excepting the right of patents. To this has since been added, in England and America, the government monopoly of the postal service.
Yet, all railroads are monopolies in a certain sense and to a certain extent; that is to say, they are without practical competition between certain points. The use of the word monopoly, however, as applied to railroads, should be qualified by the word natural. Natural monopolies are such because, under the free and equal operation of the laws of nature and of the nation, they monopolize the business by doing it more satisfactorily, more economically, and more expeditiously, than it can be done by any other means. Insomuch as they fail in this, they are not monopolies. There should not, then, be associated with the idea of natural monopolies the old and well-grounded hatred that existed against legal monopolies. The latter, under the operation of special laws, were operated for the benefit of the few; the former, under the operation of general laws, are operated for the greatest good of the greatest number. There seems no better illustration of the change which has taken place in the meaning of this term in the popular mind than its present application to free competing corporations; and that one, among the prominent measures of reform proposed by the "anti-monopolists," is the absolute destruction of all competition through the operation of the entire railroad system of the country by a great government monopoly.
Combination and consolidation being the spirit of monopoly, are supposed, in the public mind, to be opposed to the common good. But they contain the actual substance of natural monopoly, which is such from its merits and benefits, and not from privilege.
Consolidations produce responsibility and uniformity in their service, economy in their operations, and tariffs at minimum rates. These are the essential requirements of the public good, and these the public constantly receive from the great corporations. By the consolidation of several branch lines under a central management, an economy is effected in all those expenses of general supervision, and of junction and terminal stations, which, under the individual operation of the roads, each has to stand by itself. This is, in fact, a reduction of the ratio of expenses to the amount of business done, as it reduces to a minimum those fixed expenses which have little relation to the increase or decrease of traffic; and, as the consolidated company has a much larger traffic over which to distribute these fixed expenses than the short line, it becomes possible for the former to make lower rates and still have the same profit earned by the latter on higher rates.
Again, consolidations are continually being effected between short lines and roads without any through connections. On these the highest rates have always prevailed, because their traffic has been always limited. By a combination with other lines having a common interest, and perhaps by building a short line to connect them, they become
- Blackstone, book iv, p. 159.