If then we were to assume that the United States Steel Corporation determined prices of steel in the United States, we should be led to the conclusion that it had willed that the prices of steel should be steadily maintained at a price lower than most other commodities and that its effect could be nothing less than beneficial.

That, however, is probably too optimistic a conclusion. The index number in the United States is made up of a large number of commodities (252), food products and many other raw materials, of which the natural tendency is to increase in price as population increases in accordance with the principle of diminishing returns in agriculture. We should expect, therefore, that manufactured commodities, especially those highly manufactured, would not on the whole show an increase in prices through a course of years quite so, great as that shown by the index number representing general commodities. As nearly as we can judge, then, the Steel Corporation has simply followed the normal economic course of its influence upon prices. As has been indicated, however, perhaps the power to determine for short periods prices in the market, has had some effect. In the long run, however, it is dominated by economic forces as are other producers. It is a striking fact that its purchasing power has steadily decreased while the purchasing power of steel in Great Britain and Germany have both increased as compared with general commodities. This certainly seems to show almost beyond doubt that the corporation has not controlled prices to the detriment of the community. In Germany there is a large steel syndicate and in Great Britain steel manufacture is in few hands. They cer

tainly have seemed to dominate the market more than has the Steel Corporation. In this case, again, however, we should not forget that the index numbers in Great Britain and in Germany do not represent exactly the same commodities as does the index number of the United States, nor are the commodities which they do include valued in just the same way. In Great Britain 56 have been considered, in Germany 157. While, therefore, the indications are clear, they are not probably absolutely exact.

GENERAL CONCLUSIONS

This study of prices covering a number of different industries and a series of years is a sufficient basis for certain general conclusions regarding the effect of large industrial combinations on prices. An industrial combination controlling so large a percentage of the entire output that consumers are compelled to buy at least a considerable portion of their supply from the combination is able for a period of time to affect materially prices in the market. If it reduces its prices, practically all of its competitors must meet its rates. If it increases its prices, under ordinary conditions its competitors will raise their prices to substantially the same rate, although they may shade their prices somewhat to make certain their sales. In case there is an oversupply of goods on the market, an effort of the combination to maintain its prices will result in a gradual loss of its customers to its competitors. The experiences of the United States Steel Corporation, of the American Sugar Refining Company, and of other combinations justify this conclusion.

In the earlier days of the combinations there was apparently an attempt on the part of some of them to secure a monopoly of the market. At times they cut prices to force their competitors either to go out of business or to join the combination. After they had thus strengthened their hold on the market, they attempted to recoup their temporary losses to a considerable degree. The invariable result of this course seemed to have been to call again into the market within a relatively short time strong competitors who then in turn forced them to repeat the process. The result has been to establish fairly generally the business policy of not attempting to secure anything like a complete monopoly of the market, but rather for the combination to fix its prices at such a rate that it may secure under normal conditions substantial profits while its competitors are still able to live and prosper. Although the competition is a real competition in certain instances, at any rate, it is no longer the cutthroat competition of the early days of the combination.

In the cases of the United States Steel Corporation and the American Sugar Refining Company their percentage of the entire output of the country has, as we have seen, steadily diminished for the last fifteen years, although they still maintain their position as the leading factors in the market. They do not, however, maintain a complete monopoly.

Contrary to a popular opinion, a careful study of the charts indicates that the effect of these combinations, taking their history as a whole, has not been to increase prices to the consumers, although at certain times for relatively short periods they have doubtless increased prices.

The last few years has been a period of rapidly increasing prices in most lines of production, especially perhaps in food products. If we follow the course of prices of the products of these great combinations represented on these charts and compare them with general prices as shown by the index numbers, it is an interesting fact that the purchasing power of a unit of steel or of sugar or of refined petroleum has, on the whole, decreased during this period of rising prices. This fact seems to bear out the contention that on the whole the combinations have it in their power through their savings to lower prices and actually do in the long run at times attain that result.

One should not, however, reach too positive an opinion. The index number is made up by combining the prices of very many products, and the conditions applying to any one product may be so exceptional that conclusions regarding it, if based on the index number, might not apply. Nevertheless, the study of the effect of the combinations on prices when the price of the special product is compared with the index number is doubtless far more nearly accurate than when merely money prices are considered. The fact, then, that the prices of the great necessities, steel, sugar, and oil, one a highly manufactured product, the second largely an agricultural product, although in part manufactured, and the third substantially a mineral product, all show the same tendency as compared with general prices, furnishes a pretty strong indication as to the probable effects of industrial combinations in general. The further fact that the conclusions drawn from the chart are those that had been reached twenty years

ago by reasoning from general economic principles gives added weight to the conclusions.

The total result seems to be that these great combinations do not, in most instances at any rate, attain anything like a complete monopoly in any line of work unless they have the protection of patents or some special natural monopoly advantage. They do, however, maintain a leading position in the market which enables them if they so desire, as they quite generally do, to steady market conditions.

It seems probable that in lines of industry which do not require special individual skill in many processes of manufacture, they could probably secure a substantial monopoly, as they doubtless do have, in certain opportunities, economic advantages. To secure such monopoly, however, would mean that they must hold their prices steadily so low that their competitors could not live, while they could survive. Their advantage, however, is on the whole so little that they will normally prefer to follow the old competitive policy of "live and let live" and content themselves with a mere leadership in the market. This gives to the public probably a sufficient protection against extortionate monopoly practices with the benefits at the same time of large scale production. It is fair to add that this tendency in the United States has probably been strengthened somewhat by anti-monopoly legislation, which has in some cases gone so far as to be injurious to the public, and also by public sentiment and apprehension regarding future legislation. Economic principles, however, would have been sufficient without special legislation to produce the same general results outside of legal and natural monopolies.