What Shall Fix Prices?

Monopoly in the Sole Interest of Monopoly or Government in the Interests of the Whole Community?

By William Randolph Hearst

HE most difficult problem to approach in discussing the question of combination is the problem of the regulation of prices under monopoly.

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It is obvious that combination is growing and extending in the direction of monopoly in almost every large line of business. Monopolies are sometimes created by illegal coercive measures. Monopolies are sometimes created for purposes of over-capitalization and speculation.

But even where monopolies are not created by coercive measures, or for speculative purposes, they gradually tend to form, because of the convincing and compelling economic advantages of combination and because of the necessity for complete coöperative organization to handle in the most systematic and effective manner the marvelous production of modern business.

There are stringent laws against trust coercion and oppression, and these laws should be enforced to the limit of their criminal penalties.

There should also be stringent Federal incorporation laws to prevent trust over-capitalization and wildcat speculation, and these laws should be strictly applied and enforced.

But after the enforcement of the criminal clauses of the Sherman act has prevented the formation of monopolies by coercion, and after an effective Federal incorporation act has prevented the formation of trusts for speculative and stock-jobbing purposes, what is going to be done with the monopolies that form naturally through general and rightful recognition of the advantages of combination?

A monopoly that is formed naturally and legitimately is just as much a monopoly as one that is formed unnaturally and improperly.

The one, if it is a monopoly, has just as much power to control the market and extort high prices from the consuming public as the other.

The monopoly that is formed by genius, by persistent effort, by energy and enterprise is just as much a monopoly as the one that is formed by force and fraud.

It may not be as hateful, but it is just as powerful.

It may not have been as destructive in its formation, but it is just as dangerous in its operation.

It may not have been as oppressive to its opponents and competitors, but it is likely to be just as extortionate in its dealings with the consuming public.

If it is a monopoly, no matter how formed, it possesses the power of monopoly, and, possessing the power of monopoly, and having the advantage of an exclusive market, it can put the prices of its products unreasonably low to discourage competition, or it can put them unreasonably high to extort unjust profits from the public.

Obviously, it can do both of these things, and unregulated, unrestrained, uncontrolled, it obviously will do both of these things.

Both are unjust.

Both are injurious.

Both are against public policy.

Both must be considered and dealt with.

How are they going to be dealt with?

Of course, no one would for a moment consider government regulation of prices or profits if there were no necessity for considering such governmental action.

Of course, no one would advocate that government should interfere in business except where there is absolute necessity for government to interfere to protect the public.

But where there is absolute monopoly, there IS such absolute necessity. What else is possible? What else can be done?

Competition was wont formerly to regulate prices, although in an irregular and haphazard way, in a way that satisfied us, although unsatisfactory because we then knew of no superior system.

Competition and the unrestricted law of supply and demand regulated prices or rather controlled prices.

Prices, as a matter of fact, were not regulated.

They fluctuated, and they fluctuated from very low prices, ruinous to the producer when the product was plentiful, to very high prices, burdensome to the consumer when the product was scarce.

Natural competition regulates prices very much as natural rain supply waters crops.

Sometimes, crops are drowned out because of too much water, and sometimes, they are dried out because of too little water.

But now competition no longer regulates at all. The law of supply and demand does not control monopoly.

On the contrary, monopoly controls the supply, modifies the demand, and regulates the price to suit its own requirements.

Combination regulates prices as irrigation waters crops.

The quantity of water is limited to conditions and requirements, and the only question is how and by whom the quantity of water shall be controlled for the best interests of the whole community.

Prices are regular enough now. They do not fluctuate. But being regulated by monopoly, they are regulated in the interest of monopoly.

Prices are regulated at the highest point that the "traffic will bear,"

and vary only when the traffic will bear more.

This regular or steady regulation of prices, even by monopoly, has some actual advantages despite its obvious disadvantages.

It has advantages to the producer, although not to the consumer.

It has advantages in the creation of wealth, although not in the distribution of wealth.

This system is at least systematic. Here is at least organization and orderliness.

Here the economic advantages of combination are operative, even though not justly and equably operative.

The consuming public, through the natural and inevitable selfishness of the promoters of combination, is debarred from sharing in the advantages of combination.

We have cheaper production, but not cheaper prices, and there is nothing to compel cheaper prices; not competition, for it no longer operates; not the law of supply and demand, that law has been repealed; not altruism, for in business altruism does not exist; not public opinion, for the motto of monopoly is "the public be damned."

Then WHAT?

Let us have the courage to face the problem honestly and to reach the legitimate conclusion.

There are various methods of evading the subject, one of which the