olies have taken the form of huge corporations, owning either the properties directly, or a majority of the stock of the constituent companies. The monopolistic corporation is both a buyer and a seller, and it will be noted, that it may thus combine in itself all the specific forms of combinations distinguished by Liefmann. same time it may have patent rights, enjoy the benefit of the protective tariff, control valuable trade marks, and receive railway discriminations, or other special privileges. In such a case it is bolstered up in its monopoly at all possible points. Competition thus is at the most only a remote possibility and Ely is analyzing this problem to find the "source of monopoly-power." He finds this basis in the social and natural environment under which our industrial corporations are conducted. Liefmann, on the other hand, is met at every point by trusts which apparently depend for their monopoly upon combinations with their competitors and, naturally, he endeavors in his analysis to discover the economic motive that induces the individual producer to enter into a combination with his competitors. This lure Liefmann's analysis shows to be the possibility of monopolistic profits.

A further consideration of the two classifications discloses the fact that the bases upon which the monopoly depends for its success are according to Ely's analysis, in most cases, artificial in their nature and usually of limited duration. Ely holds this to be true of the social monopolies, and it must be admitted the same is true to a certain extent of the natural monopolies. The secret may out; the nature of the business may change so far as its inherent properties are concerned, unless we assume, an hypothesis which is undoubtedly contrary to fact in the manufacturing as well as in the extractive industries, that it is a practical impossibility to arrive at the point of diminishing returns. There is always at least the possibility of discovering new sources of raw materials, and further, a consideration of great importance in modern industry, of devising effective substitutes. On the other hand, monopoly profits are a permanent possibility; consequently the motive that lures consolidation is a permanent one. The tariff may be abolished by a change of public sentiment; monopoly profits will forever continue to lure the small as well as the great captains of industry to forget their differences and join hands to secure the larger returns made possible by consolidation. Hence, while the possibility of monopoly profits constitutes a lure of sufficient power to ensure rapid industrial progress, a permanent industrial monopoly based

simply on combination is rendered impossible unless prices are maintained below the competitive level. If the monopoly based upon combination attempts to realize its goal, viz., monopoly profits, new competition is stimulated in order that others may share in these exceptional earnings. Perfect freedom of association in all its forms must at the same time constitute the surest guarantee of the industrial progress, and the surest barrier to industrial monopoly.

And finally it is evident that our national as well as our individual ideas as to the character of industrial legislation necessary at the present time must depend largely upon whether we emphasize in our theoretical analysis the source of monopoly power, or the motive that leads to the consolidation of competing interests. If we accept Ely's analysis as complete in itself, we must necessarily conclude that monopoly, wherever it exists, rests upon certain legal, social, or natural privileges, all of which may be destroyed by appropriate legislation. Patents, copyrights, etc., may be abolished; natural monopolies may be acquired by the state and leased for short terms or operated directly by the government. Consequently one who believes that all monopoly rests upon either a social or a natural basis, especially if he believes, as many do, that monopoly in private hands is indefensible either politically or economically, will inevitably be led to adopt a policy of anti-trust legislation toward the social monopolies on the one hand, and of state socialism toward the natural monopolies on the other. If instead of assuming that Ely's classification is adequate to account for all species of monopolistic trusts, we admit with Liefmann that the prospect of monopoly profits is a sufficient lure to overcome the obstacles to consolidation,— the centrifugal forces in industry,-in many cases and at least during periods of some length, such a change in our theoretical views must affect the whole character of our trust legislation. We shall under these conditions look upon the trust as a normal development of the modern industrial system, to be regulated rather than to be destroyed or absorbed by the state. While we shall demand that special favors, whether granted by the government, or by other organizations, be discontinued so far as compatible with industrial progress, we shall be much more inclined to rely on competition rather than restrictive legislation to protect ourselves from the evils. of monopoly.

Yale University.

MAURICE H. ROBINSON.

Competition of Waterways and Railways in the Netherlands. Under the direction of the Chamber of Commerce of Ruhrort there has been published a treatise, entitled, "The Lower Rhine as an avenue of commerce for the import and export trade of Rhineland and Westphalia, in competition with the Prussian and Netherland railways; with especial reference to the trade of the Rhine ports, Ruhrort, Duisburg and Hochfield." The author regards the present as an important turning-point in the history of Lower Rhine shipping.

On Aug. 10, 1899, the Dortmund-Ems canal was opened to traffic. Its object is to render the export and import trade of Rhineland and Westphalia independent of outside countries, i. e., to divert it as much as possible from the Lower Rhine. For this purpose the harbor at Emden has been developed to meet the needs of a larger commerce, as a terminal of new lines. It is merely a question of time when connection with the Rhine will be established. A question arises concerning the future of the ports of the Lower Rhine and Ruhr. The writer thinks they have little to fear at present; "trade that is brought into being by such new communications is much larger than that which is diverted from existing ways of traffic, and the commerce of the Lower Rhine is still susceptible of great extension." The most important aspect of the question is that dealing with the railroads; they should assure the interior country better and cheaper transport to the waterways.

The author traces the development of import and export trade of the Lower Rhine; he first discusses the competition of railway and waterway during the period of private ownership of railroads. During this first period the transportation of the three great companies rose from 882,200 tons in 1850 to 2,271,500 tons in 1870 (about 2,500 per cent.), while transportation on the Rhine augmented only from 630,486 tons in 1850 to 2,104,218 tons in 1870 (about 350 per cent.). From 1865 to 1879 the trade of the three railroad companies rose from 14,278,000 tons to 40,725,300 tons (183 per cent.), while the trade of three large shipping companies on the Rhine increased from 209,000 tons to 282,700 tons (35 per cent.)

But the development of the railway companies was not without its good effects upon the river shipping; the latter was spurred on to a greater activity, better material was used and the stream was put into better shape. Wooden ships with small capacity were

'De Economist, June, 1900; 49ste jaargang.

superseded by large iron barges; in the period 1850-1860 the capacity of the wooden boats was on the average about 292 tons and that of iron boats about 893 tons. In 1898 the largest iron barges had a capacity of over 5,198 tons (average 1,645 tons).

In the seventies transportation per ship on the Rhine developed much faster than rail transportation. The total freight traffic of the German railroads in Rhineland and Westphalia was, in 1885, 49,023,776 tons, and in 1898 96,472,951 tons (an advance of 96 or 97 per cent.). The total trade on the Rhine rose in the same years from 4,944,878 tons to 13,196,707 tons (176 per cent.)

The writer shows that competition of railway and waterway exists in the very nature of the case, and how this militates for the common weal so long as both use like weapons. Application of a system of unequal rates by the railroads tends to destroy this healthy state of affairs.

This competition is followed up under the new German system of state railways and under the action of so-called seaport-tariffs, instituted in favor of the North Sea ports. The rivalry of Bremen and Rotterdam is mentioned especially as a great factor in the reduction of freight rates in the early eighties. To divert German products to German ports, a reduction of 20-40 per cent. was sometimes made.

The author concludes that the railroads have injured the waterways, not so much by low rates as by high junction tariffs. It is well known that proportionally higher freight rates must be paid over small distances than over larger, especially when the railroad transports goods for the Ruhr ports. The writer thinks the country back of the Lower Rhine ports could be developed so that no difficulty would exist in the way of low tariffs; but he looks for little aid from the state railways of Germany in this project. The Rhine trade must depend upon its own resources; the stream should be deepened to about 13 feet below Keulen, the tributary streams should be improved in order to get at goods without the aid of the railways. If the traffic of the river could be combined under one management by a kind of "kartel," the writer thinks that enough could be saved to render considerably lower river freight rates profitable.

Yale University.

A. G. KELLER.

The Dutch Merchant Marine (De Economist, June, 1900). The Dutch have become uneasy over the fact that their flag is coming to play a rather unimportant part in trade with the East Indies (see De Economist for Jan. 1900). National shipping developes energetically enough in the Archipelago itself, but does not keep pace with the advance of other nations in the external trade (see Indische Mercuur, jaargang 1900, blz. 218).

The question is raised as to how this state of affairs can be best met and bettered. The general answer is to "bring into the business more general traders and to cover the routes along which Indian products are being carried under foreign flags." The two existing companies, De Rotterdamsche Lloyd and Nederland should be further developed; they should make connections with Bombay and other ports of British India, and stations should be located in Zanzibar and elsewhere along the shores of the Indian Ocean. Much trade might thus be diverted to the steamers of the Netherlands. The present share of the Netherlands in the trade through the Suez Canal is about 2 per cent.

Even more important would be a direct freight line from the Indies to North America, return being made either directly or via Europe. The trade to the United States is "gigantic." The following table of exports from Java to America is given, the year selected being a typical one:

Several smaller items must be added: 110 bundles cinnamon, 27 tons tobacco, 14 tons tin and 3 tons capoc (short cotton).

Exports from Padang to North America are carried for the most part on Norwegian sailing vessels. Dutch ships of 2,220 tons net should run at least monthly. The so-called Paketvaart in the interior trade of the Indies has been of great importance in the