Omaha daily bee., 1899-04-30
POTENTLAL COMPETITION

Inc great nOStrum which all the trust
apologists hold up as the safeguard to
the people against trust oppression is
potential competition. Potential COM
petition, they tell us, is a force that may
blnations, check wage reductions and
prevent price eXtortions without n
supplemental legislation or govern
mental restriction. The great national
regulator of the trusts, we are assured,
is the fear of possible competition, and
although competition has been COM
pletely throttled the same effect is
reached through this potential force.
How fallacious this argument is and
how untrustworthy this prescription as
Il cure-all for the evils growing out of
trust expansion is seen by even a hasty
examination of the facts with a mo-
ments reflection OF their meaning. The
very object of the trust is to do away
with competition by absorbing into one
great corporation all concerns engaged
in the same field of industry. The more
effectual and successful the trust the
more completely Ices competition disap-
pear and the more difficult for it to
reappear.
The three broad lines in which the
trust profits may be enhanced are:
First, by economies in production and
distribution, usually closing factories
and throwing supertluous employees out
of work. AS long as the trust controls
the closed institutions there can be no
influence eXerted by them in the form
of potential competition and nothing but
active competition can help the displaced
unemployed.
Second, by maintaining or increasing
prices of their output. Political econo-
mists, however, practically agree that
monopoly prices are fixed at the point
which the managers think will produce
the largest net returns. In many cases,
like that of the Standard Oil trust, it is
found by experiment that there is more
to be gained by increasing the demand
through price reductions than by re-
stricting consumption with high
charges. The possibility of competition
doubtless operates as one of the factors
taken into consideration by the rate
makers, but when the trust is operated
upon the principal of largest sales at
lowest prices the chance for Il new con
Germ to enter the field is almost nothing.
Third, by reducing the price paid for
labor and materials. When all the i'll
dustries in Il given line have been con-
into II the trust becomes TO
all intents and purposes the only pur-
chaser for the raw products it uses and
the skill II employs. Here, too, poten-
tia competition must be a rather elu-
sive helpmate. No employer can per-
manently keep wages in his establish
ment down below what the same grade
of men earn at similar employments in
other lines or could earn at self-employ-
ment. While labor is TO Il large de-
gree immovable in its occupation, 1t is
not wholly so and there are limits under
which not even the tightest trust in the
world could force their wages. In the
purchase of raw products the power of
the trust is probably greater. 1t is
readily conceivable, for example, that a
combination of all the Matchmaking
plants could virtually fix the price of
live stock for all markets. But self
interest, rather than potential competi-
ton, dictates that the prices paid be
kept high enough to encourage cattle
raising, otherwise before long the plants
might have to shut down for lack of live
stock to handle.
When 1t comes to the realm of stock
jobbing and bond-1ioating potential com
petition is not dreamed of. The only
competition there is that of other in
fation boomers actively engaged in com
peting for the suckers in sight. The
possibility of other combines being eff
fected and other blocks of securities
being fioated has no repressive influence
whatever on the flooding Of the stock
market. On the contrary, the more the
market absorbs the greater the stimulus
to feed II and the less the protection
to the public.
As a matter Of truth, holding up po-