that the stores will compete for these careful buyers and that this competition will keep prices from going extremely high. But we might easily suppose that the two grocery stores were really keeping up such needless expenses as two bookkeepers, two cashiers, two delivery wagons, and two buyers when one in each of these departments would be sufficient for all the business done by both stores. We might further suppose that a very intelligent grocer who should combine the two stores might see that by lowering the price on certain kinds of goods, such as fruits or fresh vegetables, many persons who had not before bought these would find it possible to buy them. Under such conditions the monopoly might give lower prices than competition. So if there are two factories making woolen cloth each manufacturer will aim to improve his machinery, if it will help him to make his cloth at a cheaper rate and so increase his profit. If he finds a more economical method, he is likely to reduce his price just a little in order to sell his cloth. On the other hand, if a man has a patent upon some important part of the cloth-making process, or if he has a monopoly of the dye used for a certain color, he is not so strongly pressed to reduce his price or to find a better way of making the cloth. But as with the two grocery stores it is quite possible that the two factories have many unnecessary expenses. Each may maintain a selling office in a large city when one office could easily handle the business of both. Neither of the two competing factories may be able to experiment in improving methods of dyeing, whereas one factory with larger capacity could afford to maintain an expert chemist. And again even if the cloth manufacturer has a monopoly there is a check upon high prices, for if he charges too high a price people may not use as much of his cloth. They may either wear their old clothes longer or wear cloth made of cotton instead of from wool. The far-sighted manufacturer may even see a profit in reducing his price if thereby he can induce more persons to buy. tion and wages Let us look at competition as affecting wages. If CompetiI am a carpenter in a small town where there is very little building, my wages are probably not very high, and work is not very steady. But if, now, several men come to live in the town who decide to build new houses they will be likely to offer me more for my work than I have been getting. It is a good thing for the workman to have several competing for his services. He can go to the one that offers better wages and better conditions and more steady employment. Suppose, on the other hand, that you are one of the men who wishes to build. If I am the only man that. you can hire I may be exorbitant and charge you a high price. Further, I may conclude that if you have to hire me anyway, there is no need of my working very rapidly. I may even think that I will make the job last longer by not working too fast. Under the circumstances you would be glad to have another carpenter move into town so that you might have some choice. Whichever one of us you hired would be likely to be more efficient if he knew that the other would compete for a chance to build the next house. If competition between employers tends to raise the wages for workmen, and competition between workmen tends to reduce prices, it might seem that these two tendencies would just balance and leave neither side. better off. It is clear, however, that competition tends Competition stimulates invention to steady prices. It prevents a workman from taking advantage of his being the only workman, or an employer taking advantage of his being the only employer. But there is also another point to be considered. Suppose that I as the carpenter take the contract to build the house. If there is no one else competing I am very likely to use the same tools and the same methods which I have always used. But suppose I fear that the other carpenter may be willing to work for less wages and so cut under the price at which I want to work. The first and also the least intelligent plan for me will be to set such a price that I shall receive less for my work than I have received before. But isn't there a better plan, I may ask? If I can invent a new tool that will bore holes or drive nails or turn screws faster than the old way; if I can dig the cellar with a steam shovel instead of by hand; if I can bring the lumber by water instead of by rail, it may be that I can save enough to obtain the contract and yet not reduce my wages. In so far as competition stimulates men to use their wits and devise new machinery or simpler plans for marketing their goods, it is clear that it is a good thing for all. The great inventions of the world have not always been called out by competition, for some inventors would work away just the same whether any one else were competing with them or not. But it is probable that most of our smaller inventions, as well as many of the great ones, have been called out by competition. may think of this aspect aspect of competition as really a competition with nature. Man is trying to find out the puzzles which nature has set for him. Every match that he wins with nature means that nature will work for him. Emerson bids us "hitch We your wagon to a star." Every invention is really some device for doing this. In so far as competition sharpens our wits and so enables us to set nature at work for us, to lift the steel beams that go into bridges and buildings, to saw our lumber by water power instead of by hand, to carry our loads by steam, to talk by telephone with persons all about us at various distances instead of traveling to see them-in so far as competition stimulates progress in these respects it is good. There is very little complaint against the kind of competition we have just described. I do not complain of the man who can run faster than I or work more efficiently or invent a device for doing a task more economically. As a manufacturer good-naturedly remarked, "When the other fellow is selling cloth cheaper than you, you generally find that he has found out something which you don't know." The only serious complaint comes from the workmen who are temporarily thrown out of employment by the invention of a new machine or from dealers who are thrown out of business by introduction of more economical methods. There is doubtless a real misfortune to these men and society ought not to compel them to bear all the costs of progress alone. Nevertheless no one would wish to go back to the time when there were no machines. Unfair competition hinders progress B CHAPTER XXVIII UNFAIR COMPETITION UT unfortunately competition does not stop with inventing more efficient devices or with preventing exorbitant prices. It is a weapon as well as a tool. It is used to kill off the other man and not merely to do the work more effectively. There is unfair competition as well as fair competition. Let us go back to the carpenter. If instead of inventing a new tool by which I can do the work better I begin to plan how I can prevent the other man from succeeding, I can probably think of a great many dirty tricks. I may know that he will have to borrow some money at the bank in order to buy the lumber. If I am a director in the bank or if I have influence with some one who is, I may prevent my rival from borrowing money; or I may persuade the lumber dealer not to ship him his lumber promptly; or I may induce the railroad to delay the lumber consigned to him; or I may agree to build the house at so ridiculously low a price as to drive him out of town, and then charge enough more on later houses to make up my losses on this. These are not imaginary cases. Practices like these have been not uncommon in business. It is easy to see that such competition is not really helping progress at all. It is really injuring the public. It is not merely unfair to the competitor, it is stupid and hurtful to the general welfare. It is against this kind |