control of the market, but only as an incident of production control. Monopoly may, however, as already stated, be based on market control when production is not directly controlled, or where no control of production exists save that conferred by market conditions. An example of this is the French governmental monopoly in tobacco, based entirely on its arbitrary control of the market.

Usually, where a monopoly is not due to direct control of the product, it has been brought about by virtue of strategic location, superior facilities, or abler handling. Occasionally, however, a market is monopolized by methods that can only be described as improper.

A curious instance of a market captured and held by the method of approach is afforded by the operations of a New England company which manufactures brushes-hair brushes, horse brushes, tooth brushes, paint brushes, and every other kind of brush that can be used in or about the household. These products are not sold in stores but direct to consumers through a nation-wide organization of peripatetic salesmen. Each salesman has his own wagon, his own exclusive route—which he covers three or four times a year—and his own clientèle. The brushes are good, the prices right, and the purchasers prefer to buy from the salesmen rather than from stores where they pay as much or more for inferior brushes. The business is well managed and well maintained. No advertising is done and few city-dwellers know that the business exists, but the general result is a turnover of some millions of dollars annually, with most satisfactory profits. Though nothing in the nature of a natural monopoly exists, for all practical purposes the trade is held as securely as if one did.

The Standard Oil Monopoly

The development of the Standard Oil Company affords a remarkable example of the creation of a monopoly without any natural conditions favoring its creation. Here the situation was

the reverse of that of the Trinidad lake asphalt monopoly, for the oil monopoly instead of being based at the beginning on control of the product and then changing until it became based on the control of the market, began by securing control of the market until it attained such size and strength that it was practically enabled to control production and did control it for many years.

Petroleum is found in almost every part of this country and in practically every part of the world. Its distribution is so wide and the quantities found are so enormous that at first sight it would not seem to offer any possible opportunity for the creation of a monopoly-certainly no better opportunity than coal, salt, copper, iron, or a dozen other of the most extensively used and widely distributed necessaries of life.

During his early connection with the oil business it is unlikely that Rockefeller had any idea of establishing the complete and all-embracing monopoly that he did, or had any conception of the magnitude of the work he had undertaken. Nor is it at all probable that any such combination of interests as he and his associates effected could at that time have been brought about by fair means. The guiding minds-or the operating heads-of the future monopoly did not stop to consider ethics. They saw the goal before them and went to it by the most direct route regardless of the rights of others. They were apparently convinced that their career of profit and domination had been arranged by Providence a pleasing conviction to which the monopolistic mind is peculiarly susceptible-and that nothing should be allowed to stand between them and the success for which they were destined. At any rate, they did not allow anything to stand in their way. The business morality of the times permitted it, laws to prevent it were either non-existent or non-effective, and by a system of deliberate and cold-blooded commercial brigandage, admirable for its detailed and comprehensive character and for the intelligence and persistence with which it was carried out, but indefensible from the standpoint of morality and the fellowship of

men, they built up one of the greatest, most profitable, and most powerful monopolies that this country has ever seen.

Standard Oil Methods

The first organization of the Standard Oil Company was characterized by a close centralization of power, by the ability of the men connected with it, and by the unscrupulous character of its operations. Its first real hold on the oil business was secured through special freight rates and then by the iniquitous rebate system whereby its rivals were forced unwittingly to contribute to its power and to their own ultimate destruction. Oil cannot be sold without being shipped, and on every barrel of oil shipped by its competitors the Standard Oil Company received a substantial payment. As a result, the organization not only reaped the profits of its own business, but levied toll on the business of everyone who ventured to enter the oil field as a competitor.

The details of the rise of the Standard Oil are too well known to require recounting. It is sufficient to say that by rebates and discriminating rates, by controlling production, by controlling the means of piping, storing, and refining oil, by controlling everything connected with oil, by buying, crushing, absorbing, and destroying competition of every nature, the artificial monopoly first created was transformed into a natural monopoly practically controlling the entire petroleum output of the country-so much so that the Standard Oil regulated the price of oil at its own discretion, subject only to some extent to the natural laws of supply and demand-laws which even the Standard Oil Company was not able entirely to overthrow, though it juggled with them greatly to its profit.

At the present time Standard Oil has lost much of its monopolistic character. The conscience of the country has reached a point where the unscrupulous practices that built up the monopoly are no longer permitted, and restrictive laws have brought about the dissolution of the former organization. Handicapped

in this way the rapid development of both the demand for and the supply of petroleum has exceeded the ability of the Standard Oil Companies to control, and powerful independent companies are now working side by side with, and actually co-operating with Standard Oil.

The German Chemical Companies Monopoly '

I

A monopoly characteristic and more iniquitous than that of Standard Oil was built up in this country before the World War by the great chemical companies of Germany engaged in the manufacture of coal-tar dyes and kindred products. Fostered by the German government not only because of the economic value of the industry, but because of its immense importance to the country in case of war, these companies attained an enormous and impressive development. In 1914 the plant of one of the largest of these companies, Badische Anilin und Soda Fabrik, covered 500 acres of land with a water-front of a mile and a half on the Rhine; its buildings occupied 100 acres, and over 10,000 workmen were employed. The capital of the company was 54,000,000 marks increased in 1916 to 90,000,000 marks. Other companies were of equal or comparable size and six of these powerful companies were closely united in one gigantic combination, or “cartel." The actual investment in the works of these six companies was estimated at not less than $400,000,000. The total assets of the five great American chemical companies which, the better to withstand destructive competition, merged in 1920 under the name Allied Chemical and Dye Corporation, were at that time a little less than $224,000,000.

The profits of the united German companies were pooled, and while each factory maintained an independent administration, every company was informed as to the processes and experiences of the others. Also when tariff obstacles rendered it advisable to

I The material relating to the German chemical monopoly is taken almost verbatim from the report to Congress of A. Mitchell Palmer, then Alien Property Custodian.

manufacture their products in other countries, this was done by common action and at common expense.

The Up-Building of the German Chemical Companies

The advantages enjoyed by these chemical companies were the cumulated results of many favoring conditions. As far back as the middle of the nineteenth century, the practical application of chemical science began to occupy the attention of the best scientific and industrial minds of Germany. The many natural advantages combined with the national conditions and characteristics led to rapid advance. Labor was cheap, docile, and stable, and the German habit of mind was peculiarly fitted for chemical research work. Scientific attainment was directly and strongly encouraged. Men of science, and particularly research workers, were more highly regarded than in other countries, and the government by conferring honors and titles did everything possible to exalt the position of the successful scientist.

To enable them to do their part, the universities were at an early date provided with the most elaborate and advanced equipment for research work, and attracted to themselves an extraordinary proportion of the ablest young men of the nation. They accordingly turned out trained technical men in such numbers that highly skilled service was always available to the German chemical manufacturer at an extraordinarily low cost. In this respect he had a marked advantage over the manufacturers of any and every other country in the world.

Nor was the chemical manufacturer slow to realize and utilize these conditions. In the great establishments the research laboratories became large and highly efficient institutions; their facilities were placed at the disposal of research chemists from universities-often men who had no connection with the dye industry whatever; to meet the needs pointed out by the industrial leaders, armies of plodding, but nevertheless skilful chemists, completed hundreds of thousands of separate researches. The