Private Monopolies and Public Rights

Arthur T. Hadley

[Reprinted from the Quarterly Journal of Economics,
Vol.1, 1887, Boston (for Harvard University) p. 41]

This monopoly, due to the advantages of large organizations of capital, is characteristic of the present day. Legal monopolies, created by law, are largely a thing of the past. Natural monopolies, like that of land ownership, are still important; but they are not the matter of supreme importance in productive industry any more than in transportation. The writings of Henry George have led to an exaggerated estimate of the practical effects of land monopoly. In a recent discussion between Mr. George and Mr. Hyndman, the leader of the English socialists, the latter showed with great force how little change would be actually made by the nationalization of the land, if capital organization remained as it now is. The chance given to the small producer by access to the land would be very slight, so long as the possession of large capital gave a chance for so much more economical use of power as to constitute a de facto monopoly.

George's theory of public land and private capital corresponds closely to the old transportation theory of public highways and private carriers. And Hyndman has shown that this is no more possible in highly organized productive industry than in highly organized transportation ; that the control of the capital gives virtual control of the business, howsoever the land is held. While George chooses the first of our four alternatives, Hyndman chooses the second, and would have consistent socialism in production as well as transportation.

The majority of men in all ranks are still trying to carry out the third alternative, - private ownership in Q land and capital, and free competition at the same time; but they are gradually learning that in those lines of industry which involve large capital, under concentrated management, the old theory of free competition is as untenable as it was in the case of railroads. That a great deal of our productive industry is thus monopolized hardly admits of doubt.