of the competitors under one management, then the game will go on as a somewhat one-sided conflict between the resulting monopoly and the community at large. So again, as a further illustration, it is and from the outset has been evident that the iron-ore beds of northern Wisconsin, Michigan, and Minnesota ought, industrially speaking, to have been worked as one collective enterprise. There are also none but business reasons why practically all the ore beds and iron and steel works in the country are not worked as one collective enterprise. It is equally evident that such correlations of work as are permitted by the business coalitions already effected in this field have resulted in a great economy of production, and that the failure to carry these coalitions farther means an annual waste running up into the millions. Both the economies so effected and the waste so incurred are to be set down to the account of the business manners who have gone so far and have failed to go farther. The like is obvious as regards many other branches of industry and groups of industries.
23Illustrative instances will readily suggest themselves. Many a business man turns by preference to something less dubious than the distilling of whiskey or the sale of deleterious household remedies. They prefer not to use deletrious adulterants, even within the limits of the law. They will rather use wool than shoddy at the same price. The officials of a railway commonly prefer to avoid wrecks and manslaughter, even if there is no pecuniary advantage in choosing the more humane course. More than that, it will be found true that the more prosperous of the craft, especially, take pride and pains to make the service of their roads or the output of their mills as efficient, not simply as the pecuniary advantage of the concern demands, but as the best pecuniary results will admit. Instances are perhaps not frequent, but they are also not altogether exceptional, where a prosperous captain of industry will go out of his way to heighten the serviceability of his industry even to a degree that is of doubtful pecuniary expediency for himself. Such aberrations are, of course, not large; and if they are persisted in to any very appreciable extent the result is, of course, disastrous to the enterprise. The enterprise in such a case falls out of the category of business management and falls under the imputation of philanthropy.
24The captains of the first class necessari1y are relatively exempt from these unbusinesslike scruples.
25See Report of the Industrial Commission. vol. I., Testimony of J.W. Gates, pp. 1029-1039; S. Dodd, pp. 1049-1050; N.B. Rogers, p. 1068; vol. XIII, C.M. Schwab, pp. 451, 459, H.B. Butler, p. 490; L.R. Hopkins, pp. 346, 347; A.S. White, pp. 254, 256.
26Cf. Marx, Kapital, bk. I, pt. II.
27The economic principle of "charging what the traffic will bear" is discussed with great care and elaboration by R. T. Ely, Monopolies and Trusts, ch. III, "The Law of Monopoly Price." Cf., for illustration of the practical working of this principle, testimony of C.M. Schwab, Report of the Industrial Commission, vol. XIII. pp. 453-455.
28"Monopoly" is here used in that looser sense which it has colloquially, not in the strict sense of an exclusive control of the supply, as employed, e g., by Mr Ely in the volume cited above. This usage is the more excusable since Mr. Ely finds that a "monopoly" in the strict sense of the definition practically does not occur in fact. Cf. Jenks, The Trust Problem, ch. IV.
29E.g. the prestige value of Ivory Soap.
30Cf. W.D. Scott, The Theory of Advertising; J. L. Mahin, The Commercial Value of Advertising, pp. 4-6, 12-13, 15; E. Fogg-Meade, "The Place of Advertising in Modern Business," Journal of Political Economy, March 1901; Sombart, vol. II. ch. XX-XXI; G. Tarde, Psychologie Economique, vol. I. pp. 187-190. The writing and designing of advertisements (letterpress, display, and illustrations) has grown into a distinct calling; so that the work of a skilled writer of advertisements compares not unfavorably, in point of lucrativeness, with that of the avowed writers of popular fiction. The psychological principles of advertising may be formulated somewhat as follows: A declaration of fact, made in the form and with the incidents of taste and expression to which a person is accustomed, will be accepted as authentic and will be acted upon if occasion arises, in so far as it does not conflict with opinions already accepted. The acceptance of an opinion seems to be almost entirely a passive matter. The presumption remains in favor of an opinion that has once been accepted, and an appreciable burden of proof falls on the negative. A competent formulation of opinion on a given point is the chief factor in gaining adherents to that opinion, and a reiteration of the statement is the chief factor in carrying conviction. The truth of such a formulation is a matter of secondary consequence, but a wide and patent departure from known fact generally weakens its persuasive effect. The aim of the advertiser is to arrest attention and then present his statement in such a manner that it is easily assimilated into the habits of thought of the person whose conviction is to be influenced. When this is effectually done a reversal of the conviction so established is a matter of considerable difficulty. The tenacity of a view once accepted in this way is evidenced, for instance, by the endless number and variety of testimonials to the merits of well-advertised but notoriously worthless household remedies and the like. So acute an observer as Mr Sombart is still able to hold the opinion that "auf Schwindel ist dauerud noch nie ein Unternehmen begrundet worden" (Kopitalismus, vol. II. p. 376). Mr Sombart has not made acquaintance with the adventures of Elijah the Restorer, nor is he conversant with American patent-medicine enterprise. With Mr. Sombart's view may be contrasted that of Mr L.F. Ward, an observer of equally large outlook and acumen: "The law of mind as it operates in society as an aid to competition and in the interest of the individual is essentially immoral. It rests primarily on the principle of deception. It is an extension to other human beings of the method applied to the animal world by which the latter was subjected to man. This method was that of the ambush and the snare. Its ruling principle was cunning. Its object was to deceive, circumvent, ensnare, and capture. Low animal cunning was succeeded by more refined kinds of cunning. The more important of these go by the names of business shrewdness, strategy, and diplomacy, none of which differ from ordinary cunning in anything but the degree of adroitness by which the victim is outwitted. In this way social life is completely honeycombed with deception." "The Psychologic Basis of Social Economics," Ann. of Am. Acad., vol. III. pp. 83-84 [475-476].
31Fogg-Meade, "Place of Advertising in Modern Business," pp. 218, 224-236.
32Advertising and other like expedients for the sale of goods aim at changes in the "substitution values" of the goods in question, not at an enhancement of the aggregate utilities of the available output of goods.
33Cf. Jenks, The Trust Problem, pp. 21-28; Report of the Industrial Commission, vol. XIX. pp. 611-612.
34Cf. Bohm-Bawerk, Positive Theory of Capital, bk. III, ch. V, VII-IX, on the value of alternative and complementary goods.
35Where competitive selling makes up a large proportion of the aggregate final cost of the marketed product, this fact is likely to show itself in an exceptionally large proportion of good-will in the capitalization of the concerns engaged in the given line of business; as, e.g., the American Chicle Company.
36Cf. Ed. Hahn, Die Wirtschaft der Welt am Ausgang des XIX Jahrhunderts. - "In unserem heutigen Wirtsehaftsleben ist der Gewinn durch den Zuwachs der Produktion,
