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Arthur Jerome Eddy.

The new competition: an examination of the conditions underlying the radical change that is taking place in the commercial and industrial world--the change from a competitive to a coöperative basis online

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T*HE NEW COMPETITION

C^T



"Competition Is W^ar^ and ^W^ar Is Heir

THE NEW
COMPETITION

AN EXAMINATION OF THE CONDITIONS UNDERLYING
THE RADICAL CHANGE THAT IS TAKING PLACE IN THE
COMMERCIAL AND INDUSTRIAL WORLD THE CHANGE
FROM A COMPETITIVE TO A COOPERATIVE BASIS



BY



ARTHUR JEROME EDDY

AUTHOR or "THE LAW OF COMBINATIONS," ETC.





D. APPLETON AND COMPANY
NEW YORK AND LONDON: 1912



COPYRIGHT, 1912, BY
D. APPLETON AND COMPANY




Printed in the United States of America



FOREWORD

THIS book deals, first of all, with zvhat is now going on

with Facts; secondly, with the Principles underlying ac-

tual conditions ; thirdly, with Tendencies so far as they can

be inferred from close and impartial consideration of facts

and principles.

No attempt is made to fit facts to a preconceived theory,
or stretch any stubbornly held theory to cover unrelated
facts. Such notions as the writer holds have been slowly
developed during years of intimate contact with many forms
of cooperation, and the best evidence to himself that he has
been open-minded in his observations is that nearly all his
early ideas regarding competition and cooperation have been
forced to yield to the pressure of realities.

The reader will also be interested to know that many
of the suggestions-^-even to the most radical have been
tested in practice.

In so far as the book has any merit whatsoever it is of
as much value to the .laborer as to the employer, to the
country mechanic and merchant as to the large corporation
and trust.

Certain chapters "The New Competition," "The Open-
Price Association," "Brutal Competition," and "The Trust
Problem^ Segregation vs. Disintegration" appeared in
condensed form in The World's Work.^






268188



CONTENTS



CHAPTER

I. THE OLD ORDER CHANGETH

II. WHAT Is COMPETITION?

III. COMPETITION Is WAR, AND "WAR Is HELL" .

IV. GROWTH OF COOPERATION

V. BRUTAL COMPETITION

VI. TRUE vs. FALSE COMPETITION

VII. THE OLD COMPETITION

VIII. THE NEW COMPETITION

IX. THE OPEN-PRICE POLICY

X. OPEN-PRICE ASSOCIATION

XI. HARMONY

XII. RELATIONS WITH CUSTOMERS

XIII. RELATIONS WITH SELLERS

XIV. RELATIONS WITH THE PUBLIC

XV. VANISHING INDUSTRIES

XVI. WHAT Is A FAIR PRICE

XVII. THE TRUST PROBLEM SEGREGATION vs. DIS-
INTEGRATION

XVIII. THE LABOR PROBLEM INTEGRATION vs. AGGREGA-
TION

XIX. CLASS LEGISLATION AND DISCRIMINATION

XX. CONSTRUCTIVE LEGISLATION



APPENDIX I.
APPENDIX II.
APPENDIX III.
INDEX



CONDITIONS IN CANADA .
CONDITIONS IN ENGLAND
CONDITIONS IN GERMANY



PACK

I

12

19
38

59

80

92

100

110

118
146
179
192
214

221

232

257

279
305

333

345
349
354
361



THE NEW COMPETITION

CHAPTER I
THE OLD ORDER CHANGETH



"Competition is the life of trade/'

"Competition is the death of trade."

One proposition is as true as the other according to
the point of view of him who utters it.

To the man who has downed his competitor competi-
tion is the life of trade; to the competitor who is downed
competition is death.

Again, to the purchaser who buys bargains from mer-
chants who in their jealous rivalry sell below cost, competi-
tion is the life of trade; to the merchants, one or more of
whom must go to the wall, competition is fatal.

To the public who buy for cost or less than cost when
rivalry is fierce, competition may seem a good thing, but
when the rivalry results in disaster, and later prices go
up to a point sufficient to make good the losses of the
survivors, with a profit added, competition is wasteful and
costly.

Nothing is more certain than that the community, the
country as a whole, bears all the cost and all the losses
of wasteful competition; whether it reaps the profits is
another question.



* ; ; ; > ; s THE NEW COMPETITION

The profits may be spent elsewhere, the losses the
waste of time, of energy, of money, in unsuccessful efforts
to get trade, to establish a business, to build up an industry
cannot be shifted, they lodge at home, are borne in the
long run by the entire community, and covered in the long
run in the prices of products.

So that to the community competition, so far from
being the life of trade, may be the reverse.



II



Competition, blind, vicious, unreasoning, may stimulate
trade to abnormal activity, but such a condition is no more
sound, healthy "life" than is the abnormal activity of the
man who has taken a little too much alcohol one stimulant
is like another, exhausting in the end.

Competition is a fetish that men ignorantly worship,
but the cult has had its day, the sanctity of the god is be-
ing assailed, the people are waking up and asking:

"What is this competition and why should it be hedged
about and preserved?"

The country merchant asks himself: "Why is it a good
thing for me to undersell the man across the way and try
to drive him out of business? Why is it a good thing for
him to undersell me and try to drive me out of business?"

If either succeeds, will not a stranger take the loser's
place ?

The country mechanic asks himself: "Why should I
work for less than others in the foolish effort to starve
them out of the village? Why should they try to take the
bread from my mouth by working for less than I must
have to support my family? What gain is there in that
sort of competition?"

The labor union says to its members: "You shall not



THE OLD ORDER CHANGETH 3

compete one against another by offering to work for lower
wages or longer hours, that sort of competition is dead."
The tendency with the unions is to go a step further
and say: "You shall not even compete in the amount of
work you do per day, but each man shall do so much and
no more." A crude solution of a pressing problem ; a very
curt answer to the proposition, "Competition is the life of
trade."



Ill



The Socialist would eliminate competition altogether, a
cardinal principle of his philosophy being that it is not
only wasteful but inherently wrong, and the Socialist must
be reckoned with. He is abroad in the land, he is making
himself felt at the polls, he is winning and holding offices,
he is causing the leaders of the older parties no little
anxiety. Why? Because the people are becoming So-
cialists ?

Not at all.

Socialism as Socialism probably has little if any greater
appeal to-day than it had a generation ago. It will always
have its ardent followers, but in its more logical form it is
too abstract a theory to be understood and attract generally.
Its practical suggestions are absorbed by older political
organizations, with the result that the Socialist party is ever
a band of enthusiasts "crying loudly in the wilderness."

The strength of Socialism at the moment lies in the
fact that some of its demands coincide with the tendencies
of the hour. Say, if you please, the world has caught up
with Socialism in certain directions, and propositions that
seemed revolutionary twenty-five years ago yes, ten years
ago are now debated as reasonable, are even turned into
laws.

More or less unconsciously the labor movement has



4 THE NEW COMPETITION

traveled converging lines with Socialism. Each repudiates
the other, yet both have much in common, and of late the
sympathetic ties are being recognized.

Without quite knowing it they are in complete accord
on the fundamental proposition that competition, as hereto-
fore understood and practiced, is an evil to be suppressed.

What partially blinds Labor Unionism to the viciousness
of competition is the so-called "conflict between Capital and
Labor." This supposed conflict leads labor to encourage
"cut-throat" competition where capital and profits are
concerned, while decrying it where labor and wages are
involved an illogical position.

Some Socialists in their hatred of capitalism uphold
laws such as the anti-trust laws that are supposed to
promote competition, quite overlooking the obvious truth
that such legislation is contrary to all the tenets of Social-
ism, being the over-ripe fruit of individualism. In the
main the more philosophical Socialist writers look upon
the "trust" as the final stage of "Capitalism," the fore-
runner of the Socialistic community.

For our present purpose it is sufficient to point out
that two very large factors in modern Society are opposed
in theory and practice to competition as commonly under-
stood. Unionism will have none of it in the world of
labor. Socialism would have none of it in the world at all.

When to the opposition of these two factors is added
the opposition of Capitalists, Society would seem to be
pretty nearly a unit to the effect that competition is not
the good thing it is said to be.



IV



In Europe as well as America there is a ferment of
new ideas, of protest, of doubt, of discontent regarding



THE OLD ORDER CHANGETH 5

this matter of competition. The old ideas do not seem so
sound, they do not ring so true as they once did; they do
not fit present conditions, there is something wrong.

As a matter of fact, they never were true, they never
were more than superficially sound.

Competition was the life of trade only when trade was
piratic, merciless. Competition, good, old-fashioned "cut-
throat" competition, belongs to trade's buccaneering days
when every industry flew the black flag and the appearance
of a competitor meant war to the knife.

Conditions have changed, men no longer look upon one
another as industrial and commercial brigands. We are
far from an era of universal good feeling, of mutual con-
fidence, of generous and hearty cooperation, but the world
is working that way.

Steam and electricity have brought countries, cities, in-
dividuals, so close together the old feeling of bitter an-
tagonism is softened. The real competitor of the country
merchant is not the fellow on the opposite corner, but the
mail-order store a thousand miles away. The real com-
petitor of the mine-worker in Pennsylvania is not the man
in the next shaft, but the immigrant boarding the steamer
at Naples. The only competition the laborer in California
fears is from the Orient.

Within a hundred years the world has narrowed to a
very small area. Distance has been well-nigh annihilated;
men, once far apart and strangers, are now near neighbors ;
in close contact they speak to one another with ease.

The competition of isolation is no longer possible, it
never was profitable, it has become disastrous; yet a very
respectable section of the body politic louder than all, the
politicians cry out for it; they would stem the tide of
progress and restore the obsolete.

It is all futile. The old competition is passing beyond
recall. The new is coming, coming as surely as the con-



6 THE NEW COMPETITION

quest of the air is coming, coming as surely as other and
greater inventions and discoveries are coming to weld men
closer together. All the King's horses and all the King's
men cannot put competition back again. It is fallen,
cracked, and forever spilled.



In a recent case in the Supreme Court of the United
States a Justice, distinguished for his philosophical insight
and literary expression, said :

"I think that we greatly exaggerate the value and im-
portance to the public of competition in the production or
distribution of an article, as fixing a fair price. What
really fixes that is the competition of conflicting desires.
We, none of us, can have as much as we want of all the
things that we want. Therefore, we have to choose. As
soon as the price of something that we want goes above
the point at which we are willing to give up other things
to have that, we cease to buy it and buy something else.
Of course, I am speaking of things that we can get along
without." *

Other courts have said :

"Excessive competition may sometimes result in actual
injury to the public, and competitive contracts, to avert per-
sonal ruin, may be perfectly reasonable. It is only when
such contracts are publicly oppressive that they become un-
reasonable and are condemned as against public policy." 2

"While, without doubt, contracts which have a direct
tendency to prevent a healthy competition are detrimental
to the public, and consequently against public policy, it is
equally free from doubt that when such contracts prevent
an unhealthy competition and yet furnish the public with
adequate facilities at fixed and reasonable rates, they are

1 Dissenting opinion of Justice Holmes, in Dr. Miles Medical Co.
vs. Park & Sons Co., 220 U. S. p. 373.

2 People vs. North River Sugar Refining Company, 54 Hun. 354,
and N. Y. S. 406.



THE OLD ORDER CHANGETH 7

beneficial and in accord with sound principles of public
policy. For the lessons of experience, as well as the deduc-
tion of reason, amply demonstrate the public interest is not
subserved by competition which reduces the rate of trans-
portation below the standard of fair compensation." 1

"I think it would be unsafe to adopt as a rule of law
every maxim which is current in the counting room. It
was said some three hundred years ago that trade and
traffic were the life of every commonwealth, especially of
an island. 2 If it be true also that competition is the life
of trade, it may follow such premises that he who relaxes
competition commits an act injurious to trade; and not
only so, but he commits an overt act of treason against
the commonwealth. But I apprehend that it is not true
that competition is the life of trade. On the contrary,
that maxim is the least reliable of the host that may be
picked up in every market place. It is, in fact, a shib-
boleth of mere gambling speculation, and is hardly en-
titled to take rank as an axiom in the jurisprudence of this
country. I believe universal observation will attest that for
the last quarter of a century competition in trade has caused
more individual distress, if not more public injury, than
the want of competition. Indeed, by reducing prices be-
low or raising them above values (as the nature of the
trade prompted), competition has done more to monopolize
trade, or to secure exclusive advantages in it, than has
been done by contract." 3

It is interesting to find such expressions regarding com-
petition from the mouths of judges called upon to decide
actual cases involving competition. Theirs is no academic
theory evolved in the seclusion of the closet, but con-
clusions reached in the adjustment of controversies be-
tween man and man.

There are plenty of courts that have held otherwise,
that have talked about competition in the old way, that

1 M. & L. R. R. Co. vs. Concord R. R. Co., 66 N. H. 100.

2 City of London's Case, 8 Co. 125.

3 Kellogg vs. Larkin (1851, 3 Pinney Wis.) 123, 56 Am. Dec.
178-181.



8 THE NEW COMPETITION

have, in short, treated it as a fetish, instead of critically
examining its claims to immunity.



VI



The world is filled with men who repeat, parrot-like,
what others have said; that is the easy, the natural, the
safe thing to do. It may be just as well that the over-
whelming majority of men do this, for stability depends
upon tradition, but progress follows in the footsteps of
him who challenges, who utters the insistent "Why?" who
accepts nothing as hearsay, but goes straight to the root
of things and finds out for himself.

It is the business of the office-seeker and holder to
curry favor that is, he thinks it is, and it is this convic-
tion that governs his tongue. He speaks the things he
thinks the people wish to hear. He does not know they
would like to hear the new thing and the true thing. He
does not realize that while he is repeating what he has
heard and what he has read, reiterating the worn-out
phrases, there may be those in his audience who are think-
ing about coming things, who are eagerly listening for
just one word that will throw some light on the problems
of the day, and they are the only ones worth talking to.

Of what use is it to talk to the laborer or the small
merchant about the glorious benefits of the old competi-
tion when they know it is the old competition that is
stifling them, when the laborer knows that his Union has
absolutely suppressed competition in his particular trade,
when the merchant knows that if the competition to which
he is being subjected at the moment continues six months,
he will be bankrupt ?

The man who hires labor or buys goods may applaud
the familiar utterance, but even he has his competition in



THE OLD ORDER CHANGETH 9

what he has to sell, and while he would like to destroy the
labor union and prevent the merchant from cooperating
with other merchants, he, himself, has his own interests he
would like to protect by some form of combination with
his competitors.

While these words are being written the Governors of
a number of Southern States are conspiring together to
devise a scheme whereby their cotton-growers will get
better prices for their cotton, whereby competition will be 4
checked, production controlled, and, in the end, the mills
be made to pay more for raw material. A laudable enter-
prise surely from the point of view of the grower but
how about the consumer, and how about the law, and how
about the speeches of those very Governors in support of
those laws which say competition must flourish unfettered?

Congressmen and Senators from the cotton-growing
States are especially eloquent in this behalf, the Sherman
law has no more fiery and uncompromising defenders
when Northern trusts are involved.

VII

Efforts to suppress competition in products of the soil
are not confined to the Southern States. In the North high
political officials have lent the sanction of their presence
and approval to movements to control prices of farm
products. In fact, so far as the politician is concerned, he
sees no evil in the union of laborers, cotton-growers, to-
bacco-growers and farmers i. e., voters to absolutely fix
prices; they may combine, strike, boycott, pool, store, de-
stroy, do anything they please, but let the capitalist, the
employer, the manufacturer, do a tithe of these things and
there is trouble.

\

To the politician the combination of labor can do no



io THE NEW COMPETITION

'wrong, the combination of capitalists can do no right.
Only the judge who is called upon to administer the law to
all men alike sees no distinction, and, following the letter
of the law, impartially condemns combinations of both,
thereby proving the futility of the law, for if there is any-
thing certain it is that combinations of labor are with us
to stay in one form or another, and it is no whit less
certain that combinations of employers are here to stay,
and it is for society to make the best use of both.



VIII



Times are changing and, with the times, business meth-
ods. Secrecy is yielding to publicity, men are coming out
into the open and dealing more fairly with one another.
As an inevitable result competition is undergoing a change,
the old is giving way to a new, true competition is taking
the place of the false.

The country feels that things are happening, but they
are happening so fast it does not quite comprehend. The
people do not understand the new competition that is slowly
but surely taking the place of the old, courts do not under-
stand it, legislatures do not understand it, therefore they
oppose it and vainly try to preserve the old and vicious
order of things try to make men fight when they no
longer wish to fight, to make them destroy one another
industrially and commercially when they are striving to
establish industrial and commercial peace.

The old cry, "Competition is the life of trade," is yield-
ing to the new cry, "Cooperation is trade." The old cry is
the echo of primitive and barbaric conditions; it never did
mean competition on terms of fairness and equality, it
meant the relentless suppression of the weak, the merciless



THE OLD ORDER CHANGETH n

triumph of the strong, it meant methods so questionable
they are now condemned as criminal.

The old, with its unfair advantages, its secret prices
and rebates, its conspiracies to ruin competitors, help
favored parties, localities, towns, at the expense of others,
is passing; the new is taking its place, is winning its way
in spite of ignorant clamor, regardless of legislative enact-
ments, in the face of hampering decisions ; it is winning its
way because, fundamentally, it is right it is progress.



CHAPTER II
WHAT IS COMPETITION?



What is competition?

The man in the street laughs at the question : "Why,
everybody knows what competition is."

"Well, what is it?"

"It is the effort of the other fellow to get my job,"
the laborer cries.

"It is the effort of the other man to get my customers,"
the merchant and manufacturer respond.

"It is the fierce struggle for life and means, the elimina-
tion of the weak, the survival of the strong," the biologist
says, and dismisses the subject.

Is it so?

Then competition is not worth preserving; it is a bio-
logical rather than an economic, a natural rather than a hu-
man condition; it is part of the philosophy of evolution
rather than a matter of ethics; it is on a level with those
relentless forces with which men are striving; like the
familiar doctrine of the "survival of the fittest" it is more
than non-human it is inhuman.



II

Granted that the universe is an evolution, that man is an
evolution, that society is an evolution that all are products

12



WHAT IS COMPETITION? 13

of that one fundamental law, the survival of the fittest,
which is neither more nor less than competition in its fierc-
est form what then?

Do we pass laws to foster this competition, to make it
more certain that the weak disappear and the strong sur-
vive? Do we bend all our efforts to that end?

No, only in the breeding bf plants and animals do
we try to aid the law of natural selection, and even with
animals we are tender toward the sick and old toward
those nature is trying to eliminate. We even pass laws to
protect them and organize societies to help them.

When it comes to human beings only savages permit
the law of the survival of the fittest to work unchecked;
they expose infants, abandon the sick, kill the aged they
are evolutionists without human compunctions, they are
biologists without hearts.

Civilized man, in his struggle for existence, forgets
that law which the evolutionist says is the foundation of
progress. Were it not for a few savage examples to the
contrary we might say he fights it instinctively.

But fight it he does with laws, with customs, with
moral sanctions, with social conventions, with individual
standards of right and wrong, with praise for those who
sacrifice their lives for others, with words of scorn for the
selfish and cowardly in short, with almost every legal, so-
cial, and moral force do men fight for the preservation of
the sick, the weak, the helpless, the very beings the cold
doctrine of evolution says should be eliminated.

Of the struggles for existence in the animal world
Huxley said, "The creatures are fairly well treated and
set to fight; whereby the strongest, the swiftest, the cun-
ningest, live to fight another day."

Of the struggle in the human world he says in a later
lecture, "Social progress means a checking of the cosmic
forces at every step, and the substitution of another, which



14 THE NEW COMPETITION

may be the ethical process ; the end of which is not the sur-
vival of those who may happen to be the fittest, in respect
to the whole of the conditions which exist but of those
who are ethically the best."

And the proof of the ethically best, of the purest and
loftiest souls, lies in the care taken of, and the sacrifices
made for, the weak, the idiotic, the insane, the criminal if
you please.

In the language of another, "If it be true that reason
must direct the course of human evolution, and if it be also
true that selection of the fittest is the only method available
for that purpose, then, if we are to have any race improve-
ment at all, the dreadful law of the destruction of the weak
and helpless must, with Spartan firmness, be carried out
voluntarily and deliberately. Against such a course all that
is best in us revolts."

Ill

In his social relations man has made vast strides in ad-
vance of the bald biological proposition, progress is a sur-
vival of the fittest.

In his commercial and industrial relations he is in that
savage condition wherein the "destruction of the weak and
helpless" is carried out, not only "voluntarily and deliber-
ately" and "with Spartan firmness," but with precisely the
satisfaction a Roman audience watched one gladiator slay



Online LibraryArthur Jerome EddyThe new competition: an examination of the conditions underlying the radical change that is taking place in the commercial and industrial world--the change from a competitive to a coöperative basis → online text (page 1 of 27)