Case 13. Methods of Monopolies

Titius, a very wealthy Catholic, wishes to know whether it is lawful to invest money in a very large company called a “Trust” or “Combine.” Such companies, however, are accustomed to proceed in this way: They reduce the expenses of management, inasmuch as one person is able to direct several centers of business; they also reduce the expenses of carriage, inasmuch as from several centers the nearest can always be selected; and, when expenses have been reduced by these and other means, they can sell at a lower price than others. Thus, within a fairly short time, they acquire the whole trade in some article in the place where they establish their headquarters, for competitors either cease to trade or associate themselves with the company, which, left alone, can itself fix the price at which things are sold. When they have obtained the trade of one city, they attack another by similar methods and quickly overcome all competitors. Hence it is asked:

1. What is a monopoly, and to what extent is it lawful or unlawful?

2. What is the just price of things, and how is it recognized?

3. What is to be said of the case?

1. This question is answered above, p. 315.

2. This question is answered on p. 304.

3. The case. Titius, a rich Catholic, wants to know if he may put his money into a trust or combine. The combines lessen working expenses and are thus able to sell cheaper to the public. There is no moral difficulty in the question so far. Even if by selling cheaper they may drive competitors out of the trade, still as the public good is to be preferred to that of individual tradesmen, there is no moral objection to their action. However, when a trust comes into a place and begins to undersell competitors with the intention of driving them out of the trade or of compelling them to join the trust, and when it has conquered all competitors, of raising prices to as high a figure as is safe, there is at least a sin against charity. For it is against charity to use the greater economic power of a combine to ruin or to coerce rivals. If the prices at which the combine sells after it has acquired a monopoly in a place are higher than would prevail if the combine had not driven competitors out of the field, its action is also against justice.