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action on the part of one or more persons engaged in some kind of business, which gives exclusive control, more particularly, although not solely, with respect to price " (p. 14). Control of price, he explains, is "the fundamental test of monopoly;" but this does not exhaust the conception, either in theory or practice, since other things, such as the power to withhold the supply, are often of great impor- tance. This definition seems to accord with common usage and with most of the recent scientific discussions. In our judgment it is impor- tant to discriminate sharply, as Professor Ely has done, between monopoly on the one hand and surplus or differential gains on the other ; for it is highly unfortunate to apply the term " monopoly earn- ings " to the rent of land and to business profits secured under com- petitive conditions. As the author puts it, we must " distinguish between the broad concept of differential gains enjoyed by those in competitive pursuits, and the monopolistic gains which are based upon the absence of competition" (p. 34). On a later page (138) Pro- fessor Ely seems to forget himself when he speaks of the possibility that the gains arising from lower fares of street railroads may " be absorbed by rent or other monopolies." But this is probably a mere oversight, since, on p. 137, he repeats his earlier statement that rent is not a " monopolistic gain."
Professor Ely classifies monopolies as follows (p. 43): (i) General welfare monopolies, based on patents, copyrights, etc., and including public consumption and fiscal monopolies. (2) Special privilege monopolies, based upon public or private favoritism. The bulk of the so-called trusts would be included here. (3) Natural monopolies, aris- ing from a limited supply of raw material, from the properties inherent in the business, or from secrecy. To the first two classes above men- tioned he would apply the term " social monopolies;" so that his most general classification is, first, social, and, second, natural monopolies. Obviously this classification depends for its value upon the validity of the distinction drawn between the so-called natural and social monopo- lies. Professor Ely has perhaps done more than any other single writer to familiarize us with this distinction, having adopted it as long ago as 1888, when he published his Problems of Today; and it is inter- esting to notice that he still upholds it. He remarks (pp. 66, 67): " Of course, there are those who claim that there is always an incre- ment in gain resulting from combination. This is the socialist point of view, but it is not admitted by the writer. It is admitted that we have an increment in gain under the circumstances which have been
