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mentioned, but not under all circumstances. It is right at this point that controversy arises." Professor Ely holds that in commerce, manu- factures, and agriculture, monopoly does not arise from economies of combination of capital ; but a discussion of the subject is deferred to a subsequent chapter.
Next in order is an excellent chapter upon monopoly price. In this the law of highest net returns is first presented in the usual man- ner (pp. 99-102). But Professor Ely adds to this a secondary or deri- vative law which is of much importance and is formulated as follows : " The greater the intensity of customary use, the higher the general average of economic well-being, and the more readily wealth is gener- ally expended, the higher the monopoly charge which will yield the highest net returns " (pp. 102-8). This derivative law is illustrated and applied in many interesting ways, and is a distinct contribution to the subject. The author also develops the topic, already suggested by Walras, of the lack of uniformity in monopoly prices, and shows that the intelligent monopolist will endeavor, by variations, real or appar- ent, in the quality of the commodity or service offered to the public, to attract different classes of customers, exacting from each the price that will yield the largest returns from that class (pp. 108-12). This chapter gives what is perhaps the best presentation we have yet had of the subject of monopoly price. One criticism, however, may be made concerning the method of presentation. The author does not empha- size sufficiently the point that fixed expenses of all kinds are disre- garded in determining what price will yield the highest net returns. This fact is brought out incidentally in a footnote (p. 116); but it should have been accorded an important place in the main text, for, as it is, the general reader is likely to infer that all expenses are factors in determining monopoly price.
In the chapter upon the limits of competition Professor Ely defends his distinction between natural and social monopolies, and faces squarely the question whether competition is self-annihilating (p. 141). In a footnote he remarks (pp. 167, 168): " It is strange that some con- servative economists apparently fail to see that what they concede to the advocates of the superiority of monopolized businesses implies an abandonment of the fundamental position of economics concerning the advantages of competition, and is a virtual surrender to the theory of socialism." The author insists that the admission that competition is self-annihilating should lead to socialism (p. 142), and publishes a long and very able letter from a friend who argues as strongly as it can
