rn machine industries the average rate
of profits obtained for capital is generally below that which would
suffice to induce new capital invested with full knowledge to come
into the trade.

In highly organised trades, where the natural effects of free
competition have been fully manifested, we find that the hope of a
profitable business is entirely based upon the possibility that a
trade agreement will so mitigate competition as to allow a rate of
selling prices to obtain which remains considerably higher than that
which free competition would allow.

As the field of competition is narrowed to a comparatively few large
competitors, there arises a double inducement to suspend or mitigate
hostilities; as the competition is fiercer more is gained by a truce;
as the number of combatants is smaller, a truce can be more easily
formed and maintained. In most machine-using countries each branch of
a staple industry endeavours to protect itself from free competition
by a combination of masters to fix a scale of prices. This is the
normal condition of trade in England to-day. These combinations to fix
and maintain prices are not equally successful in all trades, but they
are always operative to a more or less extent in modifying or
retarding the effects of competition. Where trade unions of operatives
are strong, well-informed, and resolute, or where outsiders have large
facilities for investing capital and dividing the trade, the
endeavours to maintain prices and to secure a higher than the
competitive rate of profits are unsuccessful. The joint operation of
both these conditions in the cotton-spinning trade explains why the
Lancashire spinners have been unable to check the effects of
cut-throat competition. But throughout all branches of textile, metal,
pottery, engineering, and machine-making trades strong and persistent
endeavours are made by co-operative action of capitalists to limit
competition by fixing a scale of prices which should not be underbid.

Where competing railways fix a tariff of rates for carriage, or
competing manufacturers fix a scale of prices for their goods, their
object is to secure to themselves in higher profits a portion or the
whole of the productive and competitive economies attending
large-scale production, instead of allowing them by unrestricted
competition to pass into the hands of their customers. Suppose that a
number of steel rail manufacturers freely competing would drive down
the sell