labors intermittently,--now
acting with great intensity and forcing prices far below their normal
plane, now pausing in a reaction, when a temporary combination is
formed, and allowing prices to spring back as far above the point
indicated by the relation of supply and demand; and finally reaching the
natural end for unhealthiness--death. In fact, a recent economic writer
declares that especially intense competition should be called war, as,
indeed, it frequently is called, rather than competition.

Looking about us for other causes of variation in the intensity of
competition we discover a fifth law: _The intensity of competition tends
to vary directly in proportion to the amount of capital required for the
operation of each competing unit, especially when the interest on the
capital invested forms a large proportion of the cost of production._
Take, for example, the case of a railway line. All the capital invested
in it is wasted unless the road is in operation. Hence it will be
better to operate the road, so long as receipts are any thing more than
the expense of operation, than to abandon it. An enterprise in which no
capital is invested will cease operations when receipts do not exceed
its expenditure and there is no prospect of betterment. But in the total
expense of operating a railroad, a large item is the interest on the
capital invested, which is as truly a part of the total cost of carrying
the traffic as is the daily labor expended in keeping the road in good
repair. (In railway bookkeeping only an arbitrary line can ever be drawn
between capital account and operating expenses.) Now, in order to pay
operating expenses and fixed charges, railways must secure traffic. We
suppose that they are doing this by competition, and that they have not
yet combined to form a monopoly. Let us suppose that this competition
cuts down receipts to a point where they are just sufficient to pay the
whole cost of carriage. In an enterprise in which no capital was
invested some of the competitors would be sure to fall out when profits
disappeared; but here there is no such chance of relief; and though the
competition keeps on until the receipts are only enough to pay the
operating expenses, still the road is not abandoned because then the
capital invested, in it would be a complete loss. Changes in productive
processes often lessen the demand for a line of goods; but the owners of
the capital invested in factories and machines fo