.

_Why a Court cannot reduce Wages in Favored Fields to the Rate
prevailing at the Margin of Employment._--A tribunal of arbitration,
which has to deal with consolidated capital and organized labor, acts
in a field where both profits and wages are higher than they are in
most departments of industry. Should a court then take as its standard
of just wages what unorganized labor gets when it works for
independent employers? That would usually level the pay of the class
of laborers it is dealing with to the standard set by a much more
poorly paid class.

Should the court, on the other hand, take as the just rate the one
that generally prevails where employers are organized in trusts and
workmen in exclusive unions? That would be legalizing the result of
monopoly. The court, in such a case, knows that the profits of the
business are increased by the employers' monopoly and wages by the
workmen's; and yet it will not pull down the rate of pay to the level
prevailing where no combinations exist. On the other hand, to legalize
any high rate of wages, which is made possible only by a double
monopoly, would seem to be equally unjust.

_The Power of Monopolistic Trade Unions under Different
Conditions._--Arbitrators have to deal with trade unions which appeal
to some kind of force in defending their right of possession of a
field of labor. They make their own demands, strike, and compel rivals
to stay out of the positions they vacate. When this policy is
tolerated, they secure an exceptionally high rate of pay.

We may represent the product of labor and its pay in the different
occupations by the accompanying diagram.

[Illustration]

The heavy line _AA'_ represents, by its height at different points
above the base line _EE'_, the product that is specifically imputable
to labor in different employments. The part of the figure where the
line is far above _EE'_ represents the condition where, on the
employers' side, monopolies are established; while on the right of the
figure, where the line has descended and is slowly approaching the
base, the condition is represented in which employers are competing
with each other, and many of them are selling their products at prices
that only cover the cost of creating them. A unit of labor working for
a monopoly creates as large a physical product as it does elsewhere.
It turns out as many tons of steel or cases of cloth, etc., as though
no monopoly existed, and the price of the good