ABSTRACT
IN order to hold their retail markets, manufacturers have always been in search of means of creating for their goods some reputation-value, apart from cheapness or quality. The small shopkeeper cannot be expected to create such value, and indeed he could not necessarily be trusted to create it even if he were able, for by particular bonuses or rebates he might be induced by other competitors to stock their wares. Patents ensure to their industrial exploiters the position of monopolist strength which may appear to them as the most desirable goal. But it remains a curious fact that the monopoly by patents plays a much less important part than might have been expected when modern industrial progress began, although it is still accepted by many economists as one of the fundamental conditions which to-day make for industrial monopoly." Patents are not as important creators of monopoly as one might theoretically imagine. Neither the motor-car, nor the radio, nor the electric lamp, nor other new inventions which one might expect to lead (by their distinctive technical features) to a monopolist position, have secured any freedom from competition to their manufacturers by virtue of patents alone. The electric lamp is a particularly good illustration of this; its history is much less one of monopolist domination of a certain patented product than one of struggle between various lamp patents. 2 Patents in one line of industry seldom remain alone; improvements and new inventions undermine the monopolist importance of existing patents almost everywhere. The manufacturer who wishes to exploit the mass demand of modern retail markets cannot rely upon the mere legal protection
of a patented article, quite apart from the fact that such a possibility exists only in the minority of cases. He must broaden the sphere of patented goods into a field where the quasi-monopolist feature is not made up by legal rights but by the reputation and goodwill which his article gains. For this he cannot use the services of the retailer, except in cases where the retailer has become representative of a very large amount of the demand, as for instance in the case of chain stores. But generally the manufacturer finds it necessary to approach the consumer directly, and so to create for himself a reliable mass market of the " unknown" customer. If this end is achieved the relationship between manufacturer and retailer may be reversed; it is the manufacturer who by controlling this article of reputation has gained the upper hand.
