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plications of this argument I shall deal in a later portion of this section. It comes into my mind at this point so that I may say of it that it is certainly not generally true whatever may be the case with cotton reels.

COMBINATION AND PRICE

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Competition may be carried on till it can be justly described as cut-throat," and then the consumer receives privileges in lowness of price to which he is not entitled, and which are made possible by doing injustice and injury to one or other of the factors in production. We can all remember the cut rate Atlantic fares when the steamship companies fell foul of each other; and most people who follow political controversy will remember the accusations which his political opponents used to make against Mr. Chamberlain for having been a party to the ruining of rival screw producers by under-cutting prices. In streets where shops run in unbroken lines, we often see this warfare in window prices. It is only fair and expedient that suicide and murder should be avoided if possible in trade, and combinations seek to put in that plea as a justification for themselves. It does not explain their prospectuses or their working, however. The rule of combination working is that prices shall be kept as high as possible-that is, up to that point when the increase will diminish the total profit derived, or opposition and exposure will lead to unwelcome results. This is true whether the combination is in the form of a trust like that of sewing cotton and tobacco, or of a prices ring like the Bedstead Makers' Federation or the combinations in building material which received such scathing exposure in the press in connexion with the controversy

on housing shortage after the war. Nearly every combination confesses in its articles that its main purpose is to keep up prices.

The associations in the iron and steel industry mentioned in the report of the Committee on Trusts to which I have referred, are, in "a large proportion either permanently or intermittently price associations." Ninety per cent. of iron casting production is priced by a ring, so is the product of fourfifths of the metal bedstead firms. It has been stated repeatedly that a combination which controls 80 per cent. of the products, can control price. According to one of the appendices to the Report on Trusts, “it transpires that in innumerable lines of manufacture anything from 80 to 100 per cent. of the whole national output of the articles concerned is either in the hands of one dominant consolidation or of manufacturers grouped together for purposes of concerted price and other control in a trade association.*

The facts are beyond dispute. The consumers, and the community as an organic whole, are no longer protected by the levelling influence of competition. The public is at the mercy of combinations of capital controlled by their own interests primarily, and by their own judgment of the conditions under

* During the war the farming interests made abundant use of the economic advantage which their position gave them. For some time attempts were made to force up milk prices by combination, which offered some extra profits to retailers, the wholesale combinations fixing minimum retail prices. If retailers sold below those prices, their supply was stopped. I have a letter before me which was sent to a Co-operative Society from a farmers' combination known as the United Dairies (Wholesale), Ltd., and it contains the sentence: We understand that you have been selling at d. per quart less than other dairymen in your town. If so, we shall be glad if you will now fall into line with the others, otherwise we fear, we shall be reluctantly compelled to stop your supply.' The Society I may add, was making a satisfactory profit off the lower price.

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which these interests are to be promoted. The facts from which my case has been built up are, in the main, pre-war facts, but the experiences and practices of the war have given a great impetus to further combination. The organization of capital has proceeded apace since 1914. It is urged by the spokesmen for the combinations that they are necessary, and that, though in practically every case they are by their own declarations formed to raise and maintain prices, they do not propose to go beyond what will give a fair return on capital and encourage the development of the trade itself. What that is to be, however, the capitalist is himself to judge-a position of privilege and power which is inconsistent with any sense of security or of confidence-a position, moreover, which balance sheets and resolutions of shareholders' meetings show will be grossly abused. A customer of one of the combinations gave evidence to the Committee on Trusts: "It starves its distributors, its heavy profits are a toll on the wages of the poor, and the necessity of the public becomes its opportunity"; and officers of the Ministry of Munitions referred to "very exorbitant prices" and the operations of combinations "which had, in fact, led to a rise of prices to an excessive extent." Again, to quote once more from an Appendix to the Report of this Committee," although exceptions are not wanting, it may be said generally that the result of combination has been to increase profits"; and, dealing with the plea that combinations can be trusted not to use to the fullest their powers of exploitation, "little more can be said than that the power conferred by monopoly is capable of being used to exact immoderate prices," or, as the Committee * 4 Report," p. 5. † Ibid., p. 7. ‡ Ibid., p. 24.

itself has said: "Whilst fully recognizing the honesty with which the great bulk of business in this country is conducted, it is obvious that a system which creates virtual monopolies and controls prices is always in danger of abuse. We are confirmed in this view by a survey of the operations of similar combines and associations in other countries."*

That that power is imperial is only too plain from a study of how it is exercised and the machinery available for its exercise. The grip of the combination suits itself to every opportunity. Some combinations bind down their users after the manner of the boot and shoe machine-making company to which I have referred; † some work through special rebates or discounts deferred until customers have in their trade over a period observed conditions, including a promise to handle no goods competing with those of the combine; some work a pooling arrangement by which the combined firms are penalized if they produce more than their quota, and are indemnified if they fall short (this limits production, and, if it were a Trade Union rule, would be anathematized from every housetop); some bind their retail customers not to sell below a certain price fixed for them, and thus appear to protect them in the enjoyment of specially high profits; some fix the prices by which the products must be sold wholesale by the combined firms; some prevent free tendering for contracts (as in the building trade); some divide the country, some the world, into areas, and assign them to members of the combine; some absorb the combined businesses whilst some keep them separate but submit their activities to a grand controlling executive which manipulates the total production; some have selling organizations * "Report," p. 8. † Ibid., pp. 86 and 120.

which sometimes handle the goods of other firms. Combination has been long at work meeting its problems in detail and overcoming them. It is perfectly plain that a combination controlling the necessary percentage of the output of certain essential products, or owning a key patent, can hold the whole consuming community at ransom, and fix prices far above economic levels.

THE NECESSITY OF COMBINATION

The necessity of combination I admit. In the earlier stages of industry-a hundred years ago in our own country, for instance-when organization is loose and the pressure for raw materials and upon markets is not great, before fierceness has appeared, competition can rule and be accepted as a tolerably satisfactory safeguard. But these times pass, and organization and combination come naturally into the system. Then competition brings new results. It becomes the law of the jungle within production, it preys, and is gradually superseded on account of its destructiveness. It finds a last refuge in the somewhat starved patches where the factory, or shop, or trade is not well equipped with the means of selfprotection and not favourable to the formation of unions for mutual protection. In the fiercer times of trade and in these margins where mutual aid does not run, competition becomes something like cannibalism, and while for a time it may secure cheapness to consumers, the apparent advantage is paid for from capital and from the deterioration of the trade. For price is kept uneconomically low by using wealth that ought to be reabsorbed to increase efficiency and promote development, and also by encroaching upon

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