Sidebilder
PDF
ePub

out by rivalry or mechanical means. It has to be attacked by the organized reason.

Moreover, there must always be a tendency in Capitalism to avoid the troubles of competition whether by tariffs or combines. It is quite true that an economic monopoly, not being a natural monopoly, can never be made complete, and that if it goes too far in its exactions, it raises new rivals. But as is abundantly shown by the history of such ventures as the Standard Oil Company and shipping rings, the power of the combination, by undercutting or by penalizing those who deal with rivals,* makes it difficult for competing enterprises to spring up. It is not outside the bounds of possibility for capital to entrench itself so securely in the major industries of the whole world as to defy effective competition. So, within a pretty extensive margin, economic combination can act as though it was a natural monopoly.

ECONOMIC MONOPOLY

In our own time we have seen two prodigious monopolies of this economic kind created here-the Coates' combination in sewing thread, and the Imperial Tobacco Company; in America, these combinations are more common, and one of the latest, the Meat Trust, a combination of the five† most powerful packing firms, has been repeatedly dragged before

*This method was practised by the owners of boot and shoe machinery patents much to the hampering of other patentees and the interests of the trade. Contracts had to be signed binding users to purchase no patents or machinery but what the monopolist firm held, or could supply, and as the firm held key patents, this was tantamount to the enforcement of a complete monopoly.

† In their foreign business these five have traded under no fewer than thirty-eight different names.

the public owing to the complaints regarding its transactions, and has finally been the subject of an adverse decision in the Law Courts.

The Sewing Thread combine has been in existence since 1890, when it started with a capital of £5,750,000. In 1895 and 1896 it absorbed important competing firms and increased its capital finally to £10,000,000. In 1897, a rival combine was formed against it, and the war between the two was felt in low prices. In the end, the second combine had to surrender with its capital of nearly £3,000,000, and was brought into association with the other.

The Tobacco combine was effected in 1902 owing to the purchase, for $5,000,000, of an English firm by the American Tobacco Company, and the starting of fierce competition on the British market. By the end of the year the two leviathans came to an agreement, and, by the formation of a British American Tobacco Company, covered the whole world and divided it. The issued capital of the Imperial Tobacco Company was, when its books were closed on 30th September, 1920, 4,500,000 Preference, and 16,002,523 Ordinary £1 Shares, and in 1919-20 its current account with, and loans to, associated companies amounted to £7,200,000, and in these companies it had invested £11,356,000.

CAPITALISM IS COMBINATION NOT COMPETITION

These are huge outstanding examples towering over business as mountains over a landscape, but they are unique only in size, and it has been estimated that there are now at least 500 effective combinations operating in British trade. The Committee on Trusts appointed by the Ministry of Reconstruction began

the report which it presented in 1919 with this statement: "We find that there is at the present time in every important branch of industry in the United Kingdom an increasing tendency to the formation of Trade Associations and Combinations, having for their purpose the restriction of competition and the control of prices" (p. 2). It names thirty-five combinations (warning us that the list is not "at all exhaustive") in various sections of the iron and steel industry. These control "a large proportion of the trade," which makes the Committee remind us that an economic monopoly to be effective need not be complete. The production of chemicals, an industry which now ramifies into a great variety of other industries, “is almost wholly in the hands of two great consolidations." The electric, soap, wallpaper, salt, cement and textile industries (spinning, dyeing, printing), as regards output and prices, are effectively controlled. There is a prices and output control in the furniture trades. The building trades are in the clutches of rings formed "for the monopolization of raw materials or means of production by limitation of output and maintenance or inflation of prices.* Fifty-nine per cent. of building materials are fully or partly controlled.† The Ministry of

* "Report of Committee on Trusts,” p. 36.

66

Whilst this is being written, the Lockwood Committee is making a series of the most astounding revelations regarding building combinations in America, which have resulted in smashing fifteen combinations and a fall in prices of 30 per cent. The American methods were precisely the same as those described in the text, with the exception that they included agreements with Trade Union leaders-one in particular to aid them. In America, Capitalism works with a thoroughness which it hardly dare to employ here, but in view of the reference I make later on to the Bedstead Makers' agreement with labour, this is what is stated of this American case. "On December 17, 1919, the Building Trades

Munitions supplied the Committee with names of over ninety combinations of one kind or other, formed to restrict competition, with which it had come in contact.*

Nor are these operations confined within national boundaries. The International Rail Makers' Association is an international syndicate which, like the Tobacco Trust, covers the whole world, and is controlled by British, American, German, French, Belgian, Spanish, Italian makers. This Employers' Association entered into an agreement with Brindell's [the Trade Union official] Building Trades Council, whereby the association members were to use none but Brindell workers and the Brindell men were to work for no one not a member of the association. This eliminated from the building field the few independent contractors remaining."

* I supplement what I have written in the text with a short list of some of these combinations, because readers should be in no doubt as to the fact that combination has secured the great strategical points of advantage in industry. Bedstead Makers' Federation (controlling four-fifths of the output); National Light Castings Association (including about 100 firms); Associated Brass and Copper Manufacturers of Great Britain, which works with several combinations to keep up prices; white lead, sheet lead, lead oxide and spelter are also controlled; carpets, linoleum and floor cloth are under what " are understood to be definitely price associations the output and price of bobbins are controlled; explosives, nitrates, oil and petrol are controlled; dyes are controlled and the Government policy regarding them is to extend the power of the control; glass, especially glass bottles, is controlled. Some of the controlling companies with their capital are as follows: Fine Cotton Spinners' and Doublers' Association (capital including debentures £8,450,000); Bradford Dyers (£5,300,000); Calico Printers' Association (£8,227,000); Bleachers' Association (£7,073,000); Associated Portland Cement Manufacturers (£8,734,000) and British Portland Cement (£2,800,000); Salt Union (£2,600,000); Borax Consolidated (£4,252,000); Wallpaper Manufacturers (£4,000,000); United Alkali Company (£6,175,000); Brunner, Mond and Co. (£4,598,000); Lever Bros. (£15,143,000 in 1917; by 1921, £47,000,000 plus £4,000,000 first mortgage debentures); British Oil and Cake Mills (£2,336,428); an association of electrical material producers controls an aggregate capital of £33,000,000. The figures are those given in the Report on Trusts, q.v.

was before the war. The International Aniline Convention of German and British producers of Aniline oil, controlled prices and output and rigidly fixed conditions of marketing. The International Glass Bottle Association, formed in consequence of an American patent which revolutionized production, combines the interests of makers in Britain, Germany, Austria, Holland, Norway, Sweden and Denmark, and, working with American producers, controls the world supply and its price. I have dealt with Tobacco. There are also metal syndicates, like the Aluminium Syndicate, operating in the same way, and from both Germany and America this recital could be considerably extended. Sixty per cent. of our imported beef (before the war) came from combines, and steel, drugs, chemicals and the bulk of our trade with Germany passed through the hands of the 500 Kartels then in existence in that country.

If I were to compile an exhaustive list of all known syndicates, formidable as it would be, it would be but a fraction of the combinations which limit output and control prices. For this is done to a considerable extent by understanding and agreement never expressed in documents. For instance, when the United States Steel Corporation was being harassed by anti-Trust legislation, for a period of over three years it transacted its "illegal" deals without let, hindrance or fear at the famous Gary dinners given by its president to representatives of about 90 per cent. of the steel production of the United States. These "understandings are common in the British coal trade, both locally and nationally.

A survey of the facts at our disposal compels us to conclude with the report of the Committee on Trusts unanimously signed: "We are satisfied that

« ForrigeFortsett »