THE GROWTH OF MONOPOLY IN ENGLAND.* AMERICA has her Trusts
and Germany her Cartels ; we are accustomed to think of them as tyrannous apparitions bred overseas, and out of their element in this island. Dr. Her- mann Levy, in an extremely interesting study of the industrial history of England, reminds us that we have not always enjoyed this exemption, and he doubts whether we shall enjoy it much longer. He traces the history of mono- poly from the Elizabethan days of its prime, through the industrial revolution of the eighteenth century, which destroyed it, to the present day, when he sees it reviving in new forms, Under Elizabeth industrial privileges were granted so freely that at the close of her reign a storm of popular indignation forced her to cancel the majority of them, and the Statute of Monopoly of 16'23 was intended to complete the work. But the lucrative traffic continued under the Stuarts, and the conflict was not effectively ended until the Bill of Rights was passed in 1689. Among the most im- portant monopolies of the sixteenth and seventeenth centuries were coal, soap, and salt. In 1590 the city of Newcastle disposed of its mines to a score of " boatmen," who pro- ceeded to organise the trade in a manner which terribly alarmed London. The Londoners demanded that a maxi- mum price of 7a. per cbaldron should be fixed by Govern- ment; but the hostmen bribed the Crown with a promise of a large royalty to sanction their incorporation as a Guild with the exclusive rights " concerning the selling, carrying, loading, shipping, venting, or trading of or for any sea coal, stone coal or pit coal forth or out of the haven and river of Tyne,"—that is to say, with control of the whole export trade. Prices went up and the quality of the coal went down, but the Guild continued to flourish till 1665, when it disappears from sight. Another lucrative monopoly was salt. Until the year 1670 sea salt was the only salt manufactured in England, and it was imported from Spain, France, and Scotland far more cheaply than it could be made at home. In the sixteenth century the right of manufacture was placed in the hands of " several private persons," and the price went up tenfold. This was among the privileges which Elizabeth cancelled, but it was renewed by Charles I., who forbade importation from abroad, and sanctioned the forming of a company to control the salt trade of the East Coast from Southampton to Newcastle. Their Scottish competitors were commanded to join the new company, on the ground that the production of salt in sufficient quantity and at a moderate price was for the benefit of both countries. According to Thorold Rogers, the price of this necessary of life, which in 1630 was 13s. 4d., had risen to 27s. 4d. by the end of the century. One more instance may be given. When the Pinmakers decided in 1605 to form themselves into a company, capital was required, first for the purchase of raw material, and secondly to bribe the Government into prohibiting the importation of pins from Holland. Sir Thomas Bartlett obtained the desired prohibition, and produced the required stuns, agreeing to supply the wire, the raw material, receiving in return the whole stock of pins at a fixed price. The Dutchmen, however, could not be kept out, and the scheme came to an end.
Dr. Levy points out that England has always fought her economic battles with a resolution and a passion unknown in other lands. In Germany, where the monopoly system lasted a century longer than with us, though perhaps in a less sharply defined and oppressive form, no such fighting spirit was ever displayed as that which flamed up against it in the House of Commons in 1597, 1601, 1634, and 1640. In the first half of the seventeenth century monopoly was as favourite a subject for satirists as the Trust is in the American papers of to-day.
"If any wake what things these Monsters bee, 'Tis a Projector and a Patentee," ran the jeering legend under one of these caricatures. In 1640 monopolists were not permitted to sit in the House. The Bill of Rights in 1689 transferred the right of granting monopolies and patents from the Crown to Parliament.
The era of privilege was followed by an era of free competi- tion, which resulted in an increase in the number of manu- facturers and a fall in prices. Before long employers and
• Notepad, Mutate, and Trusts. You Dr. Hermann Levy. Verlag von Gustav Allscher in Jain.
employed were both lamenting their unfortunate position. But a reversion to the earlier system was never suggested. Free competition was already regarded as a natural law which, like other natural laws, had its painful but inevitable con- sequences. The fierce competition in the coal trade resulted, however, in 1771 in the forming of an association or Cartel for the Tyne and Wear districts, which resolved to regulate the output of coal and the price to be paid by the London market. The cost of transport placed London, their most important cr at )mer, entirely in their hands ; for the canal system was too fragmentary to allow of the coal being carried overland except as a last resource, and the freight of the Welsh coal from Swansea cost much more than that from Newcastle. The opening of the railways, in spite of bitter protests from the Northerners that the Government were assisting their rivals to ruin them, placed new sources within the consumer's reach, and in 1844 the Cartel came to an end. No one could fore- see, says Dr. Levy, that it was to reappear half-a-century later in the most diverse lands as the characteristic feature of innumerable industries.
Throughout the nineteenth century the monopoly system in England was apparently dead and forgotten, and foreigners are constantly musing upon the curious completeness of its disappearance. "In England, generally the first to develop economic theories, the Cartel problem which plays such an extraordinary part with us is hardly spoken of," writes Dr. Liefmsnn. For this aloofness three reasons have been suggested. The first of these is the strong individuality of the Englishman; the second is the fact that Great Britain's mineral wealth is too scattered to be easily "monopolised," and that she possesses no single mineral in which she has what may be called a natural monopoly, such as the diamonds of the Transvaal and the saltpetre of Chile ; the third barrier is Free-trade,—" an association formed to-day to maintain the price of a given article at a certain level may be overthrown to-morrow by an importation from abroad."
But the example of her great commercial rivals has not been without influence upon Great Britain. The tendency to concentrate, to combine, is plainly visible. Dr. Levy quotes Sir Christopher Furness's brilliant speech on the advantages to be gained by amalgamation, and while he is careful to distinguish between combination and monopoly, he believes that the one contains in it the germ of the other•. " When the Free-trade system has broken down, we shall see a change." Dr. Levy would fain convince us of the approaching danger, but he finds it impossible, even though he relates in detail the story of fifteen Cartels and Trusts now flourishing on English soil :—
" The British people—I do not mean only the 'man in the street' but the majority of political and economic thinkers—are as yet insensible to this development. This is very curious, because nothing is so unpopular in Great Britain as any kind of monopoly. Neither the German consumer who uses coal supplied by the Cartel, nor the Americans who suffer from the high prices of the Meat Trust, have ever raged so furiously as Englishmen did when they heard that Mr. Lever intended to create a monopoly in soap. The project was not really of the nature of a monopoly, but some halfpenny newspapers represented it as such, the British consumer believed it, and the Lever enterprise was abandoned. But on the whole the Englishman still believes that free competition is in a sense a law of Nature; the belief has passed into his flesh and
blood. The people who were the first to break down the barriers which stood in the way of their industrial freedom dream that the victory has been gained for all time. It will be a little while yet before they are convinced that a complete change in the organisation of industrial production is taking place which will make new demands upon their powers of thought and action."
Possibly Dr. Levy is right; but as at present advised we cannot admit either his premisses or his conclusions. The power to fight will come with the need, provided we retain the policy of the open market. Unquestionably combination is a great force, and it is always possible to turn competition into combination. Wherever the first is possible, so is the second. But this cuts both ways. Competition is always passing into combination, but no sooner is this accomplished than com- bination begins to break down from its own weight. That, at any rate, is what has happened in the past, and, we believe, will happen in the future. No doubt the tendency towards the "big business" will continue, but this is by no means always the same thing as a Trust.
Previous page
