Monopolies, Cartels and Trusts in British Industry

Hermann Levy

• Publisher: Routledge
• Year: 2018
• Print ISBN:
  9780815380092
• eBook ISBN:
  9781351213806
• Topic: Business
• Subtopic: Business General
• Index: Business

This study of monopolies and trusts in England from Tudor days to the twentieth century was first published in 1909. It is a key text in the study of early capitalism and industrial organisation.

PART I

MONOPOLY IN THE DAYS OF EARLY INDUSTRIAL CAPITALISM

CHAPTER I

THE HISTORY OF EARLY CAPITALISM

WHEN the Industrial Revolution began in the second half of the eighteenth century, the organisation of English industry was better prepared for an advance than that of any other European state. It is true that, as elsewhere, industrial undertakings found their freedom of movement restricted by the survival, partly in law and partly in custom, of the gild system; but much as these restrictions were opposed to the interests of large capitalist industries, they could not repress the many enterprising spirits who were eager to use to the full the new developments of trade. Long before the actual repeal of the Statute of Apprentices and other gild regulations completed the freedom of English industry, the way had become open even within the bounds of industrial capitalism for individual activity and mutual competition. In other countries the productive activities of single economic units were limited not merely by the demands of the gild system, but in the majority of cases, even after that difficulty had been overcome, by privileges, concessions, monopolies and the official regulation of capitalist manufacture, which united to make individual operations difficult and often impossible.

In England also, at the time when industrial capitalism commenced, the system of granting privileges to particular persons prevented the growth of competition among many who were both willing and fitted to be leaders of industry. Only when that system, which gave advantages to the few at the cost of all the rest, fell after prolonged struggles at the end of the seventeenth century, did that most important factor in modern freedom of industry, the abolition of all legal recognition of private monopolies, come into play. Nearly a century later a new technical and economic movement began, but the significance in this connection of the earlier won industrial freedom was not observed by the English economists. They regarded the free play of competition as a natural phenomenon in capitalist industry, and the unsophisticated reader might well imagine from their writings that no other system had ever existed since the rise of capitalism. The more this earlier triumph of free industry was taken as a matter of course, the more content economists were to apply the expression “freedom of industry” solely to the delivery of industry from the fetters of the gild regulations. As a result classical economy and its pupils never examined the liberation of English industry from the rule of monopoly in all its bearings, nor gave it its true importance in economic history.

It is only now that in all countries, including England, a new form of monopoly is beginning to arise in industry, that attention is directed to the monopolies which saw the birth of early capitalism, and whose fall was the necessary preliminary of that epoch of free competition, which in its turn appears to be inevitably coming to an end through the action of cartels and trusts.

The period which can be marked out in the early history of English industrial capitalism as predominantly that of monopoly lasts from the end of the sixteenth century to about 1685. Not that trade monopolies were unknown before that time; on the contrary they were very common. What made the monopolies of the time of Elizabeth, James I. and Charles I. appear in many ways something new, was that they bore a purely capitalistic impress, and perhaps for this very reason represented national industrial organisations in contradistinction to the former trade monopolies¹ of the gilds which were of purely local importance.

The period starts with the rapid economic expansion at the end of the sixteenth century. During the reign of Queen Elizabeth, and even more in the first ten years of the seventeenth century, a great number of new industries were introduced into England partly by foreigners and partly by Englishmen.² The majority were from the beginning of a capitalistic character, and far removed from the domestic handicraft. The adventurers consisted in most cases of well-to-do foreigners acquainted with the new industries, native merchants or rich courtiers, and the amounts invested were often not inconsiderable even in comparison with modern times. The four capitalists who undertook the working of the Yorkshire alum deposits in 1607 put £20,000 to £30,000 into this undertaking within a short period. In 1612 it was estimated that any one of the six existing companies employed 60 hired labourers, not counting foremen and their assistants or the necessary mechanics. The total expenses of such a company were put at about £2100 yearly.³

Salt mining and the glass industry were also organised from the beginning on a capitalist basis.⁴ The last—if we neglect primitive beginnings—first became important in 1619, when Sir Robert Mansell started to erect glass works in Newcastle, which still survived till about 1855. He undertook to make a yearly payment of £1000 to the Crown.⁵ That he employed 4000 men is, no doubt, an exaggeration,⁶ but it is clear that the whole enterprise was of a purely capitalist character. Soap was another industry introduced in the time of Elizabeth, although the novelty in this case consisted chiefly in the adoption of an improved process of manufacture, which, it was hoped, would make England largely independent of imports.¹ As early as the first half of the seventeenth century soap boiling was no longer reckoned as one of the crafts which came under Elizabeth’s Statute of Apprentices, but was “an art of mystery,”² which any free burgess, knowing the process and possessed of the necessary resources, might practise. In the middle of the eighteenth century a considerable sum, relatively speaking, was considered necessary, according to trustworthy evidence, for the initial capital of each concern, the work being done by “Labourers” and “Foremen,” no longer by Journeymen.³ There is no doubt that as early as the seventeenth century the manufacture of soap, where not carried out in private houses, was organised in a capitalist fashion. The Company of Soapmakers of Westminster incorporated in 1631 was prepared to deliver wholesale, and promised the Crown to supply 5000 tons of soap yearly. When the business was transferred in 1639 to another company the latter paid for plant and material a purchase price of £20,050.⁴

As a last example of the new capitalist organisation we may take the wire industry. While in Germany wiredrawing mills driven mechanically were introduced as early as the first half of the fourteenth century,⁵ the use of water power for drawing wire was first brought into England by a German in the second half of the sixteenth century. Till then, though the wire industry was practised as a craft in various parts of England, and especially in the Forest of Dean, the main supply, both of wire and carding wire, had to be imported. On the introduction of the new process a large capitalist factory arose at Tintern, of which we are told that it often produced more in the year than it could dispose of in England. When leased in 1592 the factory commanded a rental of £1000 a year, and employed workmen who received as much as £80 a year in wages, and were attracted from a distance, besides “many thousand poor” who found employment in the works of the company incorporated in 1568. On the other hand the finishing processes remained in the hands of craftsmen, who drew their raw material from the capitalist factories.¹

Contemporary mining shows another group of capitalist undertakings. At the end of the sixteenth century Cornish tin mining was in an unfavourable position; many works had come to a standstill owing to the increasing cost of working in deeper levels;² and the introduction of pumping machinery had become an essential preliminary to any increase of production. Presumably to bring the capital necessary for this purpose into the mining industry, Queen Elizabeth conceded her royal mining rights to a number of capitalists, a policy continued by the English kings until 1643.³ As a consequence the producers, hitherto independent miners and smelters, became economically dependent on capitalists. In 1630 Judge Doderidge complains that “the mine-workers in respect of their poor Estate are eaten out by the hard and usurious contracts for tin”⁴ (a state of affairs exactly parallel to the conditions ruling as early as the sixteenth century in German tin mining),⁵ “as those poor labourers being not able to maintain themselves and their families … are by necessity compelled for a small sum of money to enter bonds with the said regraters of tin, in value much more than the money they had received from them.”

The persons here called “mine-workers” must, it is true, be still regarded as formally independent, in spite of their name, as they produced their tin at their own cost and risk. But in reality they were nothing but the instruments of their capitalist purveyors, who sold to the “labouring tinners” at extortionate prices the necessary mining materials, receiving payment in tin at far beneath its market value.¹ Further, the smelters were compelled to have recourse to advances from capitalists² by the provisions of the law as to sales, which only allowed tin to be delivered twice a year, at Midsummer and Michaelmas.³ On the other hand the producers, thus dependent on capitalist assistance, were in their turn employers, for the great mass of those employed in tin mining were ordinary labourers. As early as 1601 Sir Walter Raleigh, who knew tin mining well, spoke of the “poor workmen” who formerly received 2 shillings a week, but now 4 shillings.⁴ A document of about the same time states⁵ that “the most part of the workers of the black tin are very poor men, and, no doubt, that occupation can never make them rich … for they have no profit of their tin if they be hired men, for their masters have the tin.”

The need of capital, therefore, brought with it a triple classification of the persons concerned in the industry—first, the capitalist trader; secondly, the producer or working master without resources of his own and drawing all his supplies from the capitalist; and lastly, the labourer he employed.⁶ During the seventeenth century the state of affairs so far changed that the capitalists became themselves “adventuring tinners” working their own mines, and further, had an interest “in most of the smelting-houses, which they either managed themselves or leased to poor smelters.”¹ In this way there arose in tin mining after 1600 a class of capitalists who appeared on the one hand as traders under the name of “merchants,” supplying independent working masters, and on the other hand gradually became themselves “masters,” and laid aside the disguise of mere traders. The final stage of this development was reached when the London merchants’ agents, who had formerly disposed of the tin to the finishers, were gradually extinguished, and the capitalist smelters took over the tin trade and sent their orders direct from London.² According to the statements of Mr. Lewis this system is still in vogue.

The most important factor in the early English industrial capitalism was, however, the development of North of England coal. The first authentic records go back to 1213.³ About 1246 coal from the Newcastle district received the name ‘sea coal,’ which proves that already in those days it was carried by sea. From the end of the sixteenth century its hold on the more distant markets, more especially on London and the neighbourhood, continually increased. While, according to Harrison, export coals “had first taken up their innes in the greatest merchant...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• Table of Contents
• PART I. MONOPOLY IN THE DAYS OF EARLY INDUSTRIAL CAPITALISM
• PART II. FREE TRADE AND THE EARLIEST MONOPOLIST COMBINATIONS
• PART III. THE MODERN ORGANISATION OF ENGLISH INDUSTRY ON A MONOPOLIST BASIS
• LIST OF AUTHORS REFERRED TO
• INDEX