Fabian Tract No. 88. 

THE 

GROWTH OF MONOPOLY 


IN 

ENGLISH INDUSTRY. 


By HENRY W. MACROSTY. 

PUBLISHED BY 

THE FABIAN SOCIETY. 

PRICE ONE PENNY. 

LONDON: 

T o BE oBTAI:\ED oF THE FABIAS Soc r ETY, 276 STRA:-m, VV.C. 
SEPTE~IBER, Iil99· 



of Monopoly 1n English 
Industry. 

( Repn·nted, by permzsszcm, jrom tl1e Co:'\TE~IPORARY REnE\\·, 

111m-eli I899, wd!J add/hems). 

The Development of Industry. 

THE theoretic economists have ju tified competition in industryand commerce by the social advantage arising from the elimination 
of the unfit by competitor more able to cope with difficulties and 
more responsive to the needs of consumers. These successful 
individuals in their turn must yield to more able and better-equipped 
entreprenmrs, and in this \vay the progressive improvement of 
indu try is en ured to the satisfaction of all concerned except 
tho e who go down in the struggle. In practice it has turned 
out that in mot industries victory has been with the large 
e tablishment , for in the "beneficent private war" of trade economic 
law is on the side of the big battalions and the long purse.
In the lowering of price through competition and the steady fall in 
the rate of interest the income of the manufacturer or trader could 
only be kept up by a large turnover at a low rate of profit takingthe place of a small turnover at a high rate. The costliness of 
improved machine:·y and the expense of initiating new processe~ 
alike necessitated the larger outlays of capital which the development 
of the joint-stock sy.tem made possible by permitting the 
aggregation ot small savings. The ruin of the small industry wa 
completed by the greater efficiency of the large-the saving in 
management, superintendence, and adYertising, the better division 
of lab r, and the application of a higher grade of brain-power than 
could find cope in mere huckstering. o long as competition continue 
there is theoretically no limit to the growth of the business 
unit and the concomitant diminution of the number of directors of 
indu:,try, except the limit of the amount of trade which can be 
efficiently controlled by one head. Even thi limit is put far off by 
the eYolution of a complex diYi~ion of management, such a is shown 
in any large railway. .As Bagehot pointed out, the commercial man 
who e tinn! is taken up with the detail of hi busine is doomed to 
failure. Not the mallest ad\'antage of a gigantic bu ine sis that it 
rt::quires an organization \\"hich ets free the finest brain to de,·i t:: 


3 

the large movements of trade. The experience of •the United 
States, with its immense trusts controlling whole industries in 
America and even extending their operations to Europe, appears to 
justify this prospect of the emergence of gigantic private monopolies;
but nevertheless its truth as regards England has been vehemently 
denied. Trusts are notoriou ly fostered by the protective system of 
taxation in America, and it has consequently been -suppo<>ed that the 
free trade policy of this country with its full admission of foreign 
competition would prevent the development of great restrictive 
combinations. Moreover, the law-abiding instincts of our people, 
which have formed themselves side by side with the slow growth of 
industry, would render impossible the lawless practices by which 
American trusts often crushed their trade rivals, whilst the greed for 

money has never reached in this country the height to which it has 
attained across the Atlantic. These considerations, backed by the 
practical example of the failure of the Salt Union, have seemed to 
justify the contention of those who maintain that trusts will not 
fiouri. h on English soil. 

.A closer examination of the facts of English industry of to-daygives a check to such complacent conclusions. Traders are not in 
business for philanthropic purposes or to make manifest the efficiency 
of competition. .As long as they find that incomes can be made 
and wealth accumulated at the expense of their rivals so long will 
they wage war against them ; but when the cutting of prices has 
reduced profits to the vanishing-point a truce will be called, especially 
if in the progress of trade the number of competitors has been 
brought down to a figure which makes agreement possible. The 
tendency then will be, not to increase the virulence of competition, 
but to deprive the consumer of its benefits by interposing a barrier 
to the fall of prices. This is the characteristic feature of the trading 
world to-day. 

The Retail Trades. 

In the retail trade competition appears to rule supreme. There 
the small man still retains a footing, though with a desperatestruggle and at the cost of all efficiency. The cutting of prices i 
made plain to every man and woman, for everything is marked down 
to something three-farthings in order to tempt buyers. Quality is 
sacrificed in the desire to snatch a profit, and the customer ignorantof technical differences is driven to seek cheapness only and chance 
the rest. In London alone 40 per cent. of general shopkeepers Jive 
in that condition which Mr. Charles Booth grades as "crowded,'' 
and yet in retail businesses almost fabulous fortunes are made. The 
retail trade is to-day passing through an industrial revolution similar 
to that which manufacture experienced in the early years of this 
century, and the small shopkeeper is the analogue of the hand-loom 
weaver. Large businesses, like Marshall and Snelgrove's, Peter 
Robinson's, Lipton's, obtain an ever-increasing share of trade, for, 
among other reasons, a well-known or well-advertized name is taken 
as a guarantee of quality. E tablishments like the various ''Stores,'' 


Whiteley's, Spiers and Ponds', and other "universal providers," 
where a number of different but co-ordinate businesses are congregated 
under the same roof, like so many markets, are a never-ceasing 
source of wonderment to visitors to London, especially to continental 
socialists, to whom they appear to realise some of Mr_ Bellamy's 
dreams. The growing trade done by such houses is shown by the 
rise of Lipton's profits from £68,ooo in 1890 to £217,620 in 1898. 
The joint-stock company system has spread to distributive businesses. 
To the boom in breweries has succeeded a boom in groceries, and 
the capitalization of stores and trading companies in the grocery, 
provision, meat, oil, and drug trades in the two years 1896-7 was 
over £18,ooo,ooo. One well-known company has a capital of a 
million, and another of two-and-a-half millions. These large firms 
spread by setting up branches in both town and country, so that 
nowhere is the private shopkeeper secure from their competition, 
and modern facilities for transport further increase the scope of their 
activity. Lipton's, Limited, for instance, has nearly 300 branches in 
London and the provinces. Daniel Hughes, Evans and Co. (capital 
£125,ooo), again, is an amalgamation of a wholesale provision house 
with 26 retail shops in London. The number of establishments 
run by half-a-dozen grocery companies would in themselves supply a 
large community, and the cheap restaurants of London are in the 
hands of four or five firms. The London· milk trade is in the same 
condition, and che:-nists and tobacconists also have to face the 
same form of competition. One tobacco company alone has over a 
hundred branches. 

, The Cutting of Prices. 

The tendency towards monopoly is thus sufficiently evident, but 
in dealing with the cutting of prices we come face to face with some 
interesting arrangements. Retailers have awakened to the fact 
that competition has reached the point where it is no longer profitable, 
and that combination is a more effective way of obtaining a 
steady income. In the grocery, tobacconist, chemist, and bakingbranches of retailing, traders are grouped into local trade associations 
of more or less strength, and these, again, are federated 
nationally. These bodies put pressure on railway companies to 
obtain reductions of rates, and on governments to avert threatened 
legislation ; they seek to remove trade abuses, and frequently look 
after the common interests in the law courts. In Scotland, for 
the last two years, the Traders' Defence Association has carried 
on a vehement campaign against co-operative stores, and tried to 
exclude their agents from buying in the local sale yards. The 
grocers' associations rely mainly on moral suasion to prevent cutting,
but in various places local price-lists have been agreed on, a method 
which prevails extensively in the better organized baking trade. 
The daily press shows how the price of bread goes up uniformly 
over a district-" it has been agreed to raise," the notice usually 
runs; but the public rarely suspects the organization behind the 
innocent-looking lines. Should any baker break away from the 


5 


list price, he is speedily starved out by the combination of the 
other bakers to reduce prices still lower. In the tobacco trade 
cutting has not been satisfactorily dealt with, owing to the strengthof the large firms which indulge in the practice. 

Chemists and Druggists. 

Chemists and druggists, with their quasi-professional status, have 
a more efficient organization than any of the other retail trades, 
and their habit of association into local pharmaceutical associations 
has made them readier to face their trade problems. In addition to 
being the poor relations of the medical profession, they are ordinary 
shopkeepers in relation to their trade in patent medicines and proprietary 
articles. How far this once lucrative business has suffered 
from the competition of "drug stores," grocers, etc., is evident to 
anyone having experience of town and country prices. "The Proprietary 
Articles Trade Association," consisting of both wholesale 
and retail chemists, has been formed " to take such steps as the 
association may be advised are legal to deal with extreme cutting of 
prices, and to give advice and render assistance to its members in 
preventing substitution "-z·.e., the pushing of some article in place 
of that asked for. The members bind themselves not to sell below 
fixed wholesale and retail prices: 

"The plan by which prices are secured is simple. . . . The proprietors of 
the articles upon our list undertake to withhold supplies of their articles from anyfirm selling any one of them below the minimum prices, or from any firm who after 
due notice supplies such a cutter with any of the goods."* 

After a year's work the association, 111 the beginning of 1897, 
included over r, 700 out of 8,ooo retailers, and every wholesale patent 
medicine house in London with one exception. It also runs a paper,
The Anti-Cutting Record. To the extent to which this movement 
is successful the trade acts as a limited monopoly.

The local chemists' associations also utilize their organization 
for purposes of co-operative purchasing ; thus the Plymouth and 
District Association, in 1897, bought over £r,ooo worth of goodsin this way. Another co-operative undertaking is the Chemists' 
Aerated Mineral Waters Association, Limited, which has 4,ooo 
members, all chemists, and eliminates the outside manufacturer bymaking mineral waters for disposal to members only. 

The Concentration of Manufacture. 

Retail dealers have two sources of profit-one is to sell dear, 
the other is to buy cheap. The greater the stress of competition, 
the greater is the pressure they put on the wholesale dealer, who, at 
the same time, has to compete for custom with other wholesale 
dealers, and sees his whole livelihood increasingly cut away by largefirms dealing directly with the manufacturer. The wholesale dealer, 
in turn, tries to put off the burden of loss on the manufacturer, and 
there it tends to stay. The fixing of retail prices in no waydiminishes the inducements to the retailer to make an extra profit 

* Pharmaceutica1Jour11al, January 9th, 1897. 

6 

out of his suppliers. Not that the manufactur"er submits tamely to 
the reduction of his gains ; quite the contrary. Before his customer 
he is economically weak, being in the position of a man who must 
sell at once to a man who is under no necessity to buy at any giventime, or from any particular person. His first resort is usually to 
make a cut off wages ; but an obstacle is met in the trade-unions 
with their standard rates. His next effort is to attempt to oust the 
middleman altogether, and he fills the commercial press with complaints 
about the iniquitous sucking-up of profits indulged in bythat individual. In certain new commodities, notably in the cycle 
and sewing-machine trades, the middleman has been eliminated, and 
the manufacturer deals directly with the retailer or the customer ; 
the same is mainly true where the distributive business is in the 
hands of large firms. The large breweries, again, have almost wipe.d 
out the private publican, by taking over licences through their 
nominees and converting public-houses into "tied houses,)) bound 
to sell only particular kinds of liquor. Some of the large millers 
are getting a similar control over the baking trade by setting upemployees of their own in "tied'' shops, or by granting credit on 
condition of exclusive dealing. But where and in so far as retailers 
are small men, middlemen perform a useful function by obviating 
the need for an army of travellers, and cannot be abolished. The 
aggregation of subordinate industries is another method which everymanufacturer now adopts in order to save profits. A shipbuilding 
firm, for example, now engages men of several hundred different 
trades, from upholstery to engineering. These are collective methods 
of unifying business by eliminating unnecessary classes of entrepreneurs, 
but the manufacturer, in an individualist manner, also 
seeks to protect himself by patents and trade marks, by making his 
goods proprietary articles, by skilful advertizing, and by seeking 
new markets. He has succeeded so far that in the grocery trade 
the shopkeeper is in most instances no longer an expert tradesman, 
but an unskilled laborer, who hands across the counter So-and-so's 
tea, or such-and-such a brand of soap, as requested by the customer. 
Patent and proprietary articles are the most, in fact almost the only,
profitable branch of manufacture ; but a patent is only a source of 
extra profit while it is private, and a proprietary article may at anytime be driven out by some new favorite. The search for fresh 
markets ungoverned by competition is no easy matter and often 
involves questions of high politics. The manufacturer, therefore, 
finds himseif forced to use against the retailer tne same weapon

which the retailer has taken up against the consumer-namely,
combination. 

Amalgamations. 

This new phase of trade has not yet been submitted to sufficient 
economic investigation, and as the various arrangements are not 
always proclaimed from the house-tops, precise information is lacking. 
Single amalgamations, while not entirely excluding competition,
control the screw, cotton thread, salt, alkali, and india-rubber tyre 


7 

industries. In other cases a formal or informal ao-reement of masters 
fixes prices; thus in the hollow-ware trade (m~tal utensils) prices 
a~e .arranged by an informal ring of a dozen Birmingham firms. 
StmJla:ly there is no open market in antimony, nickel, mercury, 
lead ptpes, fish supply, and petroleum. All the largest firms in the 
newspaper making industry have consolidated their interests into 
one large combination. 

Iron and Steel Trades. 

In the engineering trade twenty·four firms have a subscribed 
capital of £I41245,ooo. In 1897 Armstrong and Co. absorbed 
Whitworlh and Co., raising their capital to £ 4,2IO,ooo in the 
process. Vickers and Co., the armour-plate manufacturers, are 
another example of a very large amalgamation. In the spring of 
1897 they bought up the Naval Construction and Armaments Co., 
and later they acquired the Maxim-Nordenfelt Guns and Ammunition 
Co. Now they boast of being the only firm capable of 
turning out a battleship complete in every respect. In the summer 
of I 899 John Brown and Co., the large steel manufacturers of 
Sheffield, raised their capital by £98o,ooo to £2,5oo,ooo in order 
to buy up the Clydesdale Engineering and Shipbuilding Co., and 
thereby obtain access to the sea. The Scotch tube trade has also 
experienced several amalgamations. "We have now in operation 
agreements or understandings in the rail, ship-plate, boiler-plate, bar 
iron, and other branches of the iron and steel trades of this country,
by means of which prices are fairly well maintained and cutting is 
largely prevented" (Iron and Coal Tl-ades' Review, December 16th, 

1898). 

Birmingham Alliances. 

The most noteworthy examples of combination, however, are to 
be found in the Birmingham staple trades and in the textile industries. 
Mr. E. ]. Smith, the author of the Birmingham scheme 
of trade combination, said in January, 1898 : 

" In these combined trades there are about soo employers and about 20,000 
work people. It was first adopted seven years ago in the metallic bedstead trade, and 
has been so successful in that industry that the trade is to-day one of the most envied 
in the country. Since then it has been tried by the makers of sp,;ng mattresses, 
cased tubes, spun mounts, rolled metal, brass wire, metal tubes, iron, iron and brass, 
and brass fenders, china furniture, electrical fittings, marl for pottery ware, common 
building bricks, and iron, brass, and electro-plated coffin handle plates and ornaments. 
Amongst other manufacturers who are taking it up are the makers of jet and Rocking-
ham ware (potteries), galvanised hollow-ware, and brass and iron pins. It cannot, 
therefore, be said that it is suitable for any particular trade only, while the fact that it 
has never failed in any trade in which its principles and methods have been fully 
~dopted is a sufficient testimony to its claim for full consideration." 

The scheme is based on the necessity for combination among 
both employers and employed, and on the recognition of the truth 

that competition is suicidal. 

"In the carrying out of the plan to which these conclusions lead it is necessary 
to establish a good trade union on either side. The next step is to carefully ascertain 
the real cost of production of every article the selling price of which is to be controlled, 

and to fix the right proportion of profit which must at least be obtained. This is 


8 


<.lone on a sy~ Lcm "hi h uoes not stereot}pe selling prices or prevent the manufa tun: 
of cheaper articles: it only in ists upon the cost, whatever it may be, being t;rken out 
on pre,cribed lines an<.l the rig ht prop rtion f profit being a<.lded to the cost, whatel't!l 
it may be." 

These legitimate prices are fixed by committee which examine 
all the c nclitions of manufacture. 

" llaving arrived at selling prices an alli ance between the two associations t/
unions is brought about. Actual wages are left where they are, with an arrangement 
that 11 bile the all ian e continues they shall never be reduce<.l, ex epting at the worker, ' 
own request, f 1 some special purpose. An<.l a bonus on these wages is paid, such 
bonus to be regulated in the fu ture on a sliding scale as profrts increase or decrea~e, 
the fir ·t b nus never to he removed unless by th • consent of the work people, for " 
sperinl purpose." 

Di pules between employers and workmen are dealt with by 
conci\iati n boards, which have managed to c mpose all difference~ 
without r qui ring the ai 1 of out ·ide arbitration. Usually an immediate 
b nus n wages of 10 per cent. has been given. It is an 
e ·entia! part of the agreement that the memb rs of the employer ' 
a ciati n c ntract t mpl y only member of the trade uni n, 
and that the !alter bind them elYe not to work for " any manufacturer 
who i n t a member of the Manufacturer ' A sociati n r 
i selling hi go ds at 1 wer pric than tho e which from time to 
tim are decided upon "-t quote the words of th Cased Tub · 
Agreement. Manufacturers who r fus d to ent r the combination 
ar nly allowed to join afterwards n payment of a heavy fine. 
Mr. mith c ntinue : 

"A special commi ttee is appointed in •ach trade, whose duty it is to bta in 
returns from the members as to the ondition or foreign trading, and to recommend 
[rom time to time such measures as may be necessary unitedly to meet foreign competition. 
This is done sometime · by reducing selling prices in some particular market 
only, by tradi ng as an association inst•ad or as individuals, or even by manu[acturing 
in some country when nothing else is possible. . . Some of these association lu11 e 
strengthened their position by forming alliances 11 ith those trades 11hich supply them 
with materials." 

Other Alliances. 

utside the m tal trades an allianc exactly on the Birmingha!l1 
m del wa entered into between th Ma t r Dyers' Association 111 
the \V t Riding of York hire and the Amalgamated ociety of 
Dyer and the asw rker ·' and General Laborer ' Union in 

ct ber, 189+ Thi combination immediately includ d 6o per cent. 
of the ·mployers and over 90 per cent. of the operative , and soon 
pr ceded t ~ rce the th r dy r to join by calling out their men. 
It ha n w resulted in a clo·cr uni n f the firms. At the clo e of 
18q the" alliance" y t m was extended to the pott ry trade , but 
the tnO\'em nt is quite in it infancy and correspondingly weak . 

.The Public and Alliances. 

In addition to securing indu trial pea e in their trade the~t.: 
allianc •· have the great cia! advantage of hifting compellllon 
from cll 'apne · to proce es; a manufacturer can only reduce pri e 
by an impr Yeml'nt in the manufactur . But they also contain a 
gr •at i:d danger by fi:o..ing profits solely fr m the standpoint of 


9 

the manufacturer, and at the same time under a sliding scale and 
minimum wage enlisting the interests of the operatives against the 
consumer. So far this danger has not been seriously realized owing 
to the astute management of Mr. Smith, who takes care not to fix 
profits too high , but it is latent and may at any time emerge into 
actuality. 

.. The Sewing-Thread Industry. 
The cotton trade is an "open" industry in which profits have 
been reduced to the minimum by foreign competition, by the it~trusion 
of fresh capital equipped with the latest inventions, and by the 
aggression of powerful trade unions. For years the factory owners 
have sought to perfect their organization so that they might meet 
their operatives on equal terms, but to no purpose, and only in the 
winter of 1897 the last attempted reduction of wages had to be 
abandoned owing to the failure of the masters to combine. Since 
then various sets of masters have formed for themselves little oases 
of co-operation in the waste of individual competition, and a perfect 
mania for trusts has set in. The impulse to this movement was 
given by the success of combination in the sewing-thread industry. 
The firm of ]. and P. Coats, of Paisley, had been formed into a 
limited liability company in 1890, with a capital of £5,7SO,ooo, 
of which £z,ooo,ooo were in debentures. After absorbing Kerr 
and Co., of Paisley, in 1895, an amalgamation was negotiated in 
I 896 with three of their chief rivals-Clark and Co., of Paisley, 
Chadwick and Co., of Bolton, and Jonas Brook and Co., of Meltham. 
For this purpose £ 4,ooo,ooo of fresh capital was raised, and since 
that date the dividend on ordinary stock has been 20 per cent. 
Messrs. Coats instructively remarked in their circular announcing 
the fusion: 
·• These aggregate profits will be largely increased by the benefits which must 
necessarily result from the amalgamation of the four concerns. It is not intended to 
sell at higher prices than those charged by the \'arious companies when they were 
separate; but a marked improvement in values will necessarily take place in markets 
where they have been unduly depressed by unhealthy and excessive competition. 
Quite apart, however, from such readjustment of selling prices, large savings will 
result, not only in the cost of manufacturing, but also in the cost of distributing." 

In December, 1897, the English Sewing-Cotton Company, consisting 
of an amalgamation of fifteen firms, was floated with a share 
capital of £z,ooo,ooo and £7 so,ooo debentures. It is significant of 
the state of the trade that the prospectus stated that " the averageprofits of the last few ye:us have been comparatiYely small," and 
''the difficulty of arriving at reliable figures on a common basis is so 
great, and the fluctuations, owing to the excessive undercutting, 
are so considerable that the directors decline the responsibility of 
putting forward a detailed statement.'' However, they expectedthat this permanent union would "tend to maintain a steady and 
reasonable range of prices." Most important of all, the way to 
further amalgamation was prepared by an arrangement by which 
Messrs. Coats took .[zoo,ooo of the ordinary shares. Since the 
formation of the company the large Glasgow firm of R. F. and 


10 

]. Alexander, with a capital of £47 s,ooo, and a Stockport firm, 
have been absorbed. Latest of all, a huge combination of American 
sewing-thread manufacturers has been formed, with a capital of 
£3,72o,ooo, and agreements have been entered into with Messrs. 
Coats and Co. and the English Sewing-Cotton Company to avoid 
undue competition in output and prices, the former company taking 
up £Io3,000 in shares and the latter £744,000. It must be only a 
matter of a short time before the few remaining independent thread 
manufacturers in this country are brought into one or other of the 
great combinations. 

Textile Combinations. 

Profiting by these lessons and driven to action by the imperious 
necessity of staving off the ruinous consequences of severe competition 
at home or abroad, the cotton-spinners have been the next to 
turn their minds to combination. The Fine Cotton Spinners' and 
Doublers' Association, Limited, was registered on March 3I, I 898, 
with a share capital of £ 4,ooo,ooo and £2,ooo,ooo additional in 
debentures. Seventeen firms of spinners, mostly in Manchester 
and Bolton, and fifteen other firms of doublers formed the "combine," 
and seven more firms-one with a valuation of £I,ooo,ooohave 
since joined. The association now owns 2,o6o,ooo spinning 
spindles, 812,000 doubling spindles, and 220,000 French spindles(one of the constituent firms being at Lille). This amalgamation 
has been facilitated by the fact that the bulk of the manufacture of 
these yarns has been in the hands of comparatively few firms, longestablished and with good connections. Two-thirds of the calico 
printers in business agreed at meetings held early this year to form 
a combination, the estimated capital of which is put at £IO,ooo,ooo. 
Three leading firms in the linen thread manufacture, with factories 
in Scotland, Ireland, Germany, and United States have amalgamated, 
an undertaking with which Messrs. ]. and P. Coats are 
associated. A combination of the makers of textile machinery in 
the Bradford district is being organized, and the bulk of the makers 
of belts and strapping for the textile trades are also forming a syndicate. 
The Scottish floor-cloth manufacturers have also amalgamated. 

Combination in the cotton industry takes other forms besides 
federation against the operatives and fusion of business interests. 
For example, the different master cotton spinners' associations have 
united to form a parliamentary and legal defence committee for the 
purpose of dealing with all proposals brought before the House of 
Commons affecting the cotton trade, and of prosecuting appeals in 
important legal actions. This committee represents owners of over 
38,ooo,ooo spindles. In fact, it would be scarcely an exaggeration 
to say that individualism in trade no longer exists in Lancashire. 

Dy eing. 

The Bradford Dyers' Association, Limited·, formed in December, 
1 898, is an interesting and natural de\'elopment of the "alliance" 
idea already ruling in the piece-dyeing trade. It embraces twenty



II 

two firms, with a capital of £ 4,5oo,ooo. The businesses concerned 
cover 90 per cent. of the trade, employ 7,500 men , and earn a 
present profit of £zzs,ooo. As the prospectus claims, the new 
organization has "practically a monopoly," and increa ed earnings 
are expected from the avoidance of competition, the combination of 
ability, the centralization of management, and the specialization of 
operations. Encouraged by this success, the slubbing and warpdyers of the Bradford district have also fused their interests, twelve 
firms covering 8o per cent. of the slubbing dyeing trade and thirty 
yarn dyeing firms having entered the amalgamation. Only those 
large manufacturers who do their own dyeing will be free from the 
control of those trusts. The English Velvet and Cord Dyers'Association, with a capital of £r,ooo,ooo, embracing eleven firms in 
the Manchester district, was registered in April, r899. Shortly 
afterwards came the Yorkshire Indigo, Scarlet, and Color Dyers,
with a capital of £6oo,ooo-" nearly all the Yorkshire dyeing 
businesses known to be engaged in indigo and scarlet dyeing of 
wool and cloth manufactured for uniforms, liveries, etc."; they will 
also manufacture and supply their own dye wares. It is reported 
that a similar fusion will be attempted in the bleaching industry, 
the capital to be about £6,ooo,ooo. 

The Coal Industries. 

Since Sir George Eliot, in r893, proposed a coal trust to include 
the whole production of coal except that consumed in the workingof ironstone and the manufacture of iron and steel, many attempts 
have been unsuccessfully made to bring his idea within the range of 
business politics. He showed that immense savings could be made 
by treating the coal areas scientifically according to their physicalpeculiarities, without regard to arbitrary divisions. 

"Briefly," he said, "the effect of amalgamation would be to remove all the 
artificial factors which now stand for so much in the sum of the coal-mining industry. 
. . . Beyond this, it is anticipated that there would be an additional and important 
saving in the cost of distribution, as each group of collieries, having no longer an 
interest in seeking distant custom, would naturally supply that part of the country in 
which its coal can be most easily delivered." 

Keeping pithead selling prices at 7s. 3d. per ton, he estimated that 
increased wages on a " liberal basis " could be paid to the miners, 
and a minimum dividend of 10 per cent. earned on the ordinary 
tock of the trust. Dividends were not to rise above r 5 per cent. 
without the consent of the Board of Trade. Such a consolidation, 
with its capital of £rzo,ooo,ooo (one-third in 5 per cent. debentures)
would probably be too large a mouthful even for Lancashire in its 
present mood. But the smaller scheme of Mr. D. A. Thomas, M.P., 
to stiffen prices in the South Wales coal trade-which has a separatetrade-area by itself-by limiting the output and allocating business 
among the different collieries has also failed to get itself realized, 
though apparently on several occasions success was within a hair'sbreadth, 
the assent of all the miners and most of the coalowners 
having been secured. Mr. Ratcliffe Ellis, the secretary of the 


12 

Federated Coalowners of Yorkshire, Lancashire, and the Midlands, 
has proposed that the present coal owners should form themselves 
into a limited company for the purchase and re-sale, at prices to be 
arranged partly by district boards and partly by the central board 
of the company, of all the coal produced by its members. This 
ingenious scheme shows the state of mind to which low profits have 
brought coalowners. There are many large firms in the coal and 
iron trade, but the only important recent amalgamation in the coal-
mining industry which can be reported is the purchase of Lord 
Durham's collieries in 1896 by Sir j. Joicey and Co. The new firm 
now controls an output of four and a half million tons, and employs 

r 2,ooo persor.s. In the distributive coal trade, however, the same 
year saw the sea-borne coal trade of London pass under the control 
of one company, W. Cory and Sons, Limited, formed by the union 
of eight large fi rms handling s,ooo,ooo out of the 8,ooo,ooo tons of 
coal which come to London by sea. lts share capital was £ 2,ooo,ooo, 
and its debenture stock £8oo ,ooo. Philanthropic instincts might be 
discerned in the prospectus where it s:1id : 

" The working of the several businesses together as one undertaking should 
secure the fulle•t possible advantage from the special faci lities which the individual 
firms possess for the economic handling of coal, and the efforts of the management 
will be directed to the cheapening of coal to the consumer, the past experience of the 
firms proving that cheap coal and large tonnage are more profitable than high prices.'" 

But the private consumer probably felt more confidence in the 
competition of railway-borne coal to keep down prices-at least, 
until Rickett, Cockerell and Co. was floated in June, 1899, with a 
capital of £ r ,soo,ooo, to amalgamate the retaii trade of Cory and 
Sons with Rickett, Smith and Co. and subsidiary businesses owned 
by them, thereby placing the bulk of the railway-borne as well as 
the sea-borne coal of London under one control. By the side of 
such a gigantic business, the Bradford Coal Merchants, a combination 
of eight firms floated about the same time, with £25o,ooo capital, 
seems small ; but they do " upwards of 90 per cent. of the steam 
coal trade, and al o control a large proportion of the household coal 
trade of the city" of Bradford. 

Shipping Rings. 

The tran port trades afford familiar forms of monopoly in the 
omnibus, parcel delivery, and railway companies. The shippingindustry is not only strongly organized for general purposes into 
Chambers of Shipping in the different ports, but the Eastern trade, 
the Cape trade, the Australian trade, and, to an increasing extent, 
the American trade are dominated by special agreements. As the 
Chairman of the Peninsular and Oriental Company pointed out at 
the annual meeting in December, 1897 : 

" It was not possible profitably to carry on shi pping business unless there was 
uniformity of tariffs settled by a 'conference' of the shi pping companies. These conferences 
might be compared to the agreements which existed between the Yarious 
railway companies of the United Kingdom. Railways charged identical rates when 
running between the same points, although they competed in speed, train accommodation, 
and general facilities. This was exactly what the steJ.mship companies did.'" 


Under free competition, rates from Europe to the Straits Settlements 
had been as low as 7s. 6d. or ss. per ton-absurdly and unprofitablylow-but by the German-English conference they were raised to zos. 
Naturally the merchants take a different view of the matter, and 
charges of differential rates, private rebates, and preferential rates to 
foreign trade are as freely made as was the case in the war 
against railway rates of a few years back. In the Blue-book on 
Trade of the British Empire and Foreign Competition, compiled for 
Mr. Chamberlain in 1897, particulars are given showing how British 
trade to China and Australia was displaced by foreign manufacturer , 
who received a virtual subsidy in the shape of preferential rates. 
Thus, the freight of cotton goods in conference steamers was, from 
New York to Shanghai, zss. to z6s. 6d. per ton, and from Liverpool 
to Shanghai 47s. 6d. The Manchester Ship Canal cost £rs,ooo,ooo, 
but the rings prevent steamers from using the water-way. And the 
cheapest way of shipping goods from Manchester to Java is vz"ti Hull 
to Amsterdam, and transhipping there. Merchants must submit 
under pain of losing all six months' rebates at JO per cent. if they 
ship an ounce otherwise than by the ring steamers. At the annual 
meetings of the Association of Chambers of Commerce in 1898 
and 1899 the preferential rates given to foreign goods by British 
shipowners were hotly denounced, and the Government was called 
upon by resolution to withdraw subsidies from shipping companies 
conferring on foreign sea-borne traffic advantages not enjoyed by 
British traders. 

Miscellaneous. 

The passion for fusion has invaded all industries. A perambulatorcombine was killed by the ridicule cast on it by frolicsome journalists, 
but, on the other hand, an amalgamation of wringing and manglingmachine makers is announced. All the firms in the wall paper 
industry have formed a trust, with a capital of £3,ooo,ooo, "to put 
an end to vexatious rivalry." The consolidation of three firms into 
the Aberdeen Comb Works Co. (capital £3oo,ooo) controls the manufacture 
of 90 per cent. of the horn combs in the United Kingdom.
The English" Sunlight Soap " has bought up the American "Monkey 
Brand" and has a capital of £z,z~o,ooo. The London and District 
Sanitary Laundries Co. has been formed, with a capital of £ JOo,ooo, 
to acquire twenty-one laundries in London and the suburbs. In 
the berrinnino· of 1899 the Association of British Rubber Manufacture~
s was "'constituted to fix selling prices, with a penalty clause 
for breach of the joint agreements. In July, 1899, the British Oil 
and Cake Mills, Ltd., capital £z,zso,ooo, came upon the market as 
a fusion of seventeen leading firms engaged in the manufacture 
of oil cake, linseed oil, and cotton seed oil, their mills having a 
crushinrr capacity exceeding half the annual importation of oil 
seeds. "'Finally. Mr. H. R. Rathbone told the British Association, 
in 1896, that the system of speculation in wheat on the American 
markets was" steadily concentrating the grain trade of England into 
fewer and fewer hands," and ultimately would lead to a gigantic trust. 


Summary. 

We thus see in British industry a steady monment towards 
combination and monopoly, a movement which is the natural outcome 
of competition, and therefore not capable of being prevented 
or undone by law. At one time it takes the form of the elimination 
of subordjnate agents in production and distribution, at another of 
combinations or rings to regulate prices, at a third of the actual 
fusion of competing firms. To quote a trade paper : "Steadily, 
although at a rate far le s rapid than in the States, amalgamation of 
kindred concerns is going on within our own borders, and there is 
nothing to prevent, but, so far, much to encourage, further unification 
of existing interests" (Textile Merclt1')', April 22nd, 1899). 
The net result is a great impro\·ement in productive organization, 
which is balanced by the possibility that the new machinery may be 
turned against the consumer. 

Prices have been advanced in the bedstead, rubber, and velvet-
dyeing trades, and if not much harm has been done, it must be 
remembered that the movement is only in its infancy. More 
serious is the political pressure such large combinations of capital 
can exert, and the economic mastery which they possess over their 
employees. These evil we already know. When combination 
approaches perfection, the experience of the shipping companies,
the railway companies, and the National Telephone Company, shows 
how little fit private individuals, moved solely by their privateinterests, are to have supreme control over national indu tries. 
A large combination can always buy up or starve out new rivals 
whose competition threatens its monopoly, and thereby promises to 
safeguard indirectly the intere ts of the public. Long ago the 
railway companies acquired the canals and virtually closed them to 
traffic, and at a later date the ational Telephone Company boughtup its local rivals in order to establish an extortionate monopoly. 
The shipping rings, too, have crushed all attempts at competition. 

How to Deal with Trusts. 

At present there is a furious outburst of anti-trust legislation in 
the United States, but all attempts to put back the industrial clock 
are doomed to failure. What, then, is to be done? Our answer is 
clear. The State must ta~e o\·er these private monopolies and work 
th m for the public benefit. To quote the Report of the House of 
Commons Committee on Telephones (August, 1898), "a service so 
essential to commercial men, and so well calculated under other 
conditions to benefit directly or indirectly all clas es of the community, 
ought no longer to be treated a the practical monopoly of 
a private company, a course for which no legal or moral necessity 
appears to exi t." The e words contain the whole case. We can 
begin by municipalizing those "natural monopolies" where the concentration 
is already complete-gas, water, electricity, tramway , etc. 
The ale of alcohol, milk, and coal ought also to be managed by the 
locality; and, further, the local authorities should do all their work 


through their own employees, including the making of clothing and 
other articles of which their consumption is sufficiently great. The 
first tasks for the central government are the nationalization of the 
railways and the mines, and the extension of the State manufacturing 
departments for the supply of all the commodities required in the 
service of the State. It is a significant fact that, taught by the 
vVelsh Coal Strike, the Iro1l and Steel li·adesJ oumal, in its issue of 
zsth]une, 1898, was bold enough to advocate a government colliery.
Other monopolies can be nationalized when they reach a sufficient 
degree of concentration, or threaten grave economic or politicaldanger to the State. 

We must not wait, however, until the danger has become serious, 
as in America, but must control the monopolies as they grow up. 
Stringent legislation to protect the worker and elevate his standard 
of life will be necessary. There is even a precedent for the regulation 
of prices in the control over freightage rates exercised by the 
Railway Commission. Financial disasters arising from fraudulent 
company promotion and. over-capitalization must be guarded against.
The training of efficient producers must be seriously taken in hand. 
All these measures, it must be noted, by reducing the profits of 
private enterprise, will hasten the tendency towards amalgamation. 
Finally, the most powerful weapon of nationalization is taxation-
especially the taxation of the idle, shareholding capitalist. 

BIBLIOGRAPHY. 

BEIWROW, W.-Trusts in Europe. (Forum, May r8gg.) 
BoSANQUET, Mrs.-The Lines of Industrial Conflict. (Economic Jounzal, December, 
r8g7.) 
CLARKE, H. H.-The Shipping Ring and the South African Trade. (Ward,
Lock and Co., London, r8g8.)
GALLOWAY, J. R.-Shipping Rings and the Manchester Cotton Trade. (Report of 
the British .'\ssociation, r8g8, pp. g68-g.) 
GUNTON, GEORGE.-The Economic and So: ial Aspects of Trusts. (Political Science 
Quarte1'ly, Vol. iii., l\o. 3.)
HALLE, E. L. I'ON.-Trusts or Industrial Combinations and Coalitions in the 
United States. (:\Iacmillan and Co., New York, r8g5.) 
HOLT, B. W.-Trusts: The Rush to Industrial Monopoly. (Amen'can Review ojRtvitu:s, June r 88g. . 
jEANS, ]. S. -Trusts, Pools and Corners, as affecting Commerce and Industry.
(Methuen and Co., London, r8g+)
JEANS, ]. S.-Shipping Freights ctnd Conferences as affecting the 1 ron and Steel 

Trades. (h·on and Coal r.·ades Review, June 3, I 8g8.)
LLOYD, H. D.-Wealth against Commonwealth. (Ha1-pe1· Bros., London, r8g+.)
ROUSIERS, PAUL DE.-Les Industries Monopolisees aux Etats-Unis. (Colin et Cie., 

Paris, r8g8.)
SCCJTT-LINGs.-Trade Combination. (]as. Collins and Sons, Manchester, r8gg.) 
Shipping Rings. Annual .\1eeting of the Association of Chambers of Commerce of 

the United Kingdom. (Chamber of Commerce .founzal, April, r8gg.) 
'VEBB, S. AND B.-Industrial Democracy, part iii., ch. ii. (Longmans and Co., 
London, r8g7.) 


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