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(which at first was not compulsory) 'came more and more into prominence, as the safeguard of the absentees" the watch-dog," as a solemn High Court judgment described him.' 1

The joint stock company, however, has not eliminated family or private business. For under the Companies Act of 1907 such businesses are able to register as private companies with limited liability, thus enjoying privacy of operation and limitation of liability at the same time. It is frequent for a private company after reaching a certain stage to convert itself into a public company and place its shares on the market. With a private company thus intermediate between the individual or partnership and the public company and the customary progression from one to the other the time-honoured discussion concerning the scope and limitation of joint stock enterprise has lost point. In Adam Smith's day there was body to it, but now the farmer is almost the only operator who does not grow into a company of sorts.

2. The anti-monopoly Act of 1624 (21 James I, c. 3) did not deprive the Crown of the right to regulate foreign trade or to give to trading companies, as a means to that end, exclusive trading privileges. The revolution of 1688 restricted the discretionary powers of the Sovereign; and Parliament in general favoured an open trade. By 1 Wm. and Mary, c. 89, it altered the definition of Mines Royal to exclude copper mining; by 9 Wm. III, c. 26, it threw open the African trade to all traders who paid the specified charges for the upkeep of the forts belonging to the African Company; and in 1693 it resolved that it is the right of all Englishmen to trade to the East Indies or any part of the world unless prohibited by Act of Parliament. But there were occasions when Parliament was agreeable to the grant of privileges, and the Government increased the official value of Royal Charters by procuring in advance legislation sanctioning the issue of the Charter. In this way it secured the position of the Bank of England and the South Sea Company.

When a particular company, such as the East India Company or the Hudson's Bay Company, was given exclusive rights in certain areas, the monopoly was absolute against all comers, however constituted. But the grant of a banking monopoly to the Bank of England in 1709 and of an insurance monopoly to the Royal Exchange Assurance and the London Assurance in 1719 was only against joint stock rivals. The London bankers and the members of Lloyds were unaffected, and benefited by the curtailment of competition. After 1800, in keeping with

1 Economic Journal, Sept. 1925, p. 494, 'The First Half-Century of "The Accountant." For the position in banking see above, pp. 112 and 116.

the movement towards free trade, exclusive privileges were gradually withdrawn. In 1813 Parliament opened the trade to India. In 1822 it refused to renew the monopoly of the original London Dock Companies. In 1825 it repealed the Bubble Act of 1719 under which the two insurance companies enjoyed their monopoly in 1826 it legalised joint stock banks outside the London radius: in 1833 it permitted them within the radius and in the same year opened the China trade. Finally, in 1835 Parliament abolished the ancient privileges of municipal corporations, under which, for example, no one not a freeman of the City of London could keep a shop or use a trade there. In this mood it proceeded to the repeal of the corn laws and navigation laws; and it is not surprising that the upholders of these laws were denounced as monopolists rather than as protectionists. An uncontroversial measure crowned the series. In 1853 the civil service was thrown open to competition, and for the next ten years a prospering England believed so utterly in free competition that it was genuinely shocked by Ruskin's denunciation of the political economy to which Competition was the way, the truth, and the life.

3. It was possible to outlaw monopoly, but it was not possible to ensure that competition should prevail either in railways or in productive enterprise. The real threat to competition in the long run was the voluntary combination of former competitors. Business men co-operate for the advancement of trade interests by political action, advertisement or research for collective bargaining with labour for the regulation of output or price or both. Co-operation of the first type is constructive, of the second type defensive, of the third type restrictive. All these forms of joint action existed in the late 18th and early 19th centuries, but before the days of limited liability the fusion of large firms by amalgamation was financially impracticable.

The Yorkshire Worsted Committee was constituted to enforce the Act of 1777 (17 Geo. III, c. 56), the main purpose of which was to check embezzlement of materials by the workers. With funds derived from the drawback on soap used in the industry they conducted a campaign against wool smuggling and prosecuted the workers for illegal combination. After the abolition of the soap excise in 1853 they survived for a time as a voluntary body with private funds, but disbanded when the domestic system which gave birth to their main activity passed away. The Cutlers' Company of Sheffield, a Stuart incorporation, seemed destined to a peaceful end after the Acts of 1791 and 1814 had thrown open the trade. One function however remained, the supervision of trade marks; and an enlarged sphere was opened

to the Company when the Act of 1875 for compulsory registration of trade marks1 made it the official registration authority for Hallamshire. In 1785 the cotton, pottery and iron masters formed the General Chamber of Manufacturers of Great Britain. They brought pressure on Parliament for the rejection of Pitt's Irish Proposals and in support of the Treaty with France; but soon afterwards they disbanded when conflict of fiscal interest developed between the new industries to which the promoters belonged and the old industries which afterwards joined it. Fifty years later the enemies of the Anti-Corn Law League denounced the League as a manufacturers' association in pious disguise. During the 19th century local Chambers of Commerce at home and abroad have promoted the interests of their members; and the recently established Federation of British Industries has as its purpose the co-ordination of local effort and the promotion of common interests.

Masters have always combined to defeat the combination of their workers. But when combination was legalised in 1824-5 they did not at once establish formal associations, since to do so was to recognise the men's unions and thus to defeat their own purpose. However, when the Trade Unions were strong enough to impose collective bargains, the employers found it expedient to organise in return. In some industries, notably in hosiery, building, coal mining, and iron and steel, the organised representatives of employers and men set up voluntary boards of arbitration and conciliation. These Boards functioned successfully down to the Great War and formed the model for the Whitley Councils set up at its close.

Finally, there is combination for the control of output and prices. Between 1785 and 1792 the Cornish Metal Company and the Anglesey Copper Company divided the English market by agreement, but the agency had no control over supplies. The Cornish mines were small and in a bad way; and Williams of Anglesey, who was the leading spirit in the arrangement, found that he could not hold them to a limitation of output. In the first quarter of the 19th century there were frequent agreements among the Welsh and the Midland iron-masters for fixing the price of iron. This, however, broke down before the growth of the iron industry in the North; and during the half-century of expanding trade and technical pre-eminence from 1837 to 1887 the inducement to association was at its minimum. the beginning of the period the old-established Newcastle coal

138 & 39 Vict. c. 91, s. 9. This was a general Act, short title Trade Marks Registration Act of 1875. 31 Geo. III, c. 58 (1791) and 54 Geo. III, c. 119 (1814) were local.

trade-a ring which had controlled the sea-borne supply of coal to London since 1771-collapsed. The high prices exacted by it stimulated competition, and railways brought London within reach of supplies from other districts. Therefore by 1845 it had ceased to be effective.

Down to 1887 the general characteristics of the industrial scene were increasing production: an increase in the number and size of individual firms and in the use of fixed capital: keen competition between the manufacturers of rival products: and a high degree of informal automatic co-operation in the textile industries. However, before the end of the century, in spite of free trade, which was believed to guarantee Great Britain against trusts of the American type, amalgamation appeared in certain industries. Among the earliest was the Brunner Mond Salt Union formed in 1889 by an amalgamation of 64 firms. After 1900 the amalgamation movement was rapid and took two main forms. Some were horizontal amalgamations of firms formerly in competition. A frequent characteristic of these was that they enjoyed a conditional immunity from foreign competition, either because of the bulk of their product as in salt and cement, or because of international agreement to abstain from competition, as in tobacco, or because of technical superiority, as in sewing cotton. The second form was the vertical amalgamation of firms operating different stages of the productive process, and these were especially characteristic of the iron and steel trades. But such vertical amalgamation was only one of two routes to the integration of business. For the same result was achieved when a single firm without amalgamation extended backwards to the control of its raw materials and forwards to final manufacture. Finally, between businesses thus integrated there has been a certain amount of combination for the regulation of prices and the mitigation of dumping by foreign countries. The result in British industry as a whole has been (a) to valorise the economies of large-scale production, (b) to shift the plane of competition from many firms of small size to a few firms of giant size, (c) in a few special instances to eliminate domestic competition. Thus Great Britain has fallen into line with the general trend of industrial countries with a protective tariff, such as Germany and the U.S.A.

Section 6. The State and Laissez-faire

The individualism of the 18th and 19th centuries was at once a state of mind and an expression of fact. The fact which it expressed was that nearly the whole of the economic services of

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the country were supplied by individuals pursuing, alone or in association, a profit-yielding occupation. By confining itself to a few simple tasks the State made itself efficient. In public finance it reduced economy to a science and built up a civil service free of corruption. It left foreign trade altogether to its subjects. It supplied the country with a sound currency, but did not embark on banking outside the reception of savings through the Post Office and it surrounded the banks of the country with a minimum of legal restrictions. The one effort of the State as a carrier, the Post Office Steam Packets, was a financial failure. Improvements in the postal services from Ralph Allen to Rowland Hill emanated from private individuals and were introduced under opposition from the regular postal officials. The Government in the 1840's did not seriously entertain the nationalisation of railways. Even Rowland Hill, the lonely supporter of State purchase on the Commission of 1867, considered that the State after buying the railways should lease them to private companies. He proposed competition for the service in place of competition between services. The nationalisation of industry suggested to his generation nothing more hopeful than State monopoly, an evil memory. However, towards the close of the century a revulsion set in. It was due in part to a general awakening to the waste of competition and in part to a class protest from the side of labour against the profit-making basis on which the existing order was based. State ownership, it was urged, would be not only more efficient but more just, because it would retain for society the unearned surplus hitherto appropriated by the capitalist entrepreneur. The practical problem was to make a beginning. Here the working men's co-operative stores supplied the model. For just as the store replaced profit by a consumer's dividend, so also could the municipality by service at cost. Certain services such as gas, water, lighting and tramways are in their nature monopolistic. The municipality, if it does not operate, must at least control. The extension of municipal enterprise, being favoured by the new school of Fabian Socialism, received the name of municipal socialism. In this sense Tory Ontario with its provincially owned hydro-electric system is in the Socialist van. From 1890 the field of municipal activity was successfully enlarged; and the success was claimed as a precedent for the nationalisation of railways and coal mines. In 1868 the Post Office had taken over the telegraphs, and in 1905 it arranged to take over the telephones also. But neither step was inspired by socialism. The public believed that unitary management was essential to efficient service in these fields and that the Post Office, which already transmitted letters, was the

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