Portrait of a Monopoly: The British Match Industry (1953)

From the July 1953 issue of the Socialist Standard

“The arrangements we have described above form a complete and integrated monopoly . . . and the system as a whole operates, and is likely to operate, against the public interest as respects the supply both of matches and of match-making machinery.”

In these forthright terms the Monopolies Commission sums up its report on the British match industry, the sixth and latest of its investigations into restrictive practices in the United Kingdom.

The information now made public by the Commission throws revealing light on the way monopolies develop and operate, and on how they are maintained. It shows also what profitable ventures they can be for those capitalists able to form them and keep them going successfully. Drawing on the Commission's report, and using it to illustrate the practices common to all monopolies, let us examine the monopoly that has grown up inside the British match industry.

The Foundations of Monopoly

The first objective of any company seeking to carve out a monopoly must be to obtain control over the production and distribution of the particular commodity it is interested in. It must make itself, for all practical purposes, the only firm in the industry. In the British match industry, one company has succeeded in doing this.

This company is the British Match Corporation, otherwise known as B.M.C. Formed in 1927 as a holding company from the amalgamation of Bryant and May (and its subsidiaries) with Masters. Ltd., it is today responsible for almost the whole of the British home output of matches—about two-thirds of total consumption.

Linked with B.M.C. is another monopoly—the Swedish Match Company. Older readers may remember it in connection with the activities of Ivar Kreuger, the Swedish millionaire—speculator. It is this combine, with ramifications throughout the world, that provides the. remainder of the matches required in the U.K. These imports, it should be noted, are in turn controlled and distributed in this country by B.M.C. Taking home production and imports together, it is therefore obvious that B.M.C. is in almost complete control of the British market; for the mathematically-minded, the exact proportion is 92 per cent. These figures show clearly that the essential foundation of a monopoly—a stranglehold on output and distribution—has been most successfully obtained by B.M.C.

Also to be noted is the fact that Swedish Match, with 30 per cent. of the Ordinary shares in is actually its largest single shareholder. With this voting power behind it, it can of course wield considerable influence should the need ever arise.

Preserving a Monopoly

It is difficult enough to succeed in establishing a monopoly: it is even more difficult to maintain it and keep it thriving.

First and foremost, there must always be a careful watch for possible rivals. These must be rooted out quickly and dealt with ruthlessly. The record shows B.M.C. and Swedish Match to have been adept at this and it is most interesting to see how both partners have played their part in dealing with the threats of competition that have arisen from time to time.

On the home front, B.M.C. has made use of two methods, both very simple and both very effective. The first has been to undersell its competitors by offering cheaper brands of imported matches at reduced prices in selected areas whilst keeping the general level of its prices unchanged. In this way it has succeeded in keeping down competition at very little cost to itself. The second and perhaps even better method has been to charge its competitors high prices for essential raw materials, of which it again happens to be the sole controller. On this particular point the Commission found that B.M.C. was charging its competitors 77 per cent. more for certain chemicals than its own subsidiaries.

The part played by Swedish Match has been just as effective, by virtue of the fact that in its turn it has a monopoly over the machinery used in match-making. This has been more than enough to keep potential large-scale competition in check, as the following will show.

In its report the Commission mentions that two attempts have been made by other firms to start manufacturing matches on a large scale. The first of these was the Co-operative Wholesale Society, which in 1932 thought of setting up its own factory. In the subsequent negotiations in which Bryant and May became involved, the Society was actually offered some shares and Debenture stock in B.M.C. This offer was not taken up, and in 1936 the Society came to a definite decision to begin the manufacture of matches on its own account. Its efforts in this direction were completely unsuccessful as it found itself unable to obtain the necessary machinery. In 1938 it approached Bryant and May for permission to use certain machinery the rights in which, it understood, were held by that firm. The reply, which can hardly have been unexpected, was: “we hardly think you can expect us to assist you to obtain machinery which is destined to replace some, at least, of the goods we have hitherto supplied to the Societies.” Instead they proposed a deal between the Society and one of their subsidiaries, whereby profits would be divided between the two. This proposal was rejected by the Society, and it made a further attempt to get the necessary machinery. It was again unsuccessful.

Yet another concern tried for five years prior to 1934 to start manufacture on a commercial scale, again without success. In this year a most remarkable letter was sent to B.M.C. from the President of the Diamond Match Company of America (he was also a director of B.M.C. and of Bryant and May) reporting that he had arranged for some “friends” to employ an American technical expert who happened to be already under contract to this concern. The agreement reached with this expert included an understanding that he would “tactfully and earnestly work to discourage” the concern. His “consideration” for this agreement was $600 per month, to which Diamond had agreed to contribute one third, and the letter asked B.M.C. to make a contribution. This letter is so revealing of what goes on behind the scenes where monopolies are concerned that it is worth reproducing in full:—

"I have arranged to have friends employ Mr. . . . . on some experimental work that has nothing: whatever to do with the British Match Industry and will not affect to the slightest degree any of the operations abroad in which you are interested. My friends have had to reach a definite understanding and make a confidential agreement with [Mr. . . .]. which under no condition must be given publicity either here or in Britain. They have obligated themselves to pay him S600.00 per month. It is understood that [Mr.  . . .] may be called from the United States to work for . . . Ltd. [an English company]), and if he is called to go to England to do work for these people with whom he has a prior contract, he will not be paid by my friends. It has also been agreed, however, that he will tactfully and earnestly work to discourage . . . Ltd., that he will do nothing to get out of his contract with [. . . Ltd.] which would encourage them to hire some other expert or have machines made for them elsewhere. If he succeeds in discouraging [. . . Ltd.] and in getting out of his obligation to these people, then he will work exclusively for my friends for a period of three years and during this period of time will not do any outside work for any other interest whatsoever. [Mr.  . . .] has told my friends that he personally is tired of the English company, who have been continuously deceiving him, putting him off, and have been unable to date to get responsible people on your side to go forward with matters as promised and outlined. [Mr.  . . .] thinks that in the near future that he will be able to drop all connections with [. . . Ltd.] and that [ . . . Ltd.] will cease to exist as a living match producing possibility.

“In confidence, permit me to say that of this S600.00 my Company will contribute one-third of this monthly amount just so long as [Mr. . . . ] does no work whatsoever for [ . . . Ltd.] or any company interested in match making in Britain or Canada. Do you care to make any contribution in this matter?"—Report, page 120.

The result of this appeal was that B.M.C. also agreed to make a contribution of one-third. It continued making regular monthly payments until May, 1943, by which time, presumably, no further trouble was to be expected from the concern in question.

The Rewards of Monopoly

Finally we come to consider the rewards of monopoly. They are indeed substantial and worth all the effort put in to obtain them. On the manufacturing side, for example, Bryant and May's profit before the war averaged 35 per cent. annually, and that of its main subsidiary (Moreland) 45 per cent. The average profit of Masters was about 26 per cent. In 1950, according to the Commission's calculations, Bryant and May's profit was 16 per cent., Moreland's 34 per cent., and Masters' 30 per cent., the lower figures reflecting the operation of Government price control. On the import side, where distribution only is involved, pre-war profits averaged 10 per cent. dropping to 4½ per cent, in 1950.

The Commission’s strictures on B.M.C's costs and profits were most severe:

"The profit on sales of all three B.M.C. manufactures whose costs were examined was very high before the introduction of statutory price control, and the profit of the two lower cost manufacturers was still very high, having regard to the relative slight trading risk. B.M.C. has told us that it is its policy to make as much profit as it can, and that in its view competition insures that the prices charged are fair. Since it is clear that B.M.C. has taken all possible steps to eliminate competition, with marked success, and there is, in our opinion, virtually no competition in this trade, this safeguard is illusory, and it is not surprising that profits have been high.

“We conclude that there is scope for the reduction of both costs and profits of B.M.C. and that it is unlikely that either would have remained as high as they have if there had been any effective competition.”

The Commission’s Remedy

The remedy put forward by the Commission is, not unexpectedly, a dose of State intervention. Some of its members, however, disagree on the strength of the dose to be administered. Three of them, who state their views in a minority report, are all for a more “drastic” remedy than that prescribed by the other members of the Commission. This, they suggest, should take the form of a Government buying agency, armed with exclusive powers to buy all matches, whether home-produced or imported. In effect, they seek to oppose a monopoly seller with a monopoly buyer.

The majority of the Commission, however, are not impressed by this “drastic remedy.” In their opinion, it would lead to still greater rigidity in the trade and might not result in cheaper matches anyway. This latter Observation is certainly borne out by the results of State interference so far, and should be particularly noted by Labourites who so airily assume that State-control reduces prices. The majority’s preference is for a more thorough system of price-control on the part of the Government. This, they themselves admit, is only a partial remedy, and they agree that it would leave the present market-sharing arrangements between B.M.C. and Swedish match untouched.

Nobody can be very impressed with either of these remedies, not even the most ardent supporter of capitalism judging all issues by the direct and immediate effect they have on his pocket.

The Real Remedy

The Commission’s report is now with the Government, and it will be interesting to see what the Tory defenders of private enterprise and free competition finally decide to do with it. As for the Labour Party, hard up for policy and feeling rather out of things, they will probably do their best to blow it up to be something of much greater importance than it actually is.

For our part, we would make just one point. Monopoly is nothing new to capitalism; indeed it is inseparable from it. It is the logical outcome of the drive for profit, and experience has shown all over the capitalist world that as fast as one monopoly has been suppressed, another springs up elsewhere. The history of “trust-busting” in the United States is a perfect example of this. The remedy of bringing in the State does not put an end to monopoly; all it does is to replace private monopoly by the monopoly of the State. Whatever the advantages a State monopoly may have for the capitalist class, it is nothing for the working-class to get excited about. They should have had enough experience of the workings of State control by now to realise this.

Monopolies will disappear only when capitalism disappears. It is not monopoly, but capitalism, that is the issue. Socialism, the real remedy, will do away with both. When, as seems likely before long, the Labour and Conservative Parties create yet another storm in a teacup over what is to be done with the British match industry, workers should remember this.

Stan Hampson

Editorial: Capitalism and Monopoly. Davids who did not slay Goliath (1942)

Editorial from the February 1942 issue of the Socialist Standard

What happened after the last war is not conclusive evidence about what will happen now, but it is a very important pointer. Take, for example, the popular demand for the destruction or control of trusts and monopolies. In 1919 the Committee on Trusts appointed by the Government found “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 restriction of competition and the control of prices.”

The Committee placed on record that combinations operating in restraint of trade “are unlawful if shown to be against public policy.” They recommended the setting up of permanent machinery to investigate the operation of monopolies, and to deal effectively and promptly with abuses. In particular they recommended that the Board of Trade should have the duty of recommending “State action for the remedying of any grievances.”

Some members of the Committee, including Mr. Ernest Bevin and Sidney Webb, added some minority recommendations. While saying that they did not want to prevent the formation of combinations or associations, both because experience showed that interference is ineffective and because the formation of such combinations is desirable in order to secure greater efficiency, they urged the fixing of maximum prices to prevent excessive profits, and wanted the Government to hand over dangerous monopolies to the Co-operative Movement, or to Local Authorities or place them under State control, but not necessarily under State management.

The whole Committee agreed that the public were mistrustful of monopolies and this mistrust was realised by the Liberal and Labour Parties, both of which wanted action against them. The Labour Party, for example, had in its election manifestos a few years alter the last war “The prevention of profiteering and exploitation by rings, trusts and monopolies, not merely in building materials, but also in foodstuffs and household necessities.”

There are still to be heard voices in the wilderness demanding the control or abolition of trusts and combines, but all the speeches and promises and resolutions of 20 years ago had no important effect against the trend of capitalist industry. Whereas once the Liberals were demanding the retention of private, independent capitalist enterprise, the News-Chronicle (January 26th, 1942) can now say that “laissez faire” is as extinct as the dodo,” and a special correspondent of the Times recently wrote the following: —

“The typical British industry to-day is privately owned but centrally controlled. It is not often realised to what an extent combination, in its various forms such as price-fixing arrangements. market-sharing agreements, rings, cartels, trusts, pools, combines and plain monopolies has spread over British industry. The trade in which prices are determined by competition and in which the newcomer can enter on terms of approximate equality is now a distinct rarity. It would be an easier task, to show how in a wide range of industries, prices in the British market have been kept above the world level. There have been several public demonstrations of the art of excluding the newcomers and of hamstringing the firm that is ill-advised enough to try to increase its technical efficiency and thereby its competitive power. The great bulk ot British industry is divided into industrial fiefs fully as much as if every industry had been nationalised by the State.— (“Times,” November 29th, 1941).

News-Chronicle (January 26th, 1942) may still dream of “free enterprise controlled by the operation of the law,” and of control “designed to ensure true freedom, to exclude privilege or monopoly,” but gone are the days when a Judge would rule that a combine is against public policy as happened in 1927 (only to be over-ruled by a higher Court). In that case, which concerned the formation of a combine in the British Rope Trade, a Judge said: —

“You will never convince me that any combination of manufacturers puts down competition for the benefit of the public. Such combinations are against public policy.”

The issue has long been decided by what the Times, in a leader (December 6th, 1941) calls “the natural trend of modern industry towards monopoly.”

The present war, like the last one, will, of course, give a great impetus to the trend. The concentration of industries and trading concerns that has gone on during the war will not wholly disappear. This point has been dealt with by the “1941 Committee” of which Mr. J. B. Priestley is Chairman, in their “Planning and Freedom.” They say: —

“A scheme is improvised which drives out the small men. secures the position of the big monopolists and temporarily at least of the large trade unions. … In this case the jam which is intended to make the powder palatable is a fantastic promise about the restoration of the small firms after the war. It will be impossible to restore them. The war in fact has only hastened the tendency towards this type of monopolistic organisation. . . .”

The “1941 Committee” may perhaps overstate the case, but they are unquestionably right about the general trend. Their gloomy conclusion is that there is danger of drifting towards Totalitarianism and a condition in which it becomes “more and more difficult to preserve the democratic safeguards.”

Beyond urging every effort to safeguard democracy they have no practical proposals to offer; in which respect they are like all the other non-Socialist planners of the new world.

It is a problem to which there is no solution short of Socialism here and in the world as a whole. The Manchester Guardian’s City Editor may be right when he says (January 20th, 19-12) that President Roosevelt has not “given up his efforts to break down industrial monopolies,” but Mr. Bevin in 1919 was wiser when he recognised that experience in U.S.A. and other countries had already shown the uselessness of the attempt. Even if it were possible to put back capitalist development the result would be no more satisfactory than it was before monopolies grew up. Likewise, enough experience of alternative schemes of control or reorganisation has been seen to demonstrate that as far as the workers are concerned “the more capitalism changes the more it is the same thing.” Administration by the State in the form of nationalised railways, postal and telephone services did not make capitalism any more satisfactory, and the subsequent Labour Party programme of public utility corporations such as the London Passenger Transport Board has already had a long enough try-out to produce a situation in which ihe corporations have few convinced admirers or defenders outside their own ranks.

There will be no essential change until all the means of production and distribution are brought under common ownership and democratic control with production solely for use and the complete elimination of rent, interest and profit.

Editorial: Nationalisation or Trust Busting? (1952)

Editorial from the May 1952 issue of the Socialist Standard

While capitalism in Britain, Continental countries and the British Dominions has gone in for a certain amount of nationalisation and Russia has carried it to the point where all important industry and about half of agriculture is run under the State, capitalism in America has followed a different policy. In Britain Liberal and Tory governments in the 19th century nationalised telegraphs and telephones when the capitalists as a whole felt their interests adversely affected by those two services being in the hands of private monopolies. For the same reason Gladstone in 1844 was responsible for the first Act giving die government power to nationalise the railways, a power that was not used because the government held that the mere threat of it served to keep the railway directors in check.

In the United States nationalisation has so far made little headway as the capitalists have preferred to use Anti-Trust laws as a means of curbing too-powerful monopolies.

Because of the pre-eminence of the United States in world production and because private capitalism still holds the field there, more than half of world production, transport, etc., is still in the hands of private concerns. This applies to basic industries such as coal, steel, food, rubber, oil, textiles, motor cars, railways, shipping, road transport, telephones and telegraphs, banking, insurance and manufacturing generally.

In the past few years nationalisation has had a certain set-back in a number of countries and British capitalism, following the American example is now experimenting with the Monopolies Commission as a means of checking monopoly; both the Conservatives and the Labour Party being committed to developing this line of attack.

But this does not mean that the Anti-Trust legislation in America has fulfilled the expectations of those who backed it. Loopholes in the law have enabled the big monopolistic group such as the American Telephone and Telegraph company with its concentration of telephone services and the manufacture of equipment, to go on expanding. When an amending bill to the Gayton (Anti-Trust) Act of 1914 was being debated on 15th August, 1949, Congressman Celler, New York, stated that between 1940 and 1947 more than 2,500 formerly independent concerns had disappeared as a result of mergers and acquisitions, and that “two hundred and fifty concerns now control two-thirds of the industrial facilities of the country that were controlled by 15,000 companies before the war.” He added, “The anti-trust laws are a complete bust unless we pass this bill.” (“Labor and the Nation” New York, September-October, 1949.)

Most of the demand for action against the Trusts and for amendments to strengthen the laws comes of course from the small traders and businessmen.

In addition to the Anti-Trust laws the charges that may be made in America by such services as the telephones and telegraphs are subject to regulations issued by the State Utility Commissions and the Federal Communications Commission. If complaint is made that charges are too high these bodies are empowered to investigate whether the companies are making an unduly high profit. The companies may and, of course, do appeal to the Courts against Commission rulings. In 1934 the American Telephone and Telegraph company reported that through adverse court decisions one of its associated telephone companies had the prospect of refunding 20 million dollars to subscribers.

One of the leading anti-trust politicians, Senator Benton, spoke on the Trusts to the Anglo-American Press Association in Paris in November last He maintained that in Britain the electors have had to choose between nationalisation as advocated by the Labour Party and the Conservative policy of leaving industry to private monopoly, and that if American electors had the same choice they “would line up for Government ownership" and that by an overwhelming majority. (Manchester Guardian, 8.11.51.)

He also made the curious suggestion that if Marx were alive today “he would certainly have approved" of American capitalism though not of the “cartel-ridden capitalism of Europe.”

But later on the same Senator Benton charged that the British Imperial Chemical Industries group “has a deal with the DuPont firm not to go into the United States.” (Daily Mail, 22.11.51). As this must be a violation of the American Anti-Trust laws it suggests that the laws are by no means as effective as the Senator believes.

In the meantime the alternative capitalist method of dealing with monopolies by nationalising them is under fire in Great Britain where the Conservative Government, having disowned responsibility for the rise in railway, etc., fares, now professes to discover that under the Act which nationalised the railways the government has no power in the matter of fares except to refer them to the Consultative Committee which can merely make recommendations. A group of Conservative M.P.'s are now therefore proposing an amendment to the Act to enable the government “to put the Transport Commission under more effective Parliamentary control.”

It need only be added that whether nationalisation is carried very far, as in Russia, or much less far as in Britain, or whether the government relies on Anti-Trust laws as in America the state of the mass of the population continues to be that of poverty existing alongside the great wealth and large incomes of the privileged few.

Blue chip (1989)

Book Review from the January 1989 issue of the Socialist Standard

Big Blue by Richard Thomas DeLamarter (Pan £4.99.)

Big Blue is IBM, the American computer company which is the world's most powerful and profitable corporation. For thirteen years it was the subject of an anti-trust case brought by the US government, which was eventually withdrawn by one of Reagan's puppets in 1982. DeLamarter spent eight years working as a government economist on the case, and this book is his interpretation of the evidence provided, based largely on material from IBM's internal files.

Different readers will no doubt draw different conclusions from the book: some may even see it as a recipe for how to run a successful company. What strikes a socialist reader is the amount of effort devoted by IBM simply to defeating competitors or would-be competitors, and their methods of maintaining and extending their power.

Contrary to the popular image (which the company has worked very hard to build), IBM's products are not particularly reliable or technically advanced. Prior to the development of computers, IBM had a big share of the punch card accounting machine market, which gave them a larger sales and repair network than any other rival. Even though Remington had the computer market to itself for a couple of years, it was IBM that captured the lion's share of sales by installing the new machines alongside the existing ones (on which they were at first partially dependent). The first IBM computers were deliberately priced to lose money and so undersell their competitors, who lacked the financial resources to reduce their own prices.

Having beaten off most of their rivals, IBM were able to keep their, dominant market share by exploiting software lock-in and price discrimination. Software lock-in refers to the fact that once programmes have been written for a particular type of computer system, and staff trained to operate it, a company will find it prohibitively expensive to switch to another system, and so will tend to stay with its original choice and simply add on updates, however inefficient they are. Price discrimination meant setting prices relatively low where there was competition (for example, for small-scale systems which would be a customer's typical initial purchase) but relatively high where there was no effective competition (extra peripherals or computer memory). IBM was quite prepared to be flexible in this respect, drastically cutting the price of memory when independent producers began to challenge its position, and to be threatening, dropping unsubtle hints about likely maintenance problems to customers who considered buying non-IBM equipment to add to an IBM system. The company's executives were also willing to use their influence with banks and finance companies to starve competitors of funds.

In the early sixties, General Electric began to win large orders for a computer specifically designed for time sharing (whereby different operations are performed concurrently). To boost its own sales, IBM announced a new machine, model 67, intended for time sharing, and at a low price. Model 67 never attained its proposed technical performance, but it did achieve the more important (for IBM) goal of killing off the competition. General Electric saw its sales drop off, and in 1970 ceased to make mainframe computers. The model 90 was another IBM machine that was designed and launched not as a technological advance, but purely to damage a rival company, in this case Control Data Corporation

In spite of the sometimes tedious amount of detail, DeLamarter's book provides an interesting look behind the scenes of capitalist business practice. It shows very clearly that profitability and "success" in capitalist terms have nothing at all to do with meeting people's needs.

Paul Bennett

Who's Against Monopoly? (1964)

From the December 1964 issue of the Socialist Standard

If the pollsters organised a canvass of the electorate on the question “are you in favour of monopoly”? they would get an almost unanimous “no.” But it would mean no more than would a poll asking “are you in favour of right against wrong” or some such loaded question. Monopoly is defined to mean, an “exclusive trading right in a certain commodity or class of commerce or business.” All the political parties declare themselves to be against it. In the recent General Election the outgoing Conservative government claimed merit for what it had done against monopoly and what it was prepared to do “to stimulate the forces of competition which make for efficiency and bring down prices.” The Labour Party didn't think much of this and promised to tackle the problem “at its roots” and to get at “monopoly and semi-monopoly price fixing.” The Liberals, too, are on the side of competition against monopoly, or so they say.

Here we have our first mystery. If three big parties are all against monopoly and have been so since the beginning of the century how is it that there is any monopoly to be tackled? The explanation is to be found in the nature of the social system in which we live. All manufacturers, traders bankers, shipping lines, aircraft companies and so on are in business to make a profit by selling something. The most distressful situation for any one of these organisations is to find that it cannot sell its product because a competitor is in the market with a cheaper one. Faced with declining sales and the threat of bankruptcy the companies that are being driven out will consider banding together for self-protection against the successful rival. He for his part will be expanding rapidly and out of the ensuing struggle there will emerge a smaller number of larger firms, possibly a very small number on the way to establishing a near monopoly. In the years since the war mergers and take-overs have eliminated thousands of manufacturing and retailing businesses. The latest wave has washed away a lot of grocery wholesalers. In an article “Wholesalers Combine or go under” the Financial Times (13 November 1964) states that in the last decade the number of wholesalers in the grocery trade “has tumbled from some 1,200 to just over 700 today.” This has happened as a direct result of competition, first from multiple and chain stores which have their own wholesaling arrangements and were taking business away from the independent shopkeepers (and thus from the grocery wholesalers) and secondly from the increasing practise of manufacturers selling direct to retailers and by-passing the grocery wholesaler altogether.

Concentration of the control of wholesaling and retailing will go further but it has a long way to go to reach the condition of such industries as chemicals, man-made fibres and steel.

The development towards monopoly in any field always provokes complaint that as competition disappears prices will be pushed up, and the demand that the government should do something about it This is not just a problem of this century. For hundreds of years the ceaseless efforts have been going on of sellers to control the supply, and of the authorities to prevent prices being pushed up as a result. It was however accompanied by the formation of monopolies by the government itself as a means of raising revenue. At first this took the form of the government, in return for payment, allowing individuals to have the monopoly of supplying some article or other; later the government operated some services itself, likewise as a means of raising revenue, as in the Post Office. In our day the government raises vast sums through its control of the import production and distribution of alcohol and tobacco; first creating the restrictions behind which monopoly prices can be charged, then skimming off as customs and excise duties the bulk of the monopoly price paid by the consumer.

When private monopolies or semi-monopolies are operating it depends on the kind of product and the extent to which it is in common use, whether the outcry against the monopolies will produce action by the government, to break it up or otherwise nullify it. About the middle of the last century railways were the only quick means of Transporting raw materials and manufactures from manufacturing areas to markets and ports. They were increasingly able to charge monopoly prices. Against this the manufacturers and trades generally had a common interest—it was a situation which often develops, the capitalists generally being held to ransom by a particular section of capitalists. The government, under the initiative of Gladstone, at that time a Tory, got Parliament to pass an Act giving the government power to nationalise the railways. It was a threat to the Railway managements, either curb your rapacity or be taken over.

Similar causes explain the early nationalisation of Telegraphs and Telephones, the setting up of the various Port authorities, and later the nationalisation of electricity. (In a rather different category was coal nationalised and the taking over of the steel industry. Here it was rather a question of large-scale and integrated organisation being needed for modernisation, to save industries falling behind technically and unable to solve their problems themselves in reasonable time.)

The attitude of the general body of capitalists towards a private monopoly operating a service such as transport or telephones is direct and immediate. Likewise if the product is some material such as steel or chemicals entering largely into manufacture and building. Having to pay monopoly prices raises general costs of production and reduces the profits of the capitalists who have to buy from the monopolists.

The effect of monopoly is sometimes indirect but no less harmful to the general body of capitalists: that is if the monopoly is in some product such as food which enters largely into the workers’ cost of living. Higher prices of these articles induce workers to press for higher wages; to the detriment of profits if they succeed, to the detriment of their own standard of living if circumstances are against them.

Once it is realised what gives rise to monoplies and the way they help those who own them and injure others, it will be readily understood that there cannot under capitalism be a consistent and logical attitude towards monopoly. All that can be said of the great majority of people is that each group is against other people’s monopolies, and the sectional groups change their attitudes with changing circumstances. Karl Marx in a letter written in 1852 criticised a writer who had declared that the aristocracy are on the side of monopoly and the capitalists against it. Marx pointed out that in the eighteenth century the English aristocracy had been all for the freedom of trade, but in the nineteenth century they were defenders of the corn laws which filled their pockets, and opponents of the manufacturers who had become free traders and believers in the benefits of “competition.” The manufacturers wanted the abolition of the protective duties on imported corn because they saw in cheap food the certainty of low wages for their workers and consequently higher profits for themselves.

At the present time the manufacturers who buy steel are somewhat divided about re-nationalising the steel companies. On the one hand they don’t like being dependent on a private semi-monopoly and recognise that with reorganisation and concentration the costs of producing steel might be lowered, but they are not confident, in the light of experience, that nationalisation will serve the purpose.

Just for the record we can make it clear that the SPGB, alone among the political parties in this country, really is against monopoly. But for us it is not a problem of private profit-making or nationalisation, high prices or low prices, high wages or low wages because socialism will have no place for profit, or prices or wages—simply production solely for use.

Edgar Hardcastle