THE BEAVER HAT TRADE

41

organisation. When the king gave up the scheme, a capitalist called Halstead is said to have undertaken all his liabilities towards the pin-makers on the one side and Mr. Lydsey on the other. Lydsey, we are told, got back from the profits of the new enterprise part of the capital, according to his own account £7000, which he had put into the pin monopoly. The king failed in his attempt to play the part of financier, because he was himself in want of money. His sole aim was to secure for himself a share in the profits of what seemed a well-conceived undertaking. The outbreak of the Civil War, however, prevented the realisation of the complete scheme.1

The

This perhaps is the best illustration of the relations between craft corporations and capitalist monopolists. But similar cases occurred in various other trades, for instance in the manufacture of finished cloth. The monopoly organised in that trade by the well-known Alderman Cockayne has been recently described in detail by Mr. Price.2 Mr. Unwin, whom we have to thank for much light on these events, has shown that a similar development took place in the production of beaver hats. use of beaver in opposition to felt attracted the attention of several capitalists to the fact that a separate industry distinct from that of felt-makers could be made in corporate form out of it and organised as a monopoly. This scheme was realised in 1638, when the Company of Beaver Makers received the sole right to manufacture beaver hats. As the monopoly grew, it was soon seen that the poorer members of the company, who had formerly made either felt or beaver hats, had fallen on evil days, now that they might only produce the latter. As in other cases we have mentioned, they had not sufficient capital to supply themselves with the large amount of costly raw material that was necessary, if they were to limit themselves exclusively to the manufacture of beaver hats. Accord1 Unwin, p. 166-168. For the agreement between Charles I., Lydsey, and Halstead, ibid. pp. 236-240.

2 Price, 'Patents of Monopoly,' pp. 102-6.

42

GENERAL CONCLUSIONS

ingly complaints soon arose that the eight capitalists who had been the leading spirits in the matter had, by their economic preponderance, acquired the monopoly of beaver hat making.1

Many inferences might be made from the general bearing of the facts so far considered. But the outstanding and fundamental conclusion is that industrial capitalism in England was cradled in monopoly, not in competition. Early industrial capitalism tended to expand on national lines and similarly its monopolies differ from the monopolist organisation of the craft gilds in not being limited to special areas. There are many reasons for this. Many merely local seats of production owing to natural or economic causes or on account of transport facilities supplied distant parts of the country, so that a monopoly in such a district immediately became a national monopoly, as in the instance of the coal industry of the north, the Cornish tin mines, or such trades as for some reason or other were concentrated in London. Secondly, the expansion of a monopoly over the whole country arose where there was a new industry whose founder had obtained by law, or could acquire by lawful means, the privilege of sole manufacture throughout the whole country, as in the glass monopoly, the salt monopoly, or the wire industry. Finally, the 'nationalisation' of monopoly might result from the affiliation of several local monopolies, especially of craft gilds, or from the control acquired by a particular corporation over other gilds. It was by this method that the London Soap and Pin Makers extended their monopolies over production and markets in all the most important parts of the country.

The essential foundation of all these early national monopolies was the grant of privileges by law to particular persons or corporations and the legal suppression of the unwelcome competition of other producers. Where these means were not sufficient, private agreements could of course also be made. As we saw, the Coal Gild of New

1 Unwin, pp. 145-6.

GENERAL CONCLUSIONS

43

castle created a system of division of production to restrict competition within the privileged corporation itself. Other forms of association must also be mentioned. In some gilds, as with the Beaver Hat Makers, economic advantage enabled the capitalist masters to gain for themselves a monopoly over the heads of their poorer brethren. In the pin trade, on the contrary, the gild monopoly was carried on by an agreement between the corporation and a courtier till it fell into the hands of a single capitalist. Another kind of association attempted to give the copper wire monopoly the entire manufacture of pins from wire. Private agreements, therefore, played a not inconsiderable part in the formation of monopolies, though secondary to the foundation on privilege. Lastly, foreign trade policy served to increase monopolies. Wherever foreign competition appeared, restrictions of import for the protection of the monopolists, as we have seen, commenced. The importation of such goods as competed with the products of monopolies was hindered by customs duties and prohibitions, and special attempts were made to restrict the importation of raw material, so as to make competition by any outsiders who might in spite of the prohibitions of the law have arisen, as difficult as possible; witness the prohibition of the import of potash in the case of the soap trade.

Monopoly arose, therefore, in the early days of English industrial capitalism on the support of three chief buttresses, privileges from the Crown, suppression of internal competition by law, and a protective trade policy; it developed further by the aid of private agreements between persons seeking to profit by those privileges, and it was distinguished from the monopolies of the craft gild by the national sphere of its activities. To give an account of the various forms of this organisation was our first duty. The question of the importance to be attributed to these monopolies from the point of view of the industrial and economic development of England during this period leads to the examination of their various effects.

CHAPTER III

EFFECTS OF MONOPOLIES: THEIR FALL

THE monopolies of the seventeenth century have been generally condemned by almost all the economic writers who from the time of David Hume to the present day have dealt with them.1 Mr. Unwin has recently added to the number of such verdicts, though Mr. Hyde Price endeavours to find some favourable results at least in the indirect effects of monopolies. Possibly it is the general condemnation which these monopolies have met with that has made certain writers find something to praise in the system itself, and to consider only its application and its accidental concomitants disastrous. For instance, the author who describes them in 'Social England' says: 3 "The system of monopolies cannot be regarded simply as a means of raising money without parliamentary sanction, nor merely as a means of enriching favourites, nor as wholly based upon mistaken ideas upon the subject of what we now call Political Economy. It was all these and something more-a provision against real as well as fancied dangers, and in some cases a praiseworthy encouragement of business enterprise and

·

1Cf. especially Hume, 'History of England,' vol. v. p. 458; also Ch. Fisk Beach, Monopolies and Industrial Trusts,' St. Louis 1898; Hirst, 'Monopolies and Trusts'; Palgrave's 'Dictionary,' vol. ii. p. 802; F. C. Montagu, 'History of England,' London 1907, vol. vii.

2 Unwin, 'Industrial Organisation,' passim; Price, p. 129 and ff. 'Social England,' vol. iv., London 1903, p. 192.

CONFLICTING VIEWS OF MONOPOLIES

45

invention. But the British public did not make the needful distinctions."

Professor Cunningham also, though by no means, as Mr. Price seems to believe, a defender of the monopolies, adds to his description of them some remarks on the good intentions and economic ideals of the Stuarts, in which he represents the monopolist system of industry to some extent as a well-meant but unsuccessful experiment.1 This point of view seems to me, however, a dangerous one. It is extremely difficult, if not impossible, to decide what in fact the motives of the Crown in granting patents were. It is inconceivable that hidden motives like the enrichment of the king and his favourites were not as weighty as the openly proclaimed aims of engrafting new industries, cheapening production, and improving quality. Which of these motives was the most present in the grant of monopolies, how far the personal wishes of the king where they conflicted with economic reasons gained the victory, and which of the alleged objects were from the beginning only pretexts, it is quite impossible to say. Secondly, even if it could be established that the grant of monopolies was "well meant' on the part of the ruler, and represented an attempt at a national organisation on broad lines, that fact would not help us to an objective verdict on its practical working. And the elucidation of these practical results is the more necessary, because they almost always turned out differently to what the granters of the monopolies expected, or professed to expect.

It was this discrepancy between actual and expected results which was the constant excuse of the Crown when the wave of popular anti-monopoly movements rose high. Just as to-day many persons regard Cartels and Trusts

1 Cunningham, pp. 285-6. Later, especially on pp. 287-8 and 307-9 there are a number of remarks in condemnation of the monopolies, so that the author can hardly be said, as Price thinks, to sympathise with them, although he has tried to say something (p. 248) in favour of the Crown's motives in granting monopolies.