Monopoly and Competition in the United Kingdom

Numerous examples of the restrictive practices that are familiar today can be found in British industry from early times. When, during the nineteenth century, improvements in transport, by destroying local monopolies, extended the area of competition in many trades, it became common for manufacturers to try to offset this effect by combination or by some form of restrictive agreement. Their efforts appear to have been most successful, not in the great staple industries, but in the smaller trades or in certain specialized branches of the staple industries. For instance, in the decades before 1914 large combines which controlled a high proportion of the total sales were built up in the soap, alkali, explosives, salt-mining, tobacco, whisky, and cement industries. Some of these combines had interests outside the country, and there were a few trades in which the producers were parties to international cartels (e.g. the rail makers). But free competition was the rule over the greater part of the staple industries (coal-mining, iron and steel, cotton and wool textiles, shipbuilding and engineering), and production remained in the hands of many independent firms. The fact that arrangements for the restriction of competition had been made in certain branches of these industries (e.g. the anthracite coal trade, textile finishing, sewing thread, and in some finished metal goods) does not disturb this broad conclusion. Since the great staples were responsible for a high proportion of Great Britain’s industrial output, it is probable that British industry as a whole could claim, on the eve of the First World War, to be more highly competitive than German or American industry. Among the various reasons that are commonly put forward in explanation of this, the preoccupation of the major British industries with the export market on the one hand, and on the other, the adherence of Great Britain to a free trade policy, may be noted. Nevertheless, the Committee on Trusts of 1918 and the Committees of Enquiry under the Profiteering Acts of 1919–20 commented on the widespread nature of the arrangements for restricting competition. These Committees were, of course, reporting at the end of a period in which conditions had been very favourable for the development of monopoly.