Proposal preview

International Cartels in the 19th and 20th century: National Perspectives

International cartel agreements have been observed in many international markets and countries. In the past, agreements (or alliances) among firms from different countries have divided up markets and sources of raw materials, established monopoly prices, exploited patents, and taken other steps to obtain maximum profits. Their presence, often in markets for commodities and agricultural products can influence not only the price and quantity of goods traded, but can shape the regulations and laws in of the countries in which they operate. National governments have reacted to their presence either defensively (prohibiting agreements, erecting barriers, promoting local firms) or positively (by encouraging cartels links to local economies).
This session draws together researchers from several countries to examine a range of international cartels from different national perspectives. Our focus is on the impact of international cartels and their agreements on the experience of individual countries, and those nations’ interactions with one or more international cartels and with the international community. Examples in this session will be drawn particularly from cartels in the agricultural and commodity markets that emerged in the mid to late 19th century and continued (in some cases) deep into the 20th century.
The researchers listed below intend to cover a range of aspects relating to international cartels including:
• What was the extent of international cartelization in global markets in the late 19th and early 20th century?
• Were international cartels able to influence the price or quantity of goods traded in their markets? If so, buy how much?
• How did national governments perceive international cartels and their effects on the domestic market? This can be assumed to have varied in case the cartels were seen as a threat for the domestic producers, or if domestic firms could take advantage by participating? What were their policies towards the domestic firms/cartels in participating in international cartels.
• What was the role of international agencies and collaborations in addressing the international cartels and their effects?
• Were the international cartels able to influence the rules and regulations relating to competition or trade in the countries where they operated? If so where and how?
• Did national government try to influence the international community to act positively or negatively to the presence or activities of international cartels?
• Did some national governments ‘take the lead’ in influencing international regulatory bodies? Which nations were most energetic or least energetic at the international level?

Organizer(s)

  • Susanna Fellman Gothenburg University susanna.fellman@econhist.gu.se
  • Martin P Shanahan University of South Australia martin.shanahan@unisa.edu.au Australia

Session members

  • Dominique Barjot, Université Paris-Sorbonne, France
  • Marco Bertilorenzi, Padua University
  • Malin Dahlström, University of Gothenburg
  • Joost Dankers, Utrecht University
  • Bram Bouwens, Utrecht University
  • Elina Kuorelahti, University of Helsinki
  • Holm Arno Leonhardt , Universität Hildesheim, Germany
  • Toshitaka Nagahiro, Wakayama University, Japan
  • Eva-Maria Roelevink, Ruhr-Universität Bochum
  • Brian Shaev, University of Leiden
  • Espen Storli , Norwegian University of Science and Technology
  • Pål Sandvik, Norwegian University of Science and Technology
  • Yu Yamamoto, Kagawa University

Discussant(s)

  • Jeffrey Fear University of Glasgow Jeffrey.Fear@glasgow.ac.uk

Papers

Panel abstract

International cartel agreements have been observed in many international markets and countries. Their presence can influence not only the price and quantity of goods traded but can shape the regulations and laws of the countries in which they operate. Different national governments have reacted either defensively or positively to their presence. This session draws together researchers from different regions to examine the impact of international cartels on the experience of individual countries; those nations’ interactions with one or more international cartels; and ultimately with the individual nation’s interactions with the wider international community. Papers in the session that examine the interaction between nation states, governments and cartels cover a range of perspectives and economic sectors that emerged in the mid to late 19th century and continued (in some cases) deep into the 20th century.

1st half

International cartels and national perspectives: an introduction and brief overview

Susanna Fellman, Martin Shanahan

While a number of studies have examined international cartels, relatively few have focused on the interaction between these cartels and the nations with which they interact. This presentation discusses aspects of this interaction between business and the state, and provides a brief historiography of the scholarship in this field. The focus will be mostly on 20th century debates, and in particular, the periods when scholarly interest in these issues peaked and the topics that were of most concern. Of interest is how these debates were also linked to broader societal and political debates concerning the “cartel question”? We will also undertake a preliminary mapping of which economic sectors appear to have been most cartelised. Our aim is to identify areas of potential future research and raise questions about the existing coverage of topics in this field of research

While a number of studies have examined international cartels, relatively few have focused on the interaction between these cartels and the nations with which they interact. This presentation discusses aspects of this interaction between business and the state, and provides a brief historiography of the scholarship in this field. The focus will be mostly on 20th century debates, and in particular, the periods when scholarly interest in these issues peaked and the topics that were of most concern. Of interest is how these debates were also linked to broader societal and political debates concerning the “cartel question”? We will also undertake a preliminary mapping of which economic sectors appear to have been most cartelised. Our aim is to identify areas of potential future research and raise questions about the existing coverage of topics in this field of research

Small states and monopoly power: the international oil industry and the Scandinavian market 1890-1930

Espen Storli, Pål Thonstad Sandvik,

This paper focuses on the expansion of the international oil majors into Scandinavia. From 1890, Standard Oil dominated the Scandinavian market. To protect its market share, Standard Oil worked to keep other competitors out of Scandinavian, at times through the means of international cartel agreements. The governments in the Scandinavian states reacted differently to this. By the early 1900s, the Swedish and Norwegian states were rapidly becoming more interventionist, while the belief in unregulated markets remained stronger in Denmark. This paper explores why the three states responded differently to international cartels and the concentration of market power in the oil industry: 1) How did Standard Oil achieve its market power in Scandinavia and how did the company’s relations to its competitors, customers and other stakeholders develop?; and 2) How did Scandinavian governments react to the advent of Standard Oil, its heavy handed business practices and its monopoly prices?

This paper focuses on the expansion of the international oil majors into Scandinavia. From 1890, Standard Oil dominated the Scandinavian market. To protect its market share, Standard Oil worked to keep other competitors out of Scandinavian, at times through the means of international cartel agreements. The governments in the Scandinavian states reacted differently to this. By the early 1900s, the Swedish and Norwegian states were rapidly becoming more interventionist, while the belief in unregulated markets remained stronger in Denmark. This paper explores why the three states responded differently to international cartels and the concentration of market power in the oil industry: 1) How did Standard Oil achieve its market power in Scandinavia and how did the company’s relations to its competitors, customers and other stakeholders develop?; and 2) How did Scandinavian governments react to the advent of Standard Oil, its heavy handed business practices and its monopoly prices?

The International Coal Cartels in the East Asian Market, 1916-37

Toshitaka Nagahiro, Yu Yamamoto

This study focuses on exogenous factors of international cartel activities in the East Asian coal market, 1916-37. There were two international cartels in the East Asian coal market: the Coal Owner’s Conference (COC) and the Fushun Coal Agreement (FCA). In 1916, COC was organized mainly by a British coalmining company, Japanese trading company, and Manchuria coalmining company (Kailan Mining Administration [KMA], Mitsui Bussan [MB] and South Manchuria Railway [SMR]). Their cartel agreements were destabilized in the late 1920s and collapsed in 1932, because rising exchange rates disadvantaged both Japanese exports and Fushun coal. Therefore, Fushun coal was exported to Japan at a low price. Although the FCA was on the brink of collapse, the issue was solved politically. On the other hand, the KMA dominated the Chinese coal market after the withdrawal of Japanese coal. Protectionism in China, however, led to competition between KMA and Chinese coal mining

This study focuses on exogenous factors of international cartel activities in the East Asian coal market, 1916-37. There were two international cartels in the East Asian coal market: the Coal Owner’s Conference (COC) and the Fushun Coal Agreement (FCA). In 1916, COC was organized mainly by a British coalmining company, Japanese trading company, and Manchuria coalmining company (Kailan Mining Administration [KMA], Mitsui Bussan [MB] and South Manchuria Railway [SMR]). Their cartel agreements were destabilized in the late 1920s and collapsed in 1932, because rising exchange rates disadvantaged both Japanese exports and Fushun coal. Therefore, Fushun coal was exported to Japan at a low price. Although the FCA was on the brink of collapse, the issue was solved politically. On the other hand, the KMA dominated the Chinese coal market after the withdrawal of Japanese coal. Protectionism in China, however, led to competition between KMA and Chinese coal mining

International cartels and national powers in the interwar Italy. The case of the plate glass industry

Marco Bertilorenzi

This paper explores how the international plate glass cartel interacted with the Italian national powers during the 1920s and the 1930s. Created in 1904, the Convention International des Glaceries and one of its key members, Saint Gobain, considered Italy a key outlet for European production. The position of Italy as an importing country was increasingly confused during the interwar period and it was reshaped by the autarkic policies of the 1930s. This change did not mean a rupture between the international actors and the national authorities; instead, big business found channels to take advantage of the new situations, while the political authorities obtained technological benefits from it.

This paper explores how the international plate glass cartel interacted with the Italian national powers during the 1920s and the 1930s. Created in 1904, the Convention International des Glaceries and one of its key members, Saint Gobain, considered Italy a key outlet for European production. The position of Italy as an importing country was increasingly confused during the interwar period and it was reshaped by the autarkic policies of the 1930s. This change did not mean a rupture between the international actors and the national authorities; instead, big business found channels to take advantage of the new situations, while the political authorities obtained technological benefits from it.

Resisting the “International Coal Cartel”: The German Coal Syndicate, the British competitor, and the German government in the interwar period

Eva-Maria Roelevink

The paper aims to analyse the strategies of the German Coal Syndicate during the 1920s by asking how it was possible for the German Coal Syndicate to refuse cartelization on the international coal market even though the government pressed for an international cartelization. It is based on the primary sources of the Syndicates estate, draws attention to the internal structures and strategies of the Syndicate, and explores how those strategies were articulated and enforced in the discussions with the German government

The paper aims to analyse the strategies of the German Coal Syndicate during the 1920s by asking how it was possible for the German Coal Syndicate to refuse cartelization on the international coal market even though the government pressed for an international cartelization. It is based on the primary sources of the Syndicates estate, draws attention to the internal structures and strategies of the Syndicate, and explores how those strategies were articulated and enforced in the discussions with the German government

An undesired alliance. Firms, governments, and the European timber cartel in the 1930s.

Elina Kuorelahti

This paper discusses how diplomatic pressures and protectionist trade policies contributed to the formation of international commodity cartels in the 1930s. It presents the European Timber Exporters’ Convention (ETEC), a quota scheme between eight countries, and argues that the national governments, banks, and the League of Nations adopted an active role in making and maintaining the ETEC. However, the private timber sector, particularly in Sweden and Finland—which together with the Soviet Union were the leading timber exporting countries—did not always welcome this development. As a result, the ETEC process was characterized by stark conflicts between public and private interests. This paper investigates both the motivation of the governments to enforce the ETEC and the experiences and strategies of the private sector to survive through cartelization ‘from above’.

This paper discusses how diplomatic pressures and protectionist trade policies contributed to the formation of international commodity cartels in the 1930s. It presents the European Timber Exporters’ Convention (ETEC), a quota scheme between eight countries, and argues that the national governments, banks, and the League of Nations adopted an active role in making and maintaining the ETEC. However, the private timber sector, particularly in Sweden and Finland—which together with the Soviet Union were the leading timber exporting countries—did not always welcome this development. As a result, the ETEC process was characterized by stark conflicts between public and private interests. This paper investigates both the motivation of the governments to enforce the ETEC and the experiences and strategies of the private sector to survive through cartelization ‘from above’.

2nd half

The European Cement Oligopoly. Between Competition and Cooperation (1880 to today)

Dominique Barjot

The cement industry today, like yesterday, is subject to constraints that encourage the search for monopoly advantage. European industry provides the archetypical large companies whose profitability requires high levels of employment of production capacity and control over local markets. While national cartels appeared at the end of the 19th century in Germany, the United Kingdom and Switzerland, in France and Italy they appeared later because of a framework of competitive oligopoly. The difficulties of the 1920s, and the 1930’s Great Depression precipitated the formation of regional cartels, with national and even European territories. After WWII, the demand for housing and infrastructure, followed by European integration resulted in a powerful oligopoly, which, little by little, conquered the world. This is shown in the archives of Lafarge-Holcim and Heidelberg Cement-Italcementi. Despite competition from China, Mexico, Brazil and Russia, these large European groups remain competitive without foregoing, on national markets, their cartel agreements

The cement industry today, like yesterday, is subject to constraints that encourage the search for monopoly advantage. European industry provides the archetypical large companies whose profitability requires high levels of employment of production capacity and control over local markets. While national cartels appeared at the end of the 19th century in Germany, the United Kingdom and Switzerland, in France and Italy they appeared later because of a framework of competitive oligopoly. The difficulties of the 1920s, and the 1930’s Great Depression precipitated the formation of regional cartels, with national and even European territories. After WWII, the demand for housing and infrastructure, followed by European integration resulted in a powerful oligopoly, which, little by little, conquered the world. This is shown in the archives of Lafarge-Holcim and Heidelberg Cement-Italcementi. Despite competition from China, Mexico, Brazil and Russia, these large European groups remain competitive without foregoing, on national markets, their cartel agreements

The European Cement Cartel and the Swedish Cement Cartel – Gains, losses and interchange

Malin Dahlström

At the end of the 1930s the main cement producers in Europe decided to come together to limit competition in export markets. In the paper, the relations between the Swedish and the European cartels are discussed. Exports were of great importance for cement producers and by regulating international exports the cement companies achieved secure markets in which to sell. But the international cartel agreement also limited the actions of each country, so they could not sell freely. The international cartel affected the organization of the national market and vice versa. The effects of cartelization are difficult to measure. By studying how one member was affected by an international cartel we can learn more about the functions of international cartels generally.

At the end of the 1930s the main cement producers in Europe decided to come together to limit competition in export markets. In the paper, the relations between the Swedish and the European cartels are discussed. Exports were of great importance for cement producers and by regulating international exports the cement companies achieved secure markets in which to sell. But the international cartel agreement also limited the actions of each country, so they could not sell freely. The international cartel affected the organization of the national market and vice versa. The effects of cartelization are difficult to measure. By studying how one member was affected by an international cartel we can learn more about the functions of international cartels generally.

The American campaign against German and international cartels 1943-1947

Holm Leonard

In 1943/1944 two books were published that heavily incriminated German and international cartels. These works, authored by members of the U.S. Antitrust Division in Washington, implied at the same time a patriotic war propaganda and a campaign to abolish cartels worldwide. Concerning international cartels, the authors rightly pointed out issues of exploitation. Regarding national cartels in Europe and Japan, most of their notions were wrong: cartels were under state control and worked for government purposes. Because American big business rejected any vigorous antitrust policy, there was a conflict within the U.S. government. The State Department opposed the concept of the Department of Justice. Finally, a compromise was reached; international antitrust policy should work against the cartel system abroad, but not weaken U.S. corporations or allied economies. Terminologically, 1941/42 was the origin of the "cartel" as a combat term and curse word.

In 1943/1944 two books were published that heavily incriminated German and international cartels. These works, authored by members of the U.S. Antitrust Division in Washington, implied at the same time a patriotic war propaganda and a campaign to abolish cartels worldwide. Concerning international cartels, the authors rightly pointed out issues of exploitation. Regarding national cartels in Europe and Japan, most of their notions were wrong: cartels were under state control and worked for government purposes. Because American big business rejected any vigorous antitrust policy, there was a conflict within the U.S. government. The State Department opposed the concept of the Department of Justice. Finally, a compromise was reached; international antitrust policy should work against the cartel system abroad, but not weaken U.S. corporations or allied economies. Terminologically, 1941/42 was the origin of the "cartel" as a combat term and curse word.

International Cartels and the European Common Market: Regulating Competition in the early European Parliament, 1950s-1964

Brian Shaev

This paper analyzes the debates of the Internal Market Commission of the early European Parliamentary Assembly as it crafted its position on European competition policy in the 1950-60s leading up to EEC Regulation 17/62. It investigates European deputies’ views on whether the European Commission should differentiate in its regulation of cross-border cartels between: businesses based in European community countries; international cartels that included businesses from one or more European community country; and international cartels that sold products in European community countries but did not include businesses from European community countries. Further, it investigates how these debates on domestic and international cartels addressed special legal provisions for regulating competition in agriculture and transportation, and the parallel competition regime for coal and steel. Analyzing the transnational politics of cartels sheds new light on the options available and decisions taken regarding how to regulate competition at different levels of domestic/European/international economic governance.

This paper analyzes the debates of the Internal Market Commission of the early European Parliamentary Assembly as it crafted its position on European competition policy in the 1950-60s leading up to EEC Regulation 17/62. It investigates European deputies’ views on whether the European Commission should differentiate in its regulation of cross-border cartels between: businesses based in European community countries; international cartels that included businesses from one or more European community country; and international cartels that sold products in European community countries but did not include businesses from European community countries. Further, it investigates how these debates on domestic and international cartels addressed special legal provisions for regulating competition in agriculture and transportation, and the parallel competition regime for coal and steel. Analyzing the transnational politics of cartels sheds new light on the options available and decisions taken regarding how to regulate competition at different levels of domestic/European/international economic governance.

How cartels shaped corporate success: the case of Dutch steel industry in the 20th century

Joost Dankers, Bram Bouwens

The Dutch steel industry developed relatively late. It was only during WWI that Dutch industrialists, with government backing, decided to start a steel industry. When Hoogovens started production in the 1920s the International Steel Cartel dominated the marketplace. It was only after Hoogovens also produced steel and had its rolling facilities, that it could enter this cartel. After WWII Hoogovens’ success was largely dependent on the ECSC that regulated markets, prices and production. During the oil crisis, the European steel industry had to cope with rising global competition. It was again international cooperation organized in Eurofer that reshaped European steel industry. Hoogovens, strongly linked to German steel producer Hoesch, was depending on governmental support for survival. This paper explores how Hoogovens entered the international cartel in the 1930s; how it reacted to international organization during the 1950s and how European institutions shaped market conditions during the 1970s and 1980s.

The Dutch steel industry developed relatively late. It was only during WWI that Dutch industrialists, with government backing, decided to start a steel industry. When Hoogovens started production in the 1920s the International Steel Cartel dominated the marketplace. It was only after Hoogovens also produced steel and had its rolling facilities, that it could enter this cartel. After WWII Hoogovens’ success was largely dependent on the ECSC that regulated markets, prices and production. During the oil crisis, the European steel industry had to cope with rising global competition. It was again international cooperation organized in Eurofer that reshaped European steel industry. Hoogovens, strongly linked to German steel producer Hoesch, was depending on governmental support for survival. This paper explores how Hoogovens entered the international cartel in the 1930s; how it reacted to international organization during the 1950s and how European institutions shaped market conditions during the 1970s and 1980s.

Discussant

Jeffrey Fear