GROWTH OF TRUSTS

Dominion, Volume 12, Issue 274, 15 August 1919, Page 7

GROWTH OF TRUSTS

A PKODUCI OF THE WAR BRITISH COMMITTEE'S INVESTIGATIONS (Melbourne "Age" Correspondent.) London, June 3. Some interesting information villi regard to the growth of trade combinations in Great. Britain is contained in the report of the committee appointed by the Minister of Reconstruction; "to consider and report what action, it any, may he necessary to safeguard the public interest, in view of the probable extension of trade organisations and combinations." The tone of the report is mild, and some- . times apologetic. There are no scathing denunciations of the methods by which trusts exploit the community. This absence is to bo accounted for partly by the fact that the evidence obtained by f.lie committee came chiefly from employers belonging to the trusts. They naturally sat themselves the task of demonstrating what beneficial things trade combinations are, There can bo no doubt that they are beneficial, but as a rule the benefits arc- entirely confined ito the I'.iembw's. It would appear frorii tho opinion's expressed by members of the trusts who came before this committee that the worst that can be charged against these trade combinations is that they prefor to do good by stealth, For it is undeniable filial trusts do.not enro In advertise their existence, owing to tho public, prejudice that exists against such trade combinations.

In two ways the.war has stimulated the growth of trusts in Great Britain, fn the first place tho British Govern-■ ment ' found it necessary to reorganise moat of tho industries of the country oh t\ war basis, in order to increase production and equip efficiently tho vast armies in tho field. "There was considerable evidence before us," slates tho committee, "that the crowth and power of these associations has been greatly strengthened during the period of the war, and that this .result appears to have como about primarily from the novel circumstances of war, under which tho Government, acting through tho Ministry of Munitions or other departments, found it necessary sometimes to consult tho most informed opinion in a trade, and sometimes to ration material through nn organisation representative of tho trade. Unnssociated firms which found themselves not consulted by tho | Government wero thus led to join exi istinsr associations, or in.some, cases to form representative groups for the purposo of advising the Government on matters concerning tho trade. There appears to be no doubt that a large number of definite trado associations have been formed during tho war, which may certainly bo expected to control and regulate prices and tho conditions of industry in the same manner as tho prewar associations' were already doing, and it is also probable that the habit of cooperation and discussion on matters of common concern, which has boen tho re- v suit of the formation of purely advisory groups of manufacturers or distributers for the purposes of tho war, will lead to a transformation of at least a part of such advisory groups into definite trade associations as soon as Government control over trade or industry is with-" drawn." Smothering Criticism. Tho other way in which war contributed to the growth of trusts was by eliminating criticism in regard to them. High prices for commodities of all kinds became tho accepted rtilo during the war, anil-consumers felt that the artificial conditions created by the war with regard to inadequate supplies of raw materials and inadequate supplies of labour wero the chief causes of high prices. It was

not, howevor, the general public, but the Government Departments invested with responsibility for the prosecution of the war, and particularly tho Ministry of Munitions, who were the chief customers of tho trusts. Government Departments have never been regarded as economical buyers, and in a state of war, when thousands of millions of pounds were placed at their disposal, they entered on a career of colossal spending. This explains why, during tho war, so little was heard of the growth and methods of trusts, and why tho committeo was unable to obtain much information from retailers and consumers as to the way in winch they were affected by the trusts. There is no doubt that the trusts victimised the community during the war. So ( much is shown by the enormous profits earned by the firms constituting the trusts. But as the exploitation was done through the Government departments which purchased from the trusts the goneral public were not directly conscious of being exploited. Tho report of the cumniiflee gives a list of over 90 trusts (or trado associations as thoy prefer to be called, owing to the public prejudice against all that tho word trust conveys) with which that enormous spending department the Ministry of Munitions traded during the. war. The report also gives a list of 35 associations connected with tho iron and steel industry, ."nearly all-of vhich aro definitely known, or believed, to bo engaged in regulating prices and output." The report explains that this list of 35 trade combinations in the iron and steel industry "does not purport to be at all exhaustive even of .this ono industry." Prices and Output, Tho argument in favour of tho regulation of prices and output by trade associations was put before the committeo in a joint memorandum compiled by three associations. "Apart from associations which exist for negotiation with labour, tho regulation of wages und the settlement of disputes, tho simplest form of association, and the ono most common in thi-s country," states the memorandum, "is the class of association which is _ concerned with the. regulation of prices. In the absence of any association, it is the experience in our various trades' that, as the result of unrestricted competition of British manufacturers and of importers, prices aro driven down to tho lowest possible level, and profit.-* frequently reach a vanishing point. In tho absence of profit, manufacturers are discouraged, if not absolutely provented, from reorganising their plant, expending money upon improvements and introducing new methods, and thus unrestricted competition may, and frequently doos, result in an increase in cost of manufacture, and to that oxtont to tho actual detriment of tho consumer. A further evil flowing from unrestricted competition is the tendency for I manufacturers, in the struggle for ord-