CARTELS AND TRUSTS IN HOLLAND IN THE THE SEVENTEENTH CENTURY. HE cartel, or producers' syndicate, seems at first sight to be of recent origin. Economists generally assume that "trade agreements" are a consequence of the "multiplication of products" and the "reciprocal invasion of markets" that characterize our present epoch, and hence no one has as yet turned to history to examine certain forms of such agreements which are clearly defined and relatively ancient. As to trusts, they are believed to be the final result of the "concentration of capital"; and just as the term has only recently found its way into current speech, so it is assumed that the phenomenon itself dates only from yesterday. Yet, how is it possible for one to believe that such agreements, such combinations, have not been known and practiced since time out of mind? An active competition among producers and among traders is nothing novel. Long before the nineteenth century those whose interests were at stake must have planned to limit the effects of their mutual rivalry, either by alliances with one another, in which each retained his individuality and in part his independence, or by complete and definite combinations. We need not go back to Greek and Roman antiquity for evidence of such conditions. It would be useless to seek proof for our statement in a society so different from our own, especially since it would be necessary to slur over a period of great uncertainty in order to connect the remote past with the present. But of the time in which comparison becomes intelligible and possible the first half of the seventeenth century naturally attracts our attention, since in the more liberal and advanced countries of Europe it opens the modern era.1 1 The sixteenth century affords examples of rudimentary cartels under the name of "monopolies." "The butchers form monopolies," said Josse de Dammhoudère, For this period we have two valuable collections of sources in the Records of the Company of the North, compiled by the somewhat dull but conscientious editor, M. S. Muller,1 and the documents and studies on the same subject by a young and brilliant historian, M. G. W. Kernkamp.2 There are available, moreover, the texts published in the great work of Lieuwe van Aitzema3 and in the Groot Placcaetboeck. Out of the various industries involved, I have chosen for consideration in this paper the fisheries at Spitzbergen and at Jan Mayen Island, and the traffic in oil in the Dutch Netherlands. 4 I. The great trading companies which were founded in the Dutch Netherlands at the beginning of the seventeenth century arose chiefly from the necessity of association for the carrying on of a common enterprise. In regard to the trade with the East Indies, it has been said that in 1602 "without a general company, voyages so long and distant as those to the extreme Orient could not have been profitably carried on." 5 It was for this reason that the existing small companies were replaced by a single powerful one. This consolidation was, to a certain degree, analogous to our "trusts"; nevertheless, it "which by means of common funds purchase butchers' cattle from all sides, keep them in their establishments, and bring them to slaughter only in certain quantities, according to size or number, in order that they may resell at a higher price, here and there, to one and another." - Pratique judiciaire ès causes criminelles, Anvers, 1564, p. 170. Cf. my series of articles in the Journal des Économistes on "Speculation in the Low Countries in the Sixteenth Century," III, "Engrossing." 1 Geschiedenis der Noordsche Compagnie, Utrecht, 1874. Cf. also the Social Weekblad of January 9 and 16, 1897. 2 Stukken over de Noordsche Compagnie, overgedrukt mit Bijdragen en Mededeelingen van het Historisch Genootschap, XIX, 263 et seq. 3 Saken van Staet en Oorlogh (The Hague, 1669), II, 356 et seq. 4 The organization and activities of the English "regulated companies" at an epoch somewhat earlier than this would furnish material for an interesting parallel study. 5 O. van Rees, Geschiedenis der Staatshuishoudkunde in Nederland (Utrecht, 1868), II, 385. 6 M. Muller sees in this a cartel (Social Weekblad, January 16, 1897); but he is mistaken. It cannot be considered a cartel, since the original companies formed a single company in which all the partners had identical interests. differed greatly from the trust, since the interests of the country as a whole were at stake, not those of a narrow group of citizens. Every one could profit by the opportunity to take part in the common enterprise, and not the former partners alone. The case of the West India Company was similar. The organizers wished first of all "to cut the enemy to pieces"; in the second place, "to enrich the country." It was necessary for them to concentrate all the forces of the nation in order to attain this end, in which patriotism was combined with business. Accordingly, an appeal was made to the good will of all. The Company of the North, which is of especial interest here, was at first in the same position. "The English were seeking to prevent the voyage," and it was necessary that common action should be taken in order to offer energetic resistance to so dangerous a policy. In 1613 the English association known as the Muscovite Company decided to send to Spitzbergen seven ships in order to prevent by force all foreign competition; it desired to monopolize the fisheries in this distant region. It attacked the vessels belonging to the traders of Amsterdam, of Zaandam and of Enkhuizen - sank some and captured others. Only a solitary Zaandam bark was able to escape and to report the sad and alarming news.2 A concentration of energies was thus rendered necessary. The two companies which existed at Amsterdam united and planned either an early fusion with the company of Zaandam or the purchase of its vessels. On January 27, 1614, a petition was presented to the States-General, demanding a concession for a "general company." The legislature promptly granted the petition, recognizing that it afforded the best means for repairing the loss endured and for preserving this industry, which otherwise would have been placed in jeopardy and would have disappeared in the confusion.3 Thus with the desire of revenge upon the English ships was combined that of assuring a better fishing trade.1 1 Van Rees, op. cit., p. 74. 3 Groot Placcaetboeck, I, 669. The concession was granted for two years. All who wished to join the company had the right to do so; they had merely to declare their intentions in the six weeks following the posting of the advertisement.1 Hence the company was not a monopoly.2 Though the official documents give us no information with regard to this company, which was not regulated by the legislature, as were the two India companies, nevertheless, it is quite certain that we have to do, not with an imperfect trust, but with a cartel, sufficiently clear in its origin and progressively clearer in its evolution. The Company of the North was not, strictly speaking, a single company, but a number of companies, established in the principal centers of the country and connected with each other by a contract according to which matters of common interest were submitted to the deliberations of a general assembly. The company was divided into several "chambers." Each chamber had its own capital,3 controlled its own vessels and appointed the directors of its enterprises. It was frequently proposed to carry on the business "for common account," "with common funds," but the opposition of the more fortunate chambers, especially that of Amsterdam, was always an obstacle to such a policy, which would have created a real "trust." General assemblies existed from the first. Each chamber had a certain number of votes, according to its importance. The resolutions of the general assembly, "being designed to avoid all confusion and to defend the members against the power of foreign nations," were binding upon all. In case a dispute arose, it was without doubt referred to the States-General. Some time before the departure of an expedition for the northern regions, the parties interested decided how much 1 Groot Placcaetboeck, I, 669. 2 Muller, op. cit., p. 76. 4 Muller, op. cit., p. 84. 3 In his enumeration, M. Muller confuses all the historical epochs. On this point (op. cit., p. 83) he cites relatively late documents only. Nevertheless, the capital of the company must undoubtedly from the first have been divided among the various chambers; for in 1617 mention is made of "the participation of each in the company, under the respective chambers" (G. W. Kernkamp, op. cit., p. 323). 6 Groot Placcaetboeck, I, 673. each should furnish in the way of vessels, sailors and harpooners. The contingents of the various chambers met on a fixed date. Voyages were usually made under escort, in order to oppose a more energetic resistance to foreign companies and to pirates. When the fishing had been completed the product was divided among the chambers, according to a fixed proportion.1 Each party returned to his own place of business and offered the oil for sale on terms expressing the existing state of the market. It was not long before the union of the chambers grew closer. At first the deliberations of the general assemblies were concerned especially with the conditions of fishing. Gradually two new subjects for consideration appeared: control of supply "so much oil was not to be imported that it could not be used "2- and the fixing of a minimum sellingprice for all. In 1618 the chamber of Amsterdam announced to the chamber of Enkhuizen "that it was disposed to send out small expeditions" in order to diminish the catch. From that time it is easy to perceive a feeling which afterwards became of increasing importance, and was soon to find very clear expression: The greater the catch, the greater are the losses that must be borne. Has the fishing been bad, money is lost. Has the fishing been good, the expense is increased and the price depressed because of the abundance. In either case, there is a deficit: it is necessary to limit the catch and to try to secure a sufficiency at a low cost; but not more than will be demanded.* An understanding as to the selling-price does not appear to have existed in 1617.5 But there is a passage which permits us to suppose that an understanding existed the following year. "We consider that the chambers which have oil should come to an agreement with each other; thus they will not violate their contract, for those who have sold all of their own can suffer no damage." 6 1 Kernkamp, op. cit., p. 271. 2 Ibid., p. 328. 3 Ibid., p. 271. 4 Muller, Social Weekblad, January 9, 1897. 5 Kernkamp, op. cit., p. 271. 6 Ibid., p. 329. |