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Cato's Letter No. 90

Monopolies and exclusive Companies, how pernicious to Trade.

John Trenchard (Saturday, August 18, 1722)

SIR, I have in my last letter given some instances of men, who, separating themselves from the publick, act against their own interest, by being too partial to it; but I confess it sometimes happens, that private persons may receive personal advantages from publick losses; and then, considering the depravity of human nature, we are not to hope, and less to presume upon their acting against themselves for other advantages. The chief inducement which men have to act for the interest of one state before another, is, because they are members of it, and that their own interest is involved in the general interest; and the same motives which for the most part engage them to promote the advantage of that peculiar society of which they are a part, before all others, will also engage them to prefer themselves and their own family before the interests of every member, or all the members together, of the same society, whatever becomes of conscience, honour, and generosity, men will be men, in spite of all the lectures of philosophy, virtue, and religion.

This will be often the interest of particular men, but can never be the interest of the whole society, or the major part of them; whose interest must ever be the general interest, that is, the diffusive advantage of the whole, which must suffer in proportion to what any man gets irregularly, and therefore it is their common duty to prevent the unfair gains and depredations of one another; which indeed is the business of the government; viz. to secure to every one his own, and to prevent the crafty, strong, and rapacious, from pressing upon or circumventing the weak, industrious, and unwary.

I have often wondered how whole societies (every one of which intends most religiously himself and his own benefit) can yet, all together, so easily be made the dupes of one another, or of lesser societies among themselves, not only in such matters as do not fall within vulgar observation, but in instances which are obvious to the meanest capacities. All the gentlemen through England have their estates ransacked, and are deprived of whatever makes their tables elegant and curious, to put fishmongers and poulterersí wives, at London, in laces and jewels, without adding to the plenty there, much of it being destroyed, or suffered to rot or stink, by those miscreants, to keep up the price: Their cattle sell for little in the country, and will not pay the grazier, who must pay them their rents; and yet, by the jugglings and combinations of butchers and salesmen, the markets are not cheaper supplied; but those insects swallow up the rents of the landlord, and the labour of the husbandmen; as some of the factors do that of the manufacturer: The old useful laws against regraters, forestallers, &c. all lie fast asleep, and no new ones are thought on to enforce them; yet the nobility and gentry of England spend many months every year in Parliament, see all this, buy their own productions at a price by many times greater than they sell them; but are so wholly taken up with other much less views, that they suffer this great mischief to go on, and every day to increase, upon no other pretence than the privileges of particular societies of tradesmen, who pretend a right to oppression; as if any man could have a right or privilege inconsistent with the publick good, and were not ever to be subservient to it. It is true, that no government ought to take away menís natural rights, the business and design of government itself being to defend them; but sure such partial and adventitious advantages as they receive to the detriment of others by ill laws may be taken away by good ones: But no sooner any attempt is made to remedy these universal grievances, but the clamour and solicitation of these humble and inferior oppressors puts an end to the remedy.

I do not wonder, that those who subsist by oppression themselves should countenance all other sorts of it; it is their common interest to protect one another. But that the country gentlemen, who suffer by all kinds of it, and who have the means in their hands to prevent them, should suffer themselves to be plundered and impoverished, to enrich harpies and pick-pockets, and enable them to live in pride and luxury, is so stupendous, that it could not be believed, if we did not constantly see it.

But these are petty abuses, when compared to the much greater grievances of uniting great numbers of artful and wealthy merchants into conspiracies and combinations against general trade; and by that means giving or selling the industry and acquirements of a whole nation to satiate and glut a few over-grown plunderers, and in the end to destroy the trade itself; which must ever be the case, when trade is committed to the management of exclusive companies. The success and improvements of trade depend wholly upon supplying the commodities cheap at market; and whoever can afford those of equal goodness at but half per cent cheaper than his neighbour, will command any sale. Now it is impossible that any company can do this upon equal terms with a private merchant, nor would they if they could. Private men will think of every way to come at their goods cheap, will make it their whole business to work up the manufactures themselves, or buy them at the best hand, will search narrowly into their excellencies or defects, will procure carriage at the lowest prices, see them shipped themselves, and sometimes sell them in person, and as they find proper and advantageous opportunities; and the mutual emulation and contention with one another for the preference of markets, obliges them to sell often for little profit, and sometimes to loss, in expectation of better fortune at other times; but nothing of this is ever done by companies.

Those who have the direction of their affairs, have often but small part of their fortunes embarked in their stock, and always have an interest separate from that of the company, and commonly if not always, raise vast estates at their expence; the materials of their ships, and the commodities which they carry, are generally sold by themselves, or bought of their friends and relations by confederacy, at exorbitant prices: Favourite shipwrights are employed for presents; their relations or creatures are made captains or masters of their vessels, to carry on private commerce, to the detriment of the company; governors of forts, factors, and agents, are sent abroad to get great estates upon the publick, and perhaps share them with their patrons at home; their goods shall be set in such lots, and sold at such times as shall be most for the private interest of the governing directors, who will have them often bought up in trust for themselves or friends; and by these means, as the company oppresses the rest of the nation, the governors and directors cheat the company. But if these trustees be ever so honest, they will not take the same pains for others as for themselves; nor can it be expected that men of their fortunes will employ their whole time for such allowances as are or can be afforded by the society who employs them.

Besides, it is the interest of the nation to sell their commodities at as good a price as the markets abroad can afford to buy them, and to bring in foreign commodities as cheap as they can afford to sell them; especially such as do not interfere with our own (which ought to be prohibited when it can be done without greater inconvenience) and the interest of companies is directly contrary to all this: for other people being prohibited to deal in the same commodities, they can put what price they please upon both, and ever will put what is most for their advantage, and so starve the manufacturer at home, at the same time that their agents charge great prices to the company, and sell the commodities which they bring in return of them at extravagant advantages, often to the discouragement of our own manufactures, which depend upon their cheapness; their business being always to increase the price of stock, without increasing trade.

Besides all this, they keep forts abroad at a great expence, to colour the necessity of such monopolies, and to oppress and rob the natives there with security; for it is a jest to imagine that they can any ways conduce to fair trade. Every nation in the world that has any thing to buy or sell, will see their account in doing so, and will find it their interest to encourage a fair commerce, which will be ever for their own advantage; and if they do not, there is no trading with them against their own consents, though their country be encompassed with forts, which will only provoke and make them enemies; and, in fact, the private traders to Africa pay the Company ten per cent towards their forts, and seldom or never come near them, or receive any benefit by them, and yet have broke the Company, whilst they thrive themselves. The same was true of the interlopers to India formerly, who neither desired nor were suffered to take any advantage of the Companyís forts, and always were oppressed by their governors, or agents, and captains of ships, and yet would soon have undone them, if they had been suffered to go on.

The Dutch make other advantages of their forts and garrisons, which is to keep great conquered realms and powerful kings in subjection, and secure to themselves the whole commerce of their countries, by which means they have almost the monopoly of the spices of the world; of which, it is said, they every year burn mountains to keep up the price, as all exclusive companies will ever do: But we have scarce any trade to some of those places, where we are at the charge of keeping forts, which stand there no mortal can tell why. But supposing that forts were necessary to carry on any particular trade, what colour is there to deny that they ought to be kept at the publick expence, or by the contributions of all the merchants, who are to receive advantage from them in proportion to the trade which they carry on; or what pretence is there to confine an advantageous trade to one town alone, and to but few men in that town?

So that, upon the whole, if we consider these companies only as they regard trade, which is the only pretence for establishing them, they are the bane of all fair commerce, the discouragement of our manufactures, the ruin of private and industrious traders, and must end in the ruin of themselves, and all trade whatever; and no one receives advantages from them, but the governors, directors, commanders, or agents, at home and abroad, who have ever raised immense estates, whilst the kingdom has been impoverished, and the company undone. But there are other mischiefs still behind, which strike yet much deeper; namely, the influence and violence that they bring upon our constitution; which shall be the subject of my next letter.

T I am, &c.

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