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Origins of the Statutory Export Monopolies of British West Africa1

Published online by Cambridge University Press:  24 July 2012

P. T. Bauer
P. T. Bauer
Affiliation:
Fellow of Gonville and Caius College, Cambridge
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Abstract

In 1947 and 1949 statutory monopolies were established over the export of all major agricultural products from British West Africa. This device was justified chiefly on the ground that it would serve to stabilize the incomes of the peasant producers. This justification is not supported either by economic analysis or by history. The statutory monopolies seem rather to have emerged from a confluence of events and opinions in the preceding decade: the widespread belief that middlemen are socially unproductive, the search by the members of a trade association for some way to restrict competition and safeguard their profits, the formation of export control boards as a wartime measure and the resultant creation of influential administrative positions, the predilection of the administrators for tidiness, the recent emphasis on compulsory saving as an instrument for development of backward areas and the opinion that socialization of peasant saving would contribute to that development.

Type
Research Article
Information
Business History Review , Volume 28 , Issue 3 , September 1954 , pp. 197 - 213
Copyright
Copyright © The President and Fellows of Harvard College 1954

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References

2 The system of statutory export monopolies is sometimes referred to as statutory marketing.

3 The arrangements in force in West Africa are described briefly in Bauer, P. T. and Paish, F. W., “The Reduction of Fluctuations in the Incomes of Primary Producers,” Economic Journal, LXII (Dec., 1952), 750–80.CrossRefGoogle Scholar A review of the operations of the West African boards up to the end of 1951 is presented in Bauer, P. T., “Statistics of Statutory Marketing in West Africa, 1939–51,” Journal of the Royal Statistical Society, Vol. 117 (1954, Part I).Google Scholar

4 Cf. Bauer, P. T. and Yamey, B. S., “Economic Progress and Occupational Distribution,” Economic Journal, LXI (Dec., 1951), 741–55.CrossRefGoogle Scholar

5 The reasons for the high degree of concentration in the private sector of West African trade are discussed in Bauer, P. T., “Concentration in Tropical Trade: Some Aspects and Implications of Oligopoly,” Economica, XX (Nov., 1953), 302–21.CrossRefGoogle Scholar

6 Report of the Commission on the Marketing of West African Cocoa, Cmd. 5845 (London, H.M.S.O., 1938).

7 Future Marketing of West African Cocoa, Cmd. 6950 (1946).

8 This argument certainly does not apply to all firms. There were many importers, including a substantial and prosperous European concern in the Gold Coast, not interested in the export trade.

9 Details are shown in my paper in the Journal of the Royal Statistical Society, Vol. 117 (1954, Part I). In 1947 the selling arrangements were altered and the Ministry of Food raised the prices it paid for oilseeds from West Africa. But these prices remained below those paid to other bulk suppliers, and, moreover, much of the price increase was withheld from the primary producers by the West African Produce Control Board which began to accumulate surpluses of funds on these products.

10 This was stated explicitly in another British Government White Paper, Report on Cocoa Control in West Africa, Cmd. 6554 (1944), para. 24.

11 Similar products in other colonies (e.g., oil-palm produce in Malaya) were not subject to such arrangements.

12 The profit margins were generally formally or informally agreed. In the absence of agreed fixed shares (quotas) among the participants, and of penalty payments for exceeding these, the margins were generally eroded by competitive buying. The agreed shares and the penalty payments were thus both a necessary condition for maintaining or increasing profit margins and a device for sharing out the fruits of the restraint of competition.

13 The question arises why under such a system individual firms continued to purchase instead of curtailing or even discontinuing their activities and living on premium payments. The answer is complex and would require lengthy discussion which would be inappropriate here. The principal reasons appear to be the desire of the firms and of their local executives to maintain their position in the market, both for export produce and for imported merchandise; and the fear that producers who consistently failed to reach their agreed shares would have their quotas reduced.

14 The desire of the merchants for statutory export quotas to strengthen the operation of the market-sharing agreements was reflected in their evidence before the Nowell Commission. According to the Report: “A principal of one of the Agreement firms proposed the continuance of the system of export control used during the truce [the temporary suspension of the buying agreement during the enquiry into the dispute conducted by the Commission] for a period of, say, ten years. His view was that, under more stable conditions, it would be possible to rationalize the purchase of cocoa on the Coast ‘by eliminating all forms of redundancy such as overlapping buying stations, as well as reducing supervisory and other costs, there would thus be savings in overheads,’ the benefits which would be passed on automatically to the producer. He suggested that, with a Buying Agreement unsupported by quotas, there was the risk that shippers not parties to it, or new entrants to the trade, could upset by aggressive competition the member firms' efforts to regularize marketing. Export quotas would give the necessary stability.” Nowell Report, para. 498.

15 Report on Cocoa Control in West Africa 1939–1943 and Statement on Future Policy, Cmd. 6554 (1944). Statement on Future Marketing of West African Cocoa, Cmd. 6950 (1946). These White Papers leaned heavily on the Nowell Report.

16 Lagos, Government Printer, Sessional Paper No. 18 (1948).

17 Cf. Bauer, P. T. and Paish, F. W., in Economic Journal, LXII (Dec., 1952).Google Scholar

18 Cf. ibid., where several passages from the White Papers are quoted.

19 The dislike and distrust of middlemen springs from various well-known (one might almost say traditional) motives and opinions, such as the belief that trading is unproductive and traders parasitic. More recently these views have come to be reinforced by administrative antipathy to traders because their activities and their mobility may for various reasons be inconvenient to administrators. Again, the presence of a large number and great variety of traders suggests an economy untidy and unorganised in appearance, and this offends the tidiness complex so widespread in recent years.

20 Or that in so far as they do affect output the influence is on balance harmful.

21 The socialisation of saving and of peasant production raises social and political issues of the widest significance. It would obviously be inappropriate to consider these here, even though they have in fact become major functions of organisations originally established to promote the interests of West African producers by means of price stabilisation.