How cartels shaped corporate performance: The case of Dutch steel industry in the interwar period

Abstract

The interaction between the nascent Dutch steel industry Hoogovens and foreign steel cartels is a case study on the struggle of an outsider in a cartelised world. It demonstrates how national and international cartel agreements strongly impacted new entrants during the first decades of the 20th century. Until the First World War, dumping practices supplied the Dutch metallurgical industry with cheap steel from abroad but hampered the development of a domestic steel industry. This proved fatal during the war and convinced the government to give substantial financial support to the founding of Hoogovens in 1918. When this company started the production of pig iron, foreign cartels blocked exports and drove prices down. Hoogovens tried to counter these cartels by using its own trade agents and cooperate with foreign competitors. It also sought support from domestic industries and the national government. These strategies proved rather complicated and success was limited. Only when Hoogovens started its own steel production in 1936, it was finally accepted as partner of the International Steel Cartel. Growing demand strengthened the position of this cartel and its partners. However, with the outbreak of the Second World War in 1939, the International Steel Cartel, like other international cartel agreements, lost its power and was rapidly dissolved.