Abstract: The Nordic Timber Cartel and Government Intervention, 1931-1932

Elina Kuorelahti

Abstract

This paper studies the relationship between international cartels and politics, and discusses the impact that foreign political tensions and the Great Depression had on international cartels in the early 1930s. The paper presents a case of a Nordic timber cartel (NTC) that existed during 1916-1934 between the producers of Europe's biggest timber exporters, Sweden and Finland. The timber trade experienced two major shocks at the turn of the 1930s—the rise of the Soviet Union and the Great Depression—and as a result, Nordic government decided to intervene to the NTC's activities in 1931. The paper analyzes the intervention itself and the motivations behind it, as well as reactions of the cartel toward it. The results of this paper suggest that political reasons relating to the Soviet Union and Great Britain played an important role in the intervention, and that the timber cartel in fact became an instrument of a political rapprochement between Nordic countries and the Soviet Union in 1931. Results also indicate that Nordic banks were important mediators in the intervention. The key argument of this paper is that, despite the collaborative elements between the Nordic governments and the cartel, state intervention in 1931 was an unwelcome surprise for the Nordic timber industry. It made the cartel dysfunctional and led to its collapse.