p 86 "Lovell Thompson of the old Boston house Houghton Mifflin ... wrote in The Publishers' Weekly in November 1944: ... "there is nothing either businesslike or financial about publishing... the book business is suddenly beginning to behave like the oil business in the teens, or the car business in the twenties or the movies in the thirties. There is a strange tendency for the cheerful, disorganized, ne'er do well publishing industry to combine vertically in the familiar pattern of big American business ..."
"He then "cautioned about the dangers of low-priced publishing, thundering the old publisher's rule that in the low-price world, "the worst books sell best.""
Once the cartel set up Bantam, they gave Bantam the benefit of preferential access to the participating presses backlist. The board of directors was made up of members of the participating presses and they were sufficiently involved in day-to-day management and editorial decision making at Bantam to chase away at least one executive who thought he was running things. And one of the members of the cartel was Curtis Circulating Company.
"In addition, the company spent half a million dollars in its first six months on free racks for the dealers, racks that were supposedly just for Bantam Books. The practice at the time was for books to be displayed by publisher rather than category. A large, handsome rack covered with Bantam emblems would go a long way toward ensuring that Bantam Books were on display."
(The rack story reminded me forcibly of Hovenkamp's discussion of Conwood vs United States Tobacco. Hovenkamp makes a solid argument that case went the wrong way -- and effectively everyone agrees with him -- and in any event UST's behavior with respect to racks may have been more extreme. Still, it did result in a massive penalty. http://www.justice.gov/atr/public/hearings/single_firm/docs/219951.htm)
Lovell Thompson's argument is kinda hard to buy. He's essentially saying, hey, we had a gentleman's agreement, let's all be gentleman, at a point in time when the cartel's market domination is undergoing a real threat. The rest of the cartel, oh, here's the list of participants in Bantam:
"The company that emerged was a force to be reckoned with. Grosset & Dunlap and Curtis Publishing each held 42.5 percent of the stock, Ballantine [the individual that the board would ultimately run out] held 9 percent, and Pitkin and Kramer each got 3 percent. The company's board of directors was composed of some of the most august and powerful men in publishing: Cass Canfield of Harper & Brothers; Charles Scribner; Meredith Wood of the Book-of-the-Month Club; Cerf of Random House; Grosset president O'Connor; and four Curtis executives. Ballantine was installed as president, Pitkin as vice president, and Kramer as treasurer and secretary."
Further down the page, and ad in PW includes a description of Bantam:
"an independent neutral channel for the mass publishing and distritubtion of reprints of ..."
"neutral" = a member of the old boys' club.
Anyway, the cartel has decided that S&S and Marshall Field (and Penguin and the other new paperback houses feeding into the newsstand distribution system) need to be Dealt With. In Dealing With that threat, they engage in _exactly_ the kind of highly competitive activity that Thompson says publishers aren't capable of engaging in because they are busily occupied Helping Society by Publishing Good Books.
But really, this is just straight up what cartels do amongst themselves vs. what cartels do to outside threats.
No wonder the publishing industry thinks this is reasonable behavior today. It worked before, didn't it?