Note It is evident that between Cass's previous letter of 21st November and this one, he has had a meeting at the Press with Mr Mashiter. Apparently as a result of their conversation, Cass is here at last obliged to touch on the fair competition issues, the matters that were obviously uppermost in the minds of both the 1940 Inland Revenue Commissioners and, at least initially, their 1975 Inspectors. Readers are warned that in this second letter various shocking, ugly new terms are therefore introduced, albeit in inverted commas: words like 'market place', 'gain' and, worst of all, 'trading'. How distasteful. - A. M.

[original page numbering, forwards]

HEADING:
CUP logo with the legend: The right of the University Press to print and sell all manner of books was granted by Henry VIII in Royal Letters Patent of 20 July 1534
HEAD OFFICE
CAMBRIDGE UNIVERSITY PRESS
THE PITT BUILDING TRUMPINGTON STREET CAMBRIDGE CB2 1RP
Telephone (0223) 58331 Cables unipress cambridge england Telex 8176256
Chief Executive and Secretary to the Syndics Geoffrey A. Cass
Publishing Division: Managing Director Philip E. V. Allin
Publishing Division: Publisher Michael H. Black
Printing Division: University Printer Euan H. Phillips
Printing Division: Managing Director Harry Myers

Head Office: Financial Director Peter R. Hodgson
Head Office: Director - Group Projects Colin F. Eccleshare

At foot of page:
Publishing Division
Cambridge Head Office & Editorial and Production As above
Printing Division All Departments University Printing House Shaftesbury Road Cambridge CB2 2BS

GAC/AP

18th December 1975

Dear Mr Mashiter,

It was very pleasant to talk you the other day and to have the opportunity of showing you what we do.

The Composition of the Press Syndicate

I promised that I would let you have a complete list of the members of the Press Syndicate. You will remember that I said that it was unthinkable that anyone would consider that people like these, with no personal financial interest in the press whatever, were running Cambridge University Press for commercial purposes. In a very real sense, the Syndics are the living embodiment of the purposes and nature of the Press. Historically they have been the key to the preservation of the Press's nature and orientation.

Perhaps I should repeat that the Syndics are appointed by the Council of the Senate of the University. They have a standard term of office of 8 years. The Chairman of the Syndicate is personally appointed by the Vice-Chancellor of the University, to act as the Vice-Chancellor's Deputy. (The Vice-Chancellor until fairly recently used to chair the Press Syndicate in person.)

The Syndics represent the ultimate in 'gratuitous professional control.' Syndics are not remunerated in any way. They are some of the most distinguished academic authorities in the world. And they have total control of the Press's activities, on behalf of the whole University.

There are 20 full-scale meetings of the whole Syndicate each year, plus meetings of sub-committees of the Syndicate, in addition. Every meeting takes a full afternoon. Furthermore, there are Syndics on the executive committees or boards of each operating [page 2] division of the Press. The full Syndicate meets considerably more often than, and goes into much greater detail than the Board of the typical private or public commercial company.

A succession of Syndics has controlled the Press, on behalf of the Vice-Chancellor and the Council of the Senate of the University, since 1698.

General

Following our recent conversation, I would confirm that the only financial consideration that would ever be applied by the Syndicate is whether they could actually literally afford to publish something. There is no consideration of financial return whatever. In my few years at the Press, the Syndicate has never rejected an academically worthy manuscript and the question of whether an academically worthy manuscript would make an adequate financial return has never even arisen. In practice, across the educational spectrum, some of the Press's publications recoup their expenditure, some do not. The Syndics have no general financial aim at all, except to remain viable.

It could well be argued that the Syndics do not 'trade' at all, in the normal sense the word: firstly, because the University certainly does not pursue its publishing and printing businesses for livelihood or gain: and secondly, because the University cannot be said to be in real competition with commercial concerns, in that each of the Press's books is unique, and a large proportion of the University Press's output is totally unattractive to commercial concerns because of its complexity and unprofitability. The element of the University's output which might be attractive, supports the element that is definitely not. Finally, the commercial concerns are competing with each other for money: the university is not.

I should point out that because of the unique financial constitution of the University Press (the University treats it as financially autonomous, and the press enjoys no grant income), it has to appear in the 'market place' in order to carry out its activities at all. One could argue that it only appears to be 'trading'.

The actual activity is the prime purpose - and is not itself carried out to secure funds, even for some other, charitable, purpose. The University chooses to perpetuate and finance the actual charitable activity out of the funds actually raised from that activity. It is impossible, in other words, to carry out this particular activity and prime purpose without appearing in the 'market place'. [page 3]

One can reflect that even if the books were free (being wholly subsidized), and bore a zero price, or were sold at half-price (being partly subsidized), the University would have to engage in all the apparently commercial activities of buying, manufacturing, selling, and distributing etc. If it were possible to disseminate knowledge free, booksellers and agents would not distribute free books (there would be nothing in it for them) so that the University would either have to use and remunerate conventional booksellers and agents or it would have to finance a completely new and different method of worldwide exposure and distribution. In either case, there would always be present some elements that would look like 'trading', or competition with others.

However, if the University's competitors are in it for the money, and the University is not, it matters little whether the University's dissemination of knowledge is free, half-price, or self-supporting. The motivations behind the activity, the natures of the 'trading', and the destinations of the income, are entirely different. The University Press is an altruistic presence on the commercial scene. It is there by necessity, not because it has commercial trading aims. The Press has to use the methods of production, marketing, and distribution that are available, if it is to carry out its purposes effectively. Financial trading gain is not a motive of the press. There is no way that it could be, as there is no as possible destination - involving 'gain' - for any money acquired.

The Press is, in effect, a self-financing trust maintained by a charity to discharge one of the charity's prime purposes. Its activities are for public benefit, but it is not a drain on public funds. If Cambridge University Press did not exist in its present form, the Government would have to finance it from public funds in the form of grants in the way that the Government presently has to finance the rest of the University; or the Government would have to finance the creation of other university presses, or of independent printing and publishing facilities, from public funds.

However, disregarding all this, let us assume that the University is trading. It therefore has to satisfy Section 360(1)(e). That is easy. The profits are applied solely to the purposes of the charity, and the trade is exercised in the course of the actual carrying out of a primary purpose of the charity. The evidence clearly demonstrates that there is no way in which these facts can be avoided. [page 4]

Cambridge University Press is actually in a position to satisfy a much tougher clause than Section 360(1)(e). Even if it Section 360(1)(e) had read:

"...if the profits are applied solely to a prime purpose of the charity, and

(i) the trade is essential for the actual carrying out of that purpose."

One final point. On reflection, after your visit and our discussion, I am convinced that the Press of Cambridge University is literally unique. It is obviously totally different from any commercial press: but it is also significantly differentiated from the organisation which most closely resembles it superficially, Oxford University Press.

The overriding reason for this is that the Cambridge Syndics' observance of educational and religious objectives has bound the Cambridge University Press to operate within severe limitations which even Oxford University Press does not have to contend with. The lack of similar strict control by the Oxford Delegates has led to the luxury of diversification into some classes of publication (and therefore, trade) which are almost certainly outside the prime purposes of Oxford University, in terms of Section 360(1)(e).* Cambridge University has denied itself such exciting and potentially profitable diversification and has maintained strict control of the Press's activities, worldwide. It should be noted that the products of such diversification compete very strongly and directly with the similar products of commercial publishers (e.g. children's books), in a way that the bulk of the output of Cambridge University Press does not. In any event, in Oxford's case, it is more difficult to argue that a class of publications falls within the purposes of the university if those publications are never individually inspected and authorised by the university. At Cambridge, every single publication is individually examined and authorised by the University - not merely before publication, but before entering into any sort of commitment at all with the author.

* Unless Oxford could show historically that the actual activity of publishing them was itself a prime purpose, or that the funds arising from more general publishing enabled Oxford to finance publishing which was within Oxford University's prime purposes and which could not be financed in any other way. [page 5]

Their is of course a component of Oxford University Press that is almost exactly like Cambridge University Press, but it is only a part. As a total 'animal' it is quite different. There is no doubt in my mind that most of the operations of Oxford University Press are beneficial to the community in the general sense, and it ought to be charitably exempt from tax. However, factually and legally, in my view the watertight Cambridge University case could only be advanced on behalf of a segment of Oxford University's activities, because Cambridge University Press is, in the literal sense, unique.

I hope you find these comments and the enclosure helpful. Very best wishes for Christmas.

Yours sincerely,

Geoffrey Cass

T. Mashiter Esq.
HM Inspector of Taxes
Cambridge 1
Brooklands Avenue
Cambridge CB2 2DT