For finite-state indecomposable channels, Shannon's basic theorem, that transmission is possible at any rate less than channel capacity but not at any greater rate, is proved. A necessary and sufficient condition for indecomposability, from which it follows that every channel with finite memory is indecomposable, is given. An important tool is a modification, for some processes which are not quite stationary, of theorems of McMillan and Breiman on probabilities of long sequences in ergodic processes.