The Detroit times., 1916-01-31
German Cartels


The German cartels. or trade com.
b.aauons, have often been pointed
out as showing the more tolerant
attitude of European nations 20.
ward big business The origin and
nature OF tne cartel is described by
D- Edward Ewing White. chief of
the bureau OF foreign and domestic
commerce. in the Nations Business
THE cartel according 20 the def
u.ton OF a prominent German eco.
uomist Is an organization Of
agricultural or Industrial producers.
formed for a limited period for the
purpose OF assuring and improving
tho profits of the producers All Of
the members of The cartel are In
dependent producers who retain
their individuality There Is no
merger as IN Tho case OF The Ameri
can trust the members OF the cartel
only agreeing 20 act together in
certain matters concerning their
common welfare. There are over
500 cartels I'm Germany. several os
which are international iu char
acter They are most numerous lu
the heavy Industries. such as
brick, ore, cement and lime. where
the products marketed are fairly
uniform IN quality and producers
are comparatively few and located
ia a restricted territory. The car.
tells among manufacturers OF minor
finished articles. on the other hand
are less numerous. and not go pow
erful. In The textile trade. for IN.
stance, which "a decentralized and
which includes many small mills, it
has never been found possible 10
form an effective cartel There are
a number of powerful cartels IN the
chemical trades. which have been
aided by patent monopolies and IN
the concentration OF production.
The formation OF cartels by man
ufacturers and producers has led 70
the organization Of wholesalers and
retailers IN selfdefauso Most OF
them we're organized in the early
eighties or have evolved from syn.
dicates OF that period In general.
they have three distinct functions
l. The purchase Of raw materials
and supplies.
2. Tho regulation of production
by limiting the same. Jy the lessen.
Ink Of the supply. by standardlzing
by a distribution OF tho production
among the component enterprises
In accordance with their Individual
capacity and location. OF finally by
shutting down. permanently or tenn
porarily. either entire factories or
individual machines.
O. The regulation OF distribution
by either limiting or eliminating
mlddlemen, by making agreements
with other syndicates. and by tho
furtherance of export trade through
export premiums or rebates
The beneficial effect of the cartels
from the point OF view Of the mem.
bers are, better prices, savings IN
tho maintenance Of sales organiza.
tions and economies IN the buying
~ raw materials. Shares of cor.
poratious connected With cartels
are usually quoted high on the stock
exchanges Tho owl effect OF the
system IA tho tendency toward mo.
nopoly and tho unstable nature ~
Tho cartel because tho terms OF
agreement generally hold good only
for a short period Tho consumer.
az usual, bears Tho burdens % IN,
creased prices brought about. Tho
well organized and very powerful
cartcls IN tho steel and coal indus.
tries arc able 20 dictate terms n
buyers ~ tho finished hardware.
etc, thereby seriously hamporinp
such Industries IN export trade.
Other abuses usually connected with
monopoly arc present The syndl.
Gates sell abroad moro cheaply than
they sell a. home. They also exact
lsngterm contracts from buyera and
ohllge them 10 1.-Two up 70 the con.
tracts even in case OF a crisis. The
government provides check on tho
carteis through The tariff. m
through price fixing and the rmlta
ton of output, the cartel brings
about a condition which causes gen.
eral complaint among consumers
the protective tar.r h 20 adjusted
az 10 punish the Offenders and bring
about a change of tactics.