The sun., 1916-11-11
THE "CERMAN DEA' OF GOVERN
MENT,S RELATION TO INDUSTRY
How Big Business Is Organized and Financed in the Land Of "t oour,,.
ton Imposed by Government Fiat"

Such "A country could not tolerate
the idea of production running riot
which at certain cpochs becomes the
outstanding characteristic of big in
dustries In countries that maintain a
greater theoretical and practical de-
mocracy than does Germany. In the
amer In which they foster business
competition.
The kartell Ia often confused by
American readers with the trust,
which Is a combination under the
masterful control of one powerful
business talent. or, at most, Of n
powerful financial group. with the prl-
mary object of destroying ~ of driv-
ing out Of business all competitors In
the same field: but in almost every
case the history of Il German kartell
Will show that 1t WAS founded in soine
period Of industrial or financial de-
preston with the purpose Of resisting
"a" lowering of prices II the over
productioiIOf commodities. In n few
cases. however, there were formations
uf pr. ventivc kartclls. that Is. OF
k%artclis established not during Il period
of bad business. but in anticipation
Of such - period. in order. If possible.
To forcstalI il; hut such cases are
quit" raj" in Germany.
The kartcll usually has the legal
status Qf Il stock corporation. tx m
in fact. Its object Is the cooperative
sale Of a certain product. For the at
'G.nm"nt II this object two methods
AZ" pursued: either through a sales
,tr..., .I.,,T-t,n. ,,,l.. ..--
trail control. or through direct sales,
which al" also. however. under the
centIa, control. The Nerkaufsbureau
fixes prices. all the products OF it's
associates pass through its hands. II
distributes the orders among the af-
iiliutcd factories in accordance with
their capacity; all publicity work is
performed 10y II. as well as all neces-
sary regulations with customers. This
seems the simplest solution OF the
sales problem. yet IL liz by no means
master OF the field in the administra-
ton Of the German kartell. Az above
indicated. in many Of them the ex-
ccutive board fixes the prices, leaving
To each producer the task OF finding
his own market. but limiting. in some
ilislllii'Ts wv N'ldI VI III 'u'put' vi "
stricting his sa.es to a certain geo.
graphical district.
The tntiix system would he broken
up II any ~ the manufacturers. thus
left To themselves. should yield to the
temptation Of securing a large order
hy ASKING a lower price than that
agreed upon. or of achieving a more
efiC,o.t utilization Of their plants by
manufacturing for sales outside their
WI districts. 1t was therefore neces-
Sary To- establish n rigorous system Of
s~uperviS!un: active. intelligent and
more or less pugnacious" inspectors
have a right. AZ any moment, to make
whatever veriiication they like, in
spcctinc the books. the correspondence.
the manufacturing end. or the stocks
carried. Of any firm in the combine.
puni>hm.nts, IN the even that frauds
are detected. are severe. Affiliated COM
pan'es are required To deposit with the
executive board drafts accepted 10y
them. which are presented AT the
proper banks IL any fine that has been
incurred lis mo-, paid at once. when
there is a sales bureau the thing is
easier still To- regulate: IN that CASE the
amount Of the fine J.. simply charged
To- y delinquent firm, atd thus sub
'raCt"d from the amount aCCruing from
It's sales.
The e~>sen'ia' point about any kartell
j. that g., fixes the price for all the
firms ~ Il. and this applies with equal
force 20 both the sales bureau method
and To- that e separate sales with CEN
tiIl supervision. IT. either case the
object attained is the exclusion OF cut
throat competition lay the general ac-
ceptanC" Of u reasonable price AT which
To- sell products.
ON" result of this prime character
ist.c Of the kartell ia that II is impos-
sihl" to form Il kartell unless YOU have
succeeded tn making At least az per
cont. of tho productive agencies in
Your field Join the organization. In
fact, /, is desirable that even q greater
proportion than that hc inside the
movement. For u long time IL WAS I'M
poSs'hl" to- got M "A karjcll for sugar
refining a Germany. for II was first
necessary - iuclId" tn" large number
al producers whO dealt not in
:, 'inod slCar but N yrli" sugar. much
Of which in those diys went directly
ia consumers without passing through
the process Of refinement. and il was
iust tines" small producers who were
hardest IN convert To the advantages
Of a broader organization Of industry,
owing to their incTHincd preiudices
against anything that was largo and
strong and capable. aud 10 their die
trust Of the financial classes.
Another characteristic resulting
from the very nature OF tho kartcll is
this: tho kartoll is feasible only II the
product to hc sold il rather uniform
in quality: only II quality and prices.
IN other words. can hc made practi-
cally the same for the various ani,i-
ntcd companies, In n word, tho cstah-
IiShmrnt IF n kartell depends on the
possibility ~ setting mp a fixed sale
rt prices. This is the casc with coal,
with smclted metals. half crude stecls.
sheet metals, wires, needles, pins, Sc:
but once your product Is variable in
stead nf uniform. once its selling price
depends considerably on virtues I'M
parted hy peculiar and little known
modes of manufacture. II at once hc-
comes impossible to SIT NJ a scale of
prices ard the formation of "A kartcll
is ont If the question, \ good en-
ample ~ the difficulties attending the
founding OF u kartoll under these cir
rnmStauCps ~ that of tn" textile TRADE:
while the cotton %spinners wcr" able tu
enter into a kartcll, the wcavcrs could
no, do 90 because their output Is too
varied in character, and because. being