Evening star., 1944-04-30

monopoly to be preferred, in the public
interest, to free ompetition-applies tt
that particular form of monopoly which
operates across national frontiers ant
is known as the cartel.
The cartel comes into this discussion
because it restricts production, ano
whatever restricts production hold:
down employment.
I'm many respects" says Wendell
Berge, Assistant Attorney General OF
the United States, in charge of the Anti.
Trust Division of the Department of Jus.
tice, "cartels form one of the central
issues of the present period. The great
est threat to our success in achieving
full production and full employment at
home, and friendly cooperation with
other nations abroad, is the philosophy
and practice of privilege embodied in
cartels. If there is to be a free and
productive economy in the United
States, or a free exchange of. goods in
world markets, the power of cartels
must be broken"
Care for the Cartel.
Let us see first what are the advan-
tages claimed for the cartel. It is i'm
portant to know this side of the case
because of the influence which the ad-
vocates of the cartel may exert on trade
and employment in the postwar world.
The most vocal of these are in England.
where cartelization has proceeded at a
rapid pace since the abandonment of
the free-trade policy in 1882. But, as
v1vidly shown by recent governmental
inquiries into the effect of cartels on
our national defense, there is power
fully intrenched section of American
industry which is quite as cartel minded
as any foreign champion of the system.
The industrialists who sang the
praises of the cartel to Eric Johnston
on his visit to England (and were told
by him that their proposal of a postwar
division of the worlds markets between
England and the United States
wouldn't work'D were simply a little
franker than their American counter
parts. They could afford to be franker
because public opinion in England, or a.
large part of it, has come to believe
that the advantages of monopoly can be
obtained without its dangers.
1t is claimed for the cartel-as for
monopoly in general-that it eliminates
the wastes of competition and promotes
chronological progress through the ex-
change of technical information. The
first OF these contentious has merit, but
the validity of the second is certainly
debatable: There is large other side
TO that question. Again, it is argued
that international world trade combi-
nations make for world peace, and that,
too, is, to put it mildly, a highly de-
batable proposition.
Here is the case for the cartel as
stated by one of its foremost advocates:
Sir Felix j. c. Pole, chairman of Asso-
ciated Electrical Industries. Ltd:
"A cartel or association usually means
an association by agreement of COM
panles or sections of companies having
common interests. It is designed to
prevent extreme or unfair competition
and allocate markets, and it may also
extend to interchange of knowledge re-
suItlng from scientific and technical re-
search, exchange of patent rights,
Standardization of products, etc. Com
petition is not eliminated, but it is
regulated. COMPETITION in quality. eff
cheney and service takes the place of the
crude method of price cutting"
Like NRA Arguments.
This defense of the cartel is reminis-
cent of the arguments advanced for the
Inflated NRA of the first Roosevelt ad-
ministration. NRA was to bring back
prosperity by regulating competition.
The "chiseler" was to be wiped out Now
the attack on the chiseler had a wide
spread appeal alike to business and the
general public, but it came to be sensed
by the people, as the administrators of
the act reached out to draw all sorts of
small enterprises into it's net, that the
act contained implications favorable to
monopoly and hence repugnant to the
American traditional system of free
enterprise.
This fundamentally bad feature of the
act, as the people saw the matter out
weighed the good features, and so the
act was stricken down in public opinion
before the Supreme Court, by unani-
nous vote, killed it legally.
The instinct of the people was sound
and 1t is sound also in its similar con-
oemnatlon of the cartel despite what
ever advantages the cartel system NAV
oHer as reducer of waste and a SUBJ
stitute for what Sir Felix calls "the
crude method Of price cutting"
For the fact is that the cartel in
whatever guise it appears, is device
IN restraint Of trade and is therefore
at war with free enterprise.
Three General Types.
In recent timely and comprehensive
study made for the Senate Committee
on Military Affairs, Corwin D. Edwards
OF the antitrust division of the Depart
ment Of Justice, emphasizes the centra
and controlling fact that cartel actiyi-
ties are arrangements among business
enterprises engaged in the same type Of
industry ito avoid some or all forms o1
competition" However much the pur.
pose of these arrangements may be
CLOSED over, as in the quoted definition
they are, as the definition itself shows
designed to maximize the profits OF
participants by directly or indirectly
maintaining prices at the level of great.
est net return"
A cartel, by another friendly English
definition, includes fusion, pooling ar.