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felt to be contrary to public policy for a foreign company to control the market of so important a necessity.

In Austria, as has been intimated, the feeling against combinations has been considerably stronger. In 1897 the combinations among brewers, sugar refiners, and others seemed to the Government to threaten somewhat the interests of the treasury, inasmuch as if prices should be increased and, in consequence, the consumption should fall off, the tax levied upon those products would be materially lessened. With this thought in mind, the Finance Department proposed a bill placing these combinations whose goods were subject to the consumption tax under the somewhat rigid supervision of the Government, and providing that in case unreasonable measures were taken, the Government might forbid a contract or might give the fullest degree of publicity to all of the business of the combination. Owing in part to the political condition of Austria, in part also, perhaps, to the fact that the law was not more general in its application, nothing further has come of this. About the same time the Department of Trade and Industry appointed a special committee to consider the subject of the regulation of the combinations. This committee, after careful discussion of the whole question, handed in its report to the Section for Industry, Manufactures and Trade, and made the following recommendations:

“(1) That the combinations be recognized as legal organizations, and be put in consequence into legal form. “(2) That every combination be obliged to record its founding with a combination bureau or court, which shall be given certain judicial powers.

“(3) This combination court should have also the powers of a court of the first instance to settle primarily all controversies at private law arising in the course of the business of the combination.

(4) For the checking of any tendency toward monopolistic prices on the part of the combination through its limitation of free competition, measures in the direction of the modification of import duties, and of freight rates on the State railroads, should be taken, as well as measures looking toward the furtherance of unions to oppose the combinations. (Presumably organizations among dealers and others.)

(5) For the purpose of deliberating and of deciding regarding the measures to be taken by the administration, there should be created a Monopoly and Combination Council, which should be a consultative organ of the Ministry of Trade and Commerce.

“(6) Finally, the government was formally requested on the basis of this report to prepare a bill for a law on combinations to be laid before the Committee on Combinations for consideration."

This seemed at the time to be the most advanced step taken in any European country regarding restrictive legislation. It seemed not at all improbable that, as the result of this carefulstudy on the part of the Government, some legislative measures might be passed. It should be noted that the result of this study-and one may say that similar opinions seem to be prevalent also elsewhere in Europe-was that the combinations ought not to be set aside, but to be recognized as normal institutions in modern industry, and to be restricted only by certain measures on the part of the Government, which would prevent abuse of the power which they undoubtedly possess.

The recommendations, however, were not enacted into law, and the only laws against the combinations are those of the civil law and some special provisions of earlier laws of 1852 and 1870. Under these laws agreements of manufacturers for the purpose of raising the price of a commodity to the disadvantage of the public are unlawful. The courts have in several cases upheld the law and declared agreements invalid even though prices had not in fact been advanced, the intent as it appeared from the agreement being sufficient. Austria thus appears to come nearer the spirit of the Sherman law than either Great Britain or Germany.

Both Austria and Germany are rigid in the enforcement of laws against unfair competition, especially if the element of fraud appears.

The laws given in Appendix G show that European combinations, speaking generally, are not looked at askance in any of their countries to so great a degree as in many of our states. European countries, especially Germany, are inclined to welcome their advantages while protecting the public against unfair practices. The rule of reason applies in all countries.

War conditions in Europe after 1914 profoundly influenced all industrial conditions. The governments of all the warring powers at once passed laws affecting credits. In most instances they took complete control of the railways; and soon all industrial plants affecting munitions or war supplies or that needed control for war purposes were put under the supervision of government. Commissions were appointed to purchase and distribute foods, to control factories, to direct work in whatever way seemed wisest, either directly or under their former management.

In Germany it has been the opinion of some observers that their Kartell organization has been advantageous while it has been deemed necessary to legislate against abuses.

On August 4, 1914, a law was passed punishing with imprisonment and fine those who sold goods at a price beyond a maximum price fixed. Under the corporation laws of Germany, agreements to maintain prices are legal and enforceable by courts unless they are considered directly contrary to public policy. In case, however, the Kartell agreements come in conflict with the new law fixing a new price, the latter takes precedence and a member of the Kartell could not be punished for refusing to abide by the price agreed upon when that conflicted with the war law.*

At the outbreak of the war the thorough organization of German industries in many lines under their Kartell agreements proved of great advantage in adjusting the industry to the new conditions created by the

In many cases, for example, the great disadvantages coming from the moratorium were much lessened by the fact that these great monopolistic organizations were able without serious injury to extend the credit of their customers as it would not have been possible for smaller sellers to do.

Moreover, in many instances the best organized Kartells with their centralized selling syndicates had for several years attempted within broad lines to adjust

*Kartell Rundschau, 1915, page 453ff.

war.

the supply to the demand. This had already proved in many cases of decided advantage in tiding over the evils of threatening crises,

At the outbreak of the war, therefore, they found themselves in a condition without serious difficulty still further to shorten the production or on the other hand, in case of industries stimulated by war conditions, promptly to take measures to increase the output.

During the war the Kartells have been able to carry out a regular policy of steadily increasing prices while the unorganized industries have in many cases been subjected to any irregular, often extraordinary, contradictory price policy sometimes dictated by a few important firms.

There will doubtless come a time after the war, Mr. Derblich thinks, and he believes it is very desirable that the time be not too long delayed but that it be prepared for as soon as possible, when both the State and the consumer will prefer to deal with firmly organized combinations rather than to treat with industries that exist without statistics, without any price regulations, in a word, without order and without representation.*

Many believe that the rigid government control during the war will inevitably lead to a great movement toward Socialism. Inasmuch, however, as the government management in war time has been carried on with little regard to expense, and as many will feel unwilling in time of peace to submit to government dictation readily accepted in time of war, it is quite possible that a reaction may be felt leading to the opposite result.

*J. Derblich, Article in the Kartell Rundschau, 1915, on the Austro-Hungarian Combinations and the War.

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