World Cartels Map Post-War Plans to Tighten Monopoly
Berge, Wendell
World Cartels Map Post-War Plans to Tighten Monopoly By Wendell Berge Assistant Attorney General of the United States AMERICA can never have a foreign policy baoed on the principles of democracy...
...in affort...
...If, for example, m a particular industry it seemed necessary to control production in order to avoid waste of a scarce natural resource, such a problem would be a proper one for solution by national or international governmental action...
...long before the war, cartels worked out a modus Vivendi—a method of continued existence—for they felt that their relations must be preserved, war or no war...
...A cartel agreement decreed that England and franca were territory ta be supplied by German interest* and the eaie was prohibited...
...It in generally recognised now that economic freedom cannot )>•• attained at home if private group* are permitted to acquire monopoly power over induatry...
...It is embodied ia the Sherman Act...
...siosss have la he taken which) will affect taa bvss af...
...Not only was the ¦••stay development af South American trade and in-•tatry checked, but even today we struggle desperately tt overcome the political consequence* of cartel activity...
...Prior ta the war, the ahipmeat af vitally needed magnesium from this country to Great Britain was restricted by cartel agraeanents...
...Our armed forces plead with us to contribute our binocular...
...The Act applies to foreign a* well a* domestic com men...
...Under that Act agreement* between competitor* which divide the market, restrict production aad otherwise restrain competition are regarded ia mast instances as unreasonable restraint* of trade and illegal, aad agreements with respect to price, with certain limited exception*, are always illegal...
...earn long cherished the principle of open covenants openly arrived at...
...In fact, this policy i* an es-¦eatial part of America's conduct of foreign affair...
...If international restrictive agree menu are ever needed, they must be dstermiasd upon by rsponsible governments—not by private cartels...
...J* Ectcwary of IML...
...These private governments threaten the sovereignty of democratic nations...
...Hie acaicity of rubber is a never-ceasing threat to our productive effort...
...aa aH far years to come, it is mm in lial that taoae who seturre ia a democratic aad B*cmhwt sals-lien eh said bs safe la asake their voices Beard...
...Latin America was turned over by private cartels as a colony to hostile foreign interests...
...An officer of this Canadian subsidiary of the do >'<•"> i* I cartel stated in IMt that: "CIL, in company with other Canadian firms, were •object to considerable pressure by their Government to develop Canadian export trade with the West ladies especially because the Canadian Government was * pending important ansae in suhordixing stsaansbip tariff ties with the West ladies...
...But without competition they are able to shut off one country from another, to build private tariff walls, and to restrict the growth of industry throughout the world...
...The political implications of cartel activity threaten to subvert future national public policy of the United States...
...private ecssmssic gaverameata which nee a. to di-ids aad rase world indentry an the basis af economic privilege- If cartels are sacceaafal in gaining a foot bold ia ths pastwar period, it will almost he impossible far thin aatiea ta maintain a high level af peacetime pr ad or...
...In such circumstances it may be necessary for the organisations to obtain the help of their governments and the two organizations agree to collaborate in seeking that help...
...This Ousseldorf agreement was reached immediately after Hitler's invasion of Czechoslovakia and it constituted an agreement between the British and German cartel groups that they would work together to eliminate competition and fix prices...
...Thsv* are battles enough still to he famgat In the sndasrhag straggls to Impure tb* lot of mantrap a1...
...Therefore, the necessity for vigorous action in keeping open the channels of trade becomes apparent when we consider that those who create cartels hold them -selves above the law or seek to control legislation and Government policy in the many countries where they operate...
...Thus, the Of taws Jfttmml recently stated editorially that "it ia fairly clear ta all that cartels, large combinations of industries parcelling out territories among themselves, controlling patent* and Ixiag prices, may he a menace ta the general well-being, and what is snore vital, a menace ta world peace.'' But in any event, there can he na doubt a heal the American policy...
...Sack papers as ysoars f olall a vaJaaMe fan rtI an an preeralang to their readers a maters Socialist at* prieeal-day prabiims, Todae oar two great aalieaa are htcemsag ¦are aad mere ihsasly ateaclaled aa a resak af their roasasaa peep ana ia war...
...Taa greatest threat to sar •arcana in achieving fall p red actios aad fall (Btelo-aseevt at heme, nasi friendly reoperation with oik...
...It done not seem possible that the Atlantic Charter, the Good Neighbor Policy, aad the rocipr.h .1 trade pacta can effectively prevail if the aperiel aril Magna af cartels dominate trade and poll-ties m the postwar world la maay impute cartels farm esse af the ceatral aoNwo af taa aesassst pari ad...
...policies and its foreign relstion...
...Cartel* cannot accept this prospect, for they know thai economic freedom brings economic competition...
...The Good Neighbor Policy ia one of the fundamental principles of our relations with Latin America...
...Among other things, it waa provided that "agreement* upon prices or other factors between Germany and Great Britain are only a step, although a most important step, toward a mere ordered system of world trade...
...There is an awakening, however, in Canada, as well aa in Great Britain itself...
...The conduct of cartels before and during (his war has Ween one of the tragic pages of our history...
...If and when aasae measure of control and regulation become*, economically necessary on an intematioaal scale in a particular industry, a question is presented for governmental action -not for private cartel action...
...ICI, and CIL, the latter company waa confined in all it* manufacturing and selling operation* to Canada, notwithstanding the policy af the Canadian Government to encourage West Indian trade...
...An example provided by one of the leading exponents of the cartel system in Great Britain state* quite bluntly that: "With a large organisation such ss we have, I find it is a good thing to isaue such warnings from time to time—one went out at the time of the Ottawa Conference—so that everything possible is done to ensure thst no prospective political or legislative action on the part of Governments i* permitted te influence, gejation between du Pont and LCI...
...nations abroad, ia the phllanephy aad practice sf pst-itege sashsaitd fan cartehs...
...It should be recalled that the political deal which Manirh represented had its counterpart in the Dusaeldorf agreement, in which the Federation of British Industries and the German industrial overlords expressed their intention of stabilizing and rationalizing world trade...
...Their attitude has been expresed often by carteiists in the United States and other countries...
...By giving German industry virtually a free hand in Latin America, and by agreeing not to compete, American eartelists made possible the creation of a German ipeerr of influence...
...It m essential ts anderstaad that cartels are...
...1 wish yen goad fartasate ha taa fntare...
...Tern wsuld base violstsd the commitment of the American csrtelist 10 haa German partner, la lMa, after Hitler aad annsanssd hi* inteatioas, bgland aad franco sought ta obtain deep oral *ty~ nssdsd military optical genua from this country...
...Likewise, it moat be equally recognized that friendship snd cooperation between this country and other nations cannot be established without the free exchange of gooda and services...
...They cannot stand competition far it mean* expanded produe-tion, lower prices and the destruction of their control...
...But cartels have an even more serious aspect...
...In case legislation or government action interfere, then they will cooperate to adapt their relations, aa one agreement atates, "in the spirit of the present agreements...
...shall stay in Canada and not spread out into other countries, either by Isying down plants, exporting their products, or licensing under their processes...
...o • • THr.KK ia a dose relation between a country's eco-i...mm...
...Thus we find American and British eartelists agreeing to preserve the German position in Latin American markets after the war...
...Frwat HERIEIT MORIISON IT I* with great pleaaare that I reagrslalata The New Leader aa Ha assaiveraary...
...when Britain was in lac mast "*e** tssriL a cartel ngmnuat decreed that a large *"•***>• munition* ataaadaetuier could not supply **rt*J" etplsaiim ta the anil ash...
...CURELY wa mast realise now that if the program of ^ Ousseldorf prevails in taa postwar world it will produce World War III...
...Aaseriean rosspsnics cannot enter into such agreement* without violating the law and foreign companies cannot perform such agreements in this country without viols ting the law...
...Surely we realise that we cannot build a free world without a free economy...
...Because they have found the enforreasent sf the Sherman Act a hindrance in the past they have expressed a desire to have tbe antitrust law* repealed...
...In general, cartels restrict rather than promote trade...
...Csaninaf interchanges af Me** aad eaasaioaa are taking stare at all revets, aa that, aa bath staVss af Has Alienate, lams* warn, teas »oo...
...Agreements between the cartel members of countries now >.t war provide for a resumption at the war's close...
...There has been ia recent month* s substantial interest indicated ha Canada in this whole cartel problem...
...The effects of these practice* include reduced production and employment, higher prices and profits, retarded spread of technological impiovements and a lower standard of living...
...He felt that the CIL paattion with it* Government would be strsmgthswed if free is quote on certain products—where necessary protecting ICI prices—as refusal to quote had led ta cava plaint* to the Government on occasion ia the past" But under the agreement between du Pant...
...la these daya af crisis wnew great ansae* sassst he debated and political aad aerial sc...
...J Voice for the Democratic Way...
...Yet agreement* have been «• atfst-aaticinal IndaaUy affecting both the Amer-err ansa* aad our foreign policy which were se-contrived aad daistVeliiiesy arrived at...
...These same group* are making their own postwar plans...
...Cartels typically engage in each practices as dividing tetda of operation and market areas between members as aa to eliminate competition, restricting production by agieessent, and fixing prices as as to avoid price compel it mm...
...ion or ta cooperate la tbe roeoamtructiea af war Id trade...
...are rindiraag va hashes ass she net eaty to their owa nation hat to taa other pas las is aa warn...
...f*rr> treaty commitment made by this country is de-U»**d publicly by the peoples' representative* Without *tagrrrnsmt af two thirds af the Senate and the Presi-treaty may be made...
...Aa s farmer isnusaalsr Is year cetosaae, I am glad to hear af year present aarraas, and...
...An exsmpie of the way in which cartel practices strangle industrial development within the British Empire ia provided in the rase of the Canadian chemical industry controlled by Imperial Chemical Industries snd du Pont...
...Reciprocal trade treaties and good neighbor policies can have little effect if private cartels can shut off American markets to foreign producers or prevent Ameriisn producers from selling sbroad...
...The shortages af aluminum and magnesium resulting from cartel >estr*rtioua forced aa to atrip the kitchena of America and scar our public squares with scrap piles...
...The lack of vital drugs and modicum* haa jeopardized our men fighting in fever atiickm areas...
...Thus, in effect, these two industrial cartel groups agreed that in case of competition from other countries that refused to accede to the cartel arrangements, the parties would seek aid from their respective governments to effect reprisals against the countries offering competition...
...are a*iking to ariag absal aa imferased, earnest aad csasdrnrtive approach to problems which fata as all...
...They also pronaote various kinds of patent licensing contracts which enable them to control and limit the use of new inventions and thus restrict the benefits of technological advance...
...Bat where control is neaded, it must be by public authority...
...While our Government was bending every effort to bring about the conditions of sound and mutually advantageous reoperation, cartels were systematically undermining these effects...
...In fact, almost wherever there was a cactel there was a shortage...
...The policy of the combine in thst instance was stated in a letter which declared the "CIL I Canadian Industries, Ltd...
...Nazi propaganda, espionage, and aubversive activity all stern directly from this unhampered German penetration...
...Examples like loess could bs multiplied almost indefinitely, » • • WUI a K t no mistake—the war has not interfered with cartel plans...
...World Cartels Map Post-War Plans to Tighten Monopoly By Wendell Berge Assistant Attorney General of the United States AMERICA can never have a foreign policy baoed on the principles of democracy and international ¦ road trill at long aa international trade it dominated by cartels...
...Cartel agreements invariably provide for the contingency of war...
...When South Americans •eaght ts purchase drugs, metals, precision equipment, *¦* munitions from the United States, private cartel uwatie* bad already provides] that American concerns tenia not engage in this trade...
...may yaa lattg natiani to ntay year port ia them...
...Tbe parties to this agreement also stated that: "The two organisations realize that in certain rases th» advantages of agreements between tbe industries of two countries or of a group of countries may be nullified by competition from the industry in sense other country thst refuses to become a party to the agreement...
Vol. 27 • March 1944 • No. 12
