letter and spirit of the Law and of these Regulations. Acts of omission or commission on the part of any persons holding such executive offices or thus employed carry with them responsibility on the part of the Corporation. When acting upon any application made under the provision of these Regulations, the character of the management and the general attitude displayed toward the purpose and spirit of this important statute, will be a factor which will be given proper weight and influence, when determining the merits of the application. Each year at least two reports shall be made to the Board at such times and in such forms as the Board may require; and at least one official examination shall be made by examiners appointed by the Board-at the cost, however, of the Corporation thus examined. These regulations may be amended from time to time; but such changes shall not prejudice obligations undertaken in good faith under those regulations actually in force at the time those obligations were assumed. GENERAL REMARKS. This epitome of the regulations is presented as an outline of the official text, with such comments and suggestions as appear pertinent and helpful. It will be extremely unwise, however, for the reader to undertake any business step in matters connected with an Edge Law Corporation, without referring to the official language comprised in the Regulations themselves. With the best intentions, errors and mistakes of omission and commission will creep into the annotated version. Infallibility of judgment is an extremely uncommon gift. Opinions differ as to the value of comments, or as to correctness of conclusions drawn; and the reader may be right in his individual interpretation, where it conflicts with our version of the official text. CHAPTER XXI. International Agreements in the Form of Cartels, Syndicates and Other Combinations.1 Monopolistic agreements and combinations no longer halt at the frontier of nations. With the internationalization of capital they have begun to reach out to all parts of the world, and to spin their network of threads from country to country. The decade preceding the world war was characterized by the growth of international private commercial agreements, commonly known as international cartels. International Cartels Presuppose Domestic Market Control. Agreements or understandings between individuals and associations or combinations in two or more foreign countries have not been as rare in the combination and trust movement as is generally supposed to be the case. But the great number of divergent factors which interplay in world trade, including shifting political conditions, endangers the stability of agreements and combinations of this kind, and have in the past been the cause of frequent changes in organization and of numerous dissolutions. Experience shows that international agreements proved successful only when the domestic industries in the different member countries had been organized previously. Strong domestic competition and the presence of powerful outsiders at home rendered futile a coming together of a few concerns, who were unable to control their own domestic market, with foreign concerns in the form of an international agreement. For the reason that many international cartels were short-lived, but chiefly because in certain countries they were unlawful, a considerable degree of secrecy has surrounded them. This explains why our economic literature offers but meagre information on 1See Journal of Political Economy, Oct., 1920, pp. 658-679. 353 this subject. Then too, international cartels have been formed in larger numbers only since the beginning of the twentieth century. Subject Presents Questions of Prime Importance. For a number of reasons special significance attaches to a study of these international combinations. In the first place, from the viewpoint of the theory of cartels, the pure cartel concepts find a clearer expression in international than in national cartels, because the latter are more susceptible to the contingencies of legislation, local conditions, etc. Moreover, a consideration of the formation of international cartels, of the forces which produce them, their frequency, operation and effects has an important bearing on the question of the relation between cartels and protective tariffs. Finally, the economic changes brought about by the world war, among them intensified nationalism, internationalized capitalism, expansion of domestic industry and commerce in the form of "war industries" and new competitive industries, the promotion of foreign trade-lend an added interest to our problem. Number and Nature of International Cartels. Prior to the war there were known to be one hundred and fourteen international cartels in existence,1 distributed among the different industries as follows: Transportation, eighteen; coal, ores, metals, twenty-six; stones and earth, six; electrical industry, five; chemical and allied industries, nineteen; textiles, fifteen; stoneware and porcelain, eight; paper, seven; and miscellaneous, ten. In upwards of a dozen of these private commercial alliances, American interests were parties to the agreements, some of which formed a network extending over the whole world. Control of Home Market is Dominating Factor. The primary purpose underlying most of them was the preservation of an undisputed internal market. To this end a delimita 1B. Harms: Probleme der Weltwirtschaft, 1912. p. 250 ff. |