prises from being exterminated through extreme competition. This enables small industries to obtain raw materials or semi-manufactured products at something like a common scale of prices. As a result German manufacturing has developed a large number of smaller machine industries and handicraft occupations, which comprise a middle-class bulwark between large-scale manufacturing and agriculture.

Syndicates there are regarded finally as serving a useful economic purpose as a means of balancing the relations of production to distribution and therefore preventing any abnormal disproportion between demand and supply. Although there is criticism of excessive prices, practically all political parties recognize the legality and economic necessity of these syndicates or cartels. This is also true of various other interests, including finance, agriculture, mining, and labor.

Government's relation to some of the German cartels is that of positive and direct encouragement. The potash industry under the law of May 25, 1910, established a legal monopoly with government participation and regulation of prices. Desirous of preventing too rapid exploitation of a natural monopoly in potash in the German states, and having regard to the necessity of the commodity for intensive agriculture, the government's dominant share in promotion is self-evident as a matter of public

policy. On different ground but for the same general end, Russia promotes the beet sugar industry, as also does Italy. Recent steps to establish a petroleum monopoly by the state* are due partly to the government's desire to promote the good of German investments in that industry in the Balkan states and to oppose the control which the Standard Oil Company has acquired in that country.

2. Attitudes in England and Her Colonies

As to England's attitude, Dr. Francis Walker, an accepted authority on the question, says: "The policy of the law, therefore, is to encourage competition; but it does not prohibit combination. Furthermore, while agreements in unreasonable restraint of trade are invalid, the English courts give a wide scope to the freedom of contract, and they have never interfered with a consolidation of competing industrial enterprises into a single company, on this ground." +

British practice gives business the benefit of the doubt. Pools for the limitation of competition and maintenance of price lists among iron and steel makers are accepted as natural growths. Shipping rings, which by "conference" agreements completely control the rates of freight on over-sea trade, and combinations which have a

*American Economic Review, June 19, 1914.

† Annals of the American Academy of Political and Social Science, July, 1912.

large measure of control or monopoly in the supply of food stuffs, such as the meat trades these have never seemed serious enough to the authorities to interfere with, or to attempt to restrict their operation.

In two of Great Britain's leading colonies, Australia and Canada, quite the opposite policy has found favor. The Canadian Acts of 1889 and 1904, as well as of 1906 and 1907, and also the Combines Investigation Act of 1910, form a series of repressive statutes intended to prevent "combinations from injurious exploitations of the public." Here the consumer receives the benefit of the doubt. Canadian policy coincides quite closely with that of the United States. One feature of the Australian law bearing on combinations has proved to be of special value in determining whether a combination is within or without the limits of legality. It makes guilt depend upon the question whether or not the public good is served by the agreements and acts of the consolidation. The Australian authorities are specially vigilant in their supervision of foreign combinations.

To summarize, the policy towards trusts in continental Europe is generally one of government toleration or even cooperation. This is largely due, no doubt, to dependence upon export trade for markets. In England the maximum of freedom is allowed in inter-corporate relations and dealings. In America, both in Canada and

in the United States, there is increasing strictness in the enforcement of law, in both civil and criminal prosecutions, against restraints of trade and attempts at monopoly.

3. Austria-Hungary's Steel Trust

On the continents of Europe combinations in primary production seem to be so entrenched as to put the many dependent manufacturers of specialities at a more than ordinary disadvantage. The Austro-Hungarian Steel Trust affords one of the most effective cases of market control. Its benefits to investors are proved by its dividends of thirty-five to forty per cent. So complete is the mastery of the market within the kingdom that many of the smaller plants have been closed. The policy of restricting the output to a little above the domestic demand is unhindered, reports the U. S. Consul at Fiume (June, 1913), and the combination seldom raises the vexing question of selling at lower prices abroad than at home. An import duty on pig iron of $2.72 a ton and of $34 on certain steel products guarantees a home market among iron and steel users.

This large class late in 1913 organized a protective association to resist the monopoly position of the steel trust. By means of three bureaus, a legal, a statistical, and a purchasing bureau, the counter-combination of employers' associations hopes to pool its contracts for iron and steel materials by entering into exclusive

agreement with a foreign company to furnish supplies for a term of five years on the basis of ruling German or English prices.

This steel trust's control is vested in bankers bent on maximum profits. Manufacturers pay higher prices than their competitors in Germany and England for iron and steel products consumed, even though Austria-Hungary produces such products at a lower cost than Germany. This handicaps the exporting manufacturers of such products as cutlery, hardware, and building materials in their effort to develop trade abroad. Banking control of steel production is regarded as a drawback. No more frequent complaint is heard in continental experience than this-that the various cartels and trusts exploit by monopoly prices that large body of manufacturers of specialties, which counts for so much in local economic prosperity. Not even the German combinations are exempt from the persistent claim that these argus-eyed syndicates see to it that the consumer of semi-manufactures makes no more than a moderate profit.

4. Prohibition or Regulation

How far foreign experience has brought out results that can help toward solving our own problems is not yet certain. With the Europeans the trust problem has been more closely tied up with the necessities of promoting export business than with us. The connecting link between British