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ARTICLE 51.

In case of the dissolution of one of the associated companies, the company of the Metallurgical Bureau of Longwy shall not be dissolved; it shall continue in full force as between the other companies. The amount of the interest of the society dissolved shall be liquidated and distributed conformably to the company inventory.

TITLE X AND Last.Dissolution, liquidation.

ARTICLE 52.

The dissolution of the company may occur before the limit fixed for its continuance, provided that such dissolution be demanded or accepted by six-sevenths of the votes at least one year in advance.

In case of new blast furnaces being erected in the departments of Meurthe-etMoselle and of the Meuse, the dissolution may be voted by a majority of four-sevenths of the votes, on the written demand of three associated companies, made six months in advance.

ARTICLE 53.

When the dissolution of the company occurs, either by expiration of the term fixed or by an earlier dissolution, liquidation shall be made by a commission composed of all the members of the council.

This commission of liquidation shall be invested with all the powers conferred by the present statutes on the council of administration, and it shall exercise them on the same conditions.

It may name one or more liquidators, and confer on them all or a part of its powers.

ARTICLE 54.

Contracts remaining to be executed at the time of dissolution shall be carried out by the aid of the stock. In case this is not sufficient the remainder shall be furnished by all the associated companies pro rata in accordance with the quantum of production assigned to each of them in the six months preceding. The associated companies shall not commence to sell iron on their own account before the bureau has contracted for the whole amount of its stock, plus the quantum of production assigned to each of the associated companies up to the day fixed for the dissolution of the company.

The commission of liquidation shall fix the time at which sale shall be free to the associated companies.

ARTICLE 55.

The conditions established in article forty-seven (47) for the bi-yearly inventories and the apportionment of profits and losses shall continue to govern during the period of liquidation. However, the losses or profits which may result from the sale of the chattels or realty of the company shall be distributed among the companies pro rata in accordance with the value of the iron produced by them for the company since its origin, the first of August, eighteen hundred and ninety-nine.

ARTICLE 56.

For the deposit and publication of these agreements, in accordance with law, full power is given to the bearer of an abstract or of one of the original copies of these agreements.

ARTICLE 57.

The council of administration possesses full powers for the purpose of making agreements with all companies possessing blast furnaces situated in Meurthe-etMoselle and in the Meuse, by virtue of which the iron produced by the establishments of these companies shall be sold in whole or in part through the agency of the Metallurgical Bureau of Longwy:

Done in as many originals as there are parties concerned, plus two additional ones for deposit at the clerk's office of the court of commerce of Briey, and at the clerk's office of the justice of peace of Longwy, at Longwy, the first of August, one thousand eight hundred and ninety-nine.

CHAPTER IV.

AUSTRIA.

EXTENT OF COMBINATION MOVEMENT.

In many ways the development of the industrial combinations in Austria has been more interesting than in any other country of Europe, inasmuch as the Government has felt called upon to take a more active interest in them than has been the case elsewhere.

Apparently the modern combination movement in Austria started especially as the result of the industrial depression of the seventies. During the later eighties the movement had attained great proportions, and during the last few years combinations have been formed in very many lines of industry. One of the leading officers in the department of finance of the Government states that, in his judgment, there are combinations in nearly every branch of business of importance, although in very many cases he believes that these agreements are secret. The general opinion seems to be that the combinations in most cases started with the manufacturers who were feeling the pressure of competition, and that they, through increasing their prices, in many instances have forced the dealers into a combination or forced other manufacturers who were dependent upon them for their raw materials likewise to unite in order to protect themselves. This process has been continued until agreements are very general.

The following is reprinted from the grounds upon which the national court (Landesgericht) sitting in Bochum handed down judgment against the United Hannibal Mine on July 12, 1899:

"1. The agreement which the united mines made with the coal syndicate is a business contract of a unique sort. The mines are to deliver their products to the coal syndicate; on the other hand, the latter, in its capacity as purchaser, is obligated to take these products off the hands of the mines, and in its capacity as seller to further dispose of them in the interest of the united mines. If now the syndicate is thus obligated to purchase and sell the product of each mine belonging to it, it has also the right corresponding to the sphere of duties thus imposed upon it, to demand of each mine belonging to the syndicate that said mine shall hand over to the syndicate and allow the syndicate to sell its products so far as these are not expressly excepted from such further sale by the syndicate. (See sec. 1 of the syndicate agreement.) The coal syndicate, therefore, depends upon no external right, but solely upon its own contractual right, when it demands of the defendant that the latter shall, during the term of the syndicate agreement, deliver to it (the coal syndicate) the coal produced by the defendant's mine in so far as said coal is not used for the defendant's own purposes or for the purpose of running defendant's own works or is otherwise excepted from further sale by the syndicate.

“2. The coal syndicate possesses this right for the whole term of the agreement. It follows from this that the separate mines belonging to the syndicate have relinquished to the syndicate the right of freely disposing of their products to the extent mentioned above for the same term. They must during this entire time deliver their product, as provided for in the agreement, to the coal syndicate, and they can not by a one-sided transaction withdraw themselves from this obligation. This contractual limitation of the right of freely disposing of their product has, to be sure, the character of a self-imposed obligation only; it is of no effect as regards third parties. The Hannibal Association could, therefore, sell and transfer its mine to Krupp, and such contract of sale is not invalid. It conflicts, however, with the obligation which by agreement the Hannibal Company assumed toward the coal

syndicate, because the Hannibal Company thereby rendered itself incapable of fultilling its contract to deliver coal to the syndicate during the term of the agreement. By virtue of this agreement, however, the coal syndicate has immediate recourse in its claim for the performance of the principal part of the contract-i. e., the delivery of coal. If the Hannibal Company has by voluntary act rendered itself incapable of performing the principal part of its contract it must instead pay the syndicate an indemnity in money. The amount of this indemnity was determined in advance by section 8, No. 1, of the syndicate agreement, at 50 marks (about $12.50) for each ton of coal below the amount which by agreement was to be delivered to the syndicate during the current agreement period.

“3. The plea which the defendant Hannibal Company makes with regard to section 2, No. 7, of the syndicate agreement, is in conflict with good faith. As was set forth under 1 and 2, the sale of the mine to Krupp was a breach of the contract with the coal syndicate. From injustice the one guilty of the injustice can not derive a right. Sections 1 and 8 of the syndicate agreement forbid, under considerable penalties, the evasion of the provisions of the agreement by the direct sale of the products of the mines to third parties. The action of the defendant Hannibal Company was clearly in conflict with the palpable meaning and intent of the syndicate agreement when it sold, not, indeed, the coal product, but rather the total amount of yet unmined coal in its mines, to a third consumer who was not legally connected in any way with the coal syndicate, and who was, moreover, not only unwilling to fulfill the obligations which the Hannibal Company had assumed to the syndicate, but was even openly desirous of using the output of the mines for his own purposes and hence withdraw ing it from the market.

"The provision contained in section 2, No. 7, of the syndicate agreement can be understood only in connection with the other provisions of the agreement, and especially in connection with sections 1 and 8. It has in view only those cases in which mine owners, for reasons which need no defense, are unable to produce their full quota of the product, as, for example, when production is hindered by unusual accidents or by natural limitations. If

, under such circumstances, the mine owner makes a motion in due time and in good faith for a reduction of the quota assigned him the board of directors is obliged to grant it without opposition. 4. From the foregoing the following important points follow:

(a) The agreement concluded between the coal syndicate and the mines belonging to the syndicate is of such a nature that the latter may not by a one-sided act on their part force into their places third persons, either real or artificial, without the consent of the other members of the association.

(b) It would by no means be in accordance with the intent of the contracting parties at the time the syndicate agreement was entered into if Krupp should now recognize that as the legal successor of the Hannibal Company he had indeed taken over its obligations to the syndicate, but that he was no longer obliged to deliver coal to the syndicate since he needed it to run his own works. As a large consumer of coal and coke Krupp was obliged to reckon with the existence of the syndicate. By the purchase of the Hannibal mine he is undoubtedly no longer so much dependent upon the syndicate. A consolidation between his works and one of the syndicate mines, therefore, runs directly counter to the purpose of the syndicate agreement. From the foregoing it also follows that the same result is not to be reached by a plan whereby the Hannibal Company, for instance, should buy up the Krupp Works and thereupon declare that it needed its coal product in its own business and was therefore no longer obliged to deliver any to the syndicate. Section 1, No. 2a, of the syndicate agreement, which does indeed except from sale through the syndicate the coal necessary for the purposes of and for the running of the works of the mines themselves, is to be interpreted according to its intent, as good faith demands, which is here to include only the running of those works in connection with the mines which were in existence at the time the agreement was made.

“Not a single iron works which was also the owner of [coal] mines has joined the coal syndicate. The interests [of the two kinds of enterprises) are too divergent. It is therefore self-evident that the mines belonging to the syndicate may not by the building or purchase of iron works withdraw from the obligations which they have undertaken and thus in an unloyal way jeopardize the interests of the association to which they belong by virtue of the syndicate agreement.

* (c) The obligations which the mines belonging to the syndicate assumed in the syndicate agreement are of a personal nature; they rest only upon the contracting mines in their relation to the syndicate; they are not to be transferred without further ceremony to the successors in ownership, as real incumbrances resting upon the mines."

PUBLIC SENTIMENT.

Probably nowhere else in Europe has public feeling regarding combinations been so like that found in the United States as in Austria. The number of combinations has been large, and in some instances-for example, in the iron industry and in the sugar industry—they have affected articles of common consumption so that the attention of the public has been very generally called to them. The iron combination, which at the present time includes practically all of the important manufacturers of iron in Austria and Hungary, occupies much the same position in Austria that the Standard Oil Company does in the United States, being the one combination that is most frequently attacked by public speakers and writers. While the newspapers and many public speakers in Austria have frequently expressed the opinion that these combinations are very oppressive, the leading business men and many of the economists think that in spite of various abuses that have arisen the combinations perform an important economic function and are really necessary for the proper development, in accordance with modern methods, of the leading manufacturing industries.

Owing in part to this pressure on the part of the public and in part to the need for controlling more carefully the revenues, the Austrian Government in 1897 introduced a bill into the Parliament for the purpose of controlling certain of these industrial combinations, especially those manufacturing articles like sugar and beer, which are of common consumption. This move toward legislation will be explained in detail later. Even since the introduction of that bill, which to the present time has not become a law, the Government and chambers of commerce have made investigations on the subject, so that there seems to be little doubt that some active attempt at legislation will be made in the near future, provided the legislature can free itself temporarily from the jealousies between the Czechs and the Germans long enough to enable it to do important public business.

REASONS FOR COMBINATION.

In Austria, as elsewhere, the reasons put forward for the formation of the combinations differ considerably with the point of view of the speaker, and with the circumstances under which he is speaking. When one talks in private with a member of the combinations regarding the causes for their formation, while he may speak of the savings that it was hoped to effect, the thought that after all seems most prominent in his mind is the elimination of ruinous competition. So far as one can see, this feeling regarding the ruinous effect of competition has been keener in Austria than in the United States, while the thought of effecting savings in the cost of production has not been so much emphasized. As will appear later, this difference in motive is largely due to the forms of combinations found in Austria and Germany, and to the results that they are expected to accomplish. In the United States it is probable that improvements in methods of manufacture and savings therefrom have been, together with lessening of competition, at times the prominent arguments brought forward in effecting the combination. In these European countries, on the other hand, where the consolidation is less complete, amounting in many cases often to merely a selling bureau, the savings in the costs and lessening the difficulties of marketing the product are the ones that have appealed most to the business men.

Another reason why the thought of ruinous competition has been made somewhat more prominent there is possibly the fact that in many cases in both Germany and Austria the chief promoters, both of large corporations and of these combinations among business men, are bankers, whereas in the United States the promoters are much less frequently of that profession. As is well known, it is a common custom in continental Europe for the banks to pay 2 or 3 per cent and sometimes even a higher rate of interest upon deposits. It is often difficult for the banks to make regular loans which will yield them a sufficient net revenue above this interest to make business profitable. In consequence, it is natural for them to look about for other means of investing their money; and the result is that they become, in many cases, the holders of stocks in industrial enterprises to a very great extent; often even controlling large manufacturing establishments, and themselves electing the boards of directors. This fact that the combinations in many cases are formed at the instance rather of men interested in the financial end of the business than in the technical part of the establishment will perhaps account for the emphasis that is placed upon ihe fierceness of competition and lowered profits as a cause for the organization of the combinations.

Nevertheless, in various instances we find the matter of savings very strongly emphasized. For example, Herr Wittgenstein, the founder of the iron combination

in Austria, in a report that he made in 1896 to the Chamber of Commerce of Prague, called attention to the fact that it was necessary that an iron establishment, in order to work efficiently, be run all of the time at its full capacity—otherwise it would not be possible for it to procure in the best times a sufficient amount of skilled labor, nor could the capital be kept so profitably employed. The possibility of securing this full employment by regulating the production was, therefore, one of their chief reasons, according to Herr Wittgenstein, for organizing. Another reason was the fact that without combination they were much more at the mercy of purchasers than otherwise. Still another one was that when the establishments were working independently they each needed to provide heterogeneous articles of all kinds for their customers, and

were, in consequence, unable to specialize as different plants can do when they are working in harmony. In a similar way Herr Wittgenstein continued, showing the various methods of saving from the combination quite after the style that has been followed by the managers of the iron combinations in the United States.

Perhaps another instance even more striking, where the savings of the wastes of competition were prominent in bringing about the combination, is found in the case of the Vienna Soda Water Manufacturers' Company. The 45 different producers of soda water of various kinds, syphons and charged waters of various flavors found so commonly in European cities, realized that there were very many expenses in connection with the business which could be eliminated if they were willing to unite; and, as a consequence, 28 of them formed a single joint-stock company in order that these savings might be effected. The savings were partly those connected with the manufacture, partly those connected with the distribution. Naturally the most active time in that business is the hot season, in winter there being very little call for the waters; but, generally speaking, the producer was obliged to keep the same help throughout the winter in order to be able at the opening of the busy season to supply his customers at once, with the assistance of trained help who understood not merely the manufacturing business, but also the habits of the dealers and consumers. Each manufacturer had also been in the habit of delivering goods all over the large city of Vienna and in the suburbs. The combination enabled them to divide the city into districts and make the delivery over much shorter distances, bringing about not merely a saving in energy, but also a very large saving in the number of reserve syphon bottles needed, as well as in the laborers in charge of filling the syphons and in making the deliveries. The number of teams was gradually lessened, the rent of buildings, the amount of bookkeeping, the extent of service, were all reduced to a very great degree. Likewise they were enabled through a joint buying of materials necessary for their production to secure much lower prices and to obtain a better quality of goods. All of these savings were so clearly known beforehand that they might be considered as the chief causes in the bringing about of this and similar combinations. In this instance, it will be noted, the combination took the form of a single corporation, quite after the American custom.

The element of saving in freight, owing to delivery from the nearest plants, which has been so prominent in many of the American combinations, appears naturally in some of these local organizations, such as the one just mentioned, but does not appear to anything like the same extent in the case of the larger combinations of Europe, owing to the fact that their countries are, relatively speaking, much smaller, and the range of their markets, from the point of view of mileage, is much less. More striking still, perhaps, in many instances, is the fact that practically without exception there are no discriminations in freight rates to special customers in any of the leading European states.

The scientific writers on the subject of industrial combinations and their causes, in their public addresses, seem to lay chief emphasis upon the advantages which come from regulating the supply in order to meet the normal demand, and in that way to prevent the danger of a crisis in special industries due to overproduction resting upon lack of knowledge of the probable demands of the market.

FORMS OF COMBINATIONS.

1. While in the United States attention has sometimes been called to local combinations

as, for example, that among the brewers at Pittsburg, or at Cleveland and Sandusky, our thought has been so centered upon the larger national organizations that little attention has been paid to those that are merely local. One hears somewhat more frequently of local combinations in Europe. Mention has already been made of the soda water manufacturers of Vienna. That organization, entirely local in its scope, is a company organized under the regular corporation laws of Austria, which will be discussed in some detail in the proper place. Another local combination in that city among the brewers is organized under a somewhat different plan.

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