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commodities independently to the buyer. The previous instance (lower court) supposes that this declaration had not had as a consequence the termination of the membership of the defendant, and bases this opinion on section 1381, Saxon B. G. B., where conditions are stated under which an association which is formed for a limited time may be dissolved before the expiration of the term by one of the contracting parties. This way of argument would be unsatisfactory if it could be assumed that according to the imperial legal (judicial) norms a contract, such as is here under discussion, even when it is concluded for a limited time can be annulled by each party at any time when it chooses. The view that this must follow from the principle of industrial freedom is, it is true, defended in literature;
especially Kohler in his treatise already above mentioned (Archiv für Bürgerliches Recht, vol. 5, p. 218 and A., and Aus dem Patent- und Industrierechte, I. Teil, p. 87) has expressed, that to each party agreeing to such a contract must be granted the right “to attain again its natural freedom” by withdrawal at any time from the contract. He deduces this from the consideration that the reverse would be in antagonism with the free development of trade and would put obstacles to the industry of individuals.
This view can not be agreed to. If, as was explained above, the principle of industrial freedom in its twofold nature as a protection of the welfare of the community against the self-interest of individuals and as a guaranty of individual freedom is not consistent with “the inviolability of the free play of economic forces, i. e., that the tradespeople can not be allowed the right of regulating in the way of mutual selfhelp the activity of these forces and preventing excesses which may be considered injurious” (Comp. Decis. of Imp. Court in Civil Cases, vol. 28, p. 244), then also the conclusion can not be drawn from this principle that each individual entrepreneur can renounce in the future the obligation which he undertook with the view of mutual self-help by simply declaring that through these obligations the free play of the economic forces is impaired and he is hampered in his industry. With no more right can it be deduced from the industrial law or other revisable legal norms that the defendant, as he wishes to make believe, had to withdraw from the association for the reason that by remaining in the same his economic existence would be in danger,
DECISION OF THE STATE COURT (LANDESGERICHT) SITTING AT BOCHUM, JULY 12, 1899.-RHENISH-WESTPHALIAN COAL SYNDICATE v. UNITED HANNIBAL ASSOCIATION (FRIED, KRUPP).
With the circumstance that since 1898 the coal output in the Dortmund Superior mining district is no longer sufficient to cover the demand for coal, the number of cases has increased in which iron foundries and other works whose activity depends upon a uniform supply of coal have sought by the purchase of coal mines to secure to themselves the right of controlling absolutely the produce of the said mines. In the spring of this year the Hoesch Iron and Steel Works of Dortmund purchased the United Westphalia mine with this end in view. The firm of Friedrich Krupp, of Essen, also bought up the United Hannibal coal mine at Eickel, while at the present time (August, 1899) the Société Anonyme des Hauts-Fourneaux of Differdingen (Blast Furnace Limited Liability Company), a Lorraine company, has under advanced consideration the purchase of the Dannenbaum Joint Stock Mining Company of Bochum. In case mines purchased for this purpose belong to the syndicate, which is true in the cases of all three of the mines mentioned above, the Rhenish-Westphalian Coal Syndicate takes the position that according to section 1, paragraph 1, of the syndicate agreement of July 31, 1896, these mines are bound to continue to place their output at the disposal of the syndicate until the end of the term agreed upon, i. e., December 31, 1905, and their new owners therefore must continue as before to draw their supply of coal through the syndicate. On account of the importance of the principles involved the question was brought to judicial decision. A decision favorable to the syndicate was obtained in the court of first instance in the cases of Coal Syndicate v. The United Westphalia Mine Association (Hoesch Iron and Steel Works) and the United Hannibal Association (Fried. Krupp).
1 Jahrbuch für den Oberbergamtsbezirk Dortmund, pp. 69–71.
OTHER EUROPEAN COUNTRIES.
Next to the countries already treated in detail there is doubtless more industrial development in Belgium than elsewhere in Europe. Although Belgium is a small country it is as far advanced in manufacturing and industry in proportion to its size and wealth as its neighboring countries, France and Germany. There are several rather important combinations in Belgium, and in more than one instance they are working in harmony also with combinations in Germany, Austria, and France. The form of organization seems to be substantially the same as that in Germany, agreements being made upon prices and at times also upon output. The coal producers have a syndicate, limiting the output of their mines and fixing the prices of their product. It seems certain that they have, during the last two or three years, increased the price of their product, although there is no reason for believing that they have gone materially beyond the normal increase in price brought about by the unusual demand.
There is also a coke trust, comparatively recently organized, composed of several different establishments.
There has been also an important plate-glass combination which works in harmony with those of France, Germany, and Italy. A large proportion of the plate glass is exported. The combination has a joint selling bureau with various branches in different countries. Orders are sent to the central office in each country, and thence distributed to the different members. The selling bureau determines also prices as well as product.
The combination of sugar refiners seems to be formed something after the plan of the one in France, although it is probable that they are somewhat more directly concerned in fixing prices than they are in France, where the price is left to adjust itself after the output has been determined.
Other combinations mentioned are those among stone quarries, which, however, is a combination different from those ordinarily spoken of as industrial combinations, and one among mirror manufacturers.
There does not seem to be any special hostility to these combinations so far. Apparently comparatively little has been said about them, so that there is no strong feeling either for or against them.
HOLLAND. Holland being chiefly a commercial and agricultural country, rather than a manufacturing one, has so far not been materially affected by the movement toward industrial combination. The coal trade seems to be largely in the hands of one company, and that is apparently associated quite closely with the Rhenish-Westphalian Coal Syndicate
It is said also the peat moss is controlled by one company. The Netherlands seems to have also a branch of the dynamite and explosives combination which extends throughout Europe.
In Spain there is a branch of the combination for manufacturing powder and explosives. Aside from that no industrial combinations are found, though there are various State monopolies.
1 While some personal investigations were made in Belgium, the report for that country, as well as those for the other countries in this chapter, are taken mainly from the Schriften des Vereins für Social-Politik, vol. 60, 1894; from I. I. Janshul, Industrial Syndicates or Unions of Entrepreneurs for Regulating Production, particularly in the United States of America (a Russian work written at the instance of the Russian Secretary of Finance for the Russian Government, 1895); and from Special Consular Report, vol. 22, Part III, on Trusts and Trade Combinations in Europe, Government Printing Office, 1900.
In Italy there is at any rate one rather important combination of iron foundries, and the consul from Sicily reports that the Anglo-Sicilian Sulphur Company, Limited, of London, has 5-year contracts with mine owners and lease holders in Sicily which cover about 80 per cent of the total production. This contract has been extended (1901) for 5 years more.
This seems to be an industrial combination which is fairly successful, and which is quite of the modern type.
Another company is said to have been organized in August, 1899, which practically controls the output and price of sumac. It is a combination of sumac producers and manufacturers, who turn over their products to the society for exportation. The wages of workingmen in this combination, as well as in that of the sulphur producers, is said to have been increased by the combinations, and prices have also advanced.
SWITZERLAND. In Switzerland there have been various attempts at combinations of the modern type, but most of them have not been of importance or successful. The milk producers in different communities comparatively lately have made temporary agreements at times on prices of milk to the cheese manufacturers.
Among the chocolate manufacturers there have been lately informal agreements regarding prices, but none that seem to be permanent in their nature.
The proprietors of limekilns established some time ago a sort of selling bureau, but the agreement was not a firm one and seems to have had little or no permanent effect.
There has been for some time in existence in the embroidery trade an embroidery union, which comprises manufacturers, exporters, merchants, and operatives, which has agreements regarding both wages and working time, as well as concerning the amount of production and the prices. This seems to have been organized somewhat after the fashion of the E. J. Smith combinations in England, and it lasted for a considerable time, apparently accomplishing its purposes fairly well. The combination, however, seems to have been pushed too far in the way of passing and enforcing restrictive measures, and at length it was dissolved.
Attempts have been made also to make a combination among the watch manufacturers of Geneva, but it has apparently proved unsuccessful. There are various local associations among butchers, wood and coal merchants, and other dealers in Geneva and Lausanne, but none of them can fairly be considered industrial combinations in the modern sense.
In Copenhagen there is a combination among the breweries. In 1891 a joint stock company was formed to control the weiss-bier market. Inasmuch as this product will not stand transportation, the combination, containing all of the producers in Copenhagen, with one exception, had entire control of the market. The prices have not been increased, but various customs concerning rebates and advances have been done away with, and improvements in methods of production and distribution have made it possible to reduce the number of officials as well as the number of workmen, so that profits have been decidedly increased; wages have also been increased. Aside from this there seems to have been at the date of the report in 1893 no combination that could in any sense be considered a capitalistic combination. There have been various cooperative undertakings in dairy and meat products for exportation purposes, but they seem from the report to be rather of the strictly cooperative than of the capitalistic kind.
SWEDEN AND NORWAY.
In Sweden and Norway, as in Denmark, little has been done in the way of combination. Several anchovy factories in Sweden seem to be working in harmony, and at times also some breweries have been brought together under one management. In Norway the Anglo-Swiss Condensed Milk Company owns different plants, and may perhaps be considered a single important company of international importance, having works in different countries. Other minor combinations for the purpose of regulating prices of goods have been formed by producers of wood pulp, of lumber, and of paper. These agreements do not seem to extend to the output, but simply are more or less formal agreements regarding prices.
The Criminal Code of Russia makes provision against combinations among laborers, and also among employers, where they unfavorably affect the State or where they speculate in goods that are considered necessaries of life. The interpretation of this law seems not to have been entirely settled, but one case has been cited where a number of Siberian whisky dealers were severely punished for increasing the price of schnapps.
There has been a combination of fire insurance companies for a good many years, probably somewhat since 1874, and it has been in regular operation since 1882. Its first intention was to make an agreement upon rates among the regular companies. Later it entered the field against the mutual insurance enterprises of the municipalities and other local governments. In 1880 it increased its rates; again in 1882 it announced an increase of 30 per cent in the premiums on city and 20 per cent on rural real property. Still later in the same year another very decided increase of from 50 to 60 per cent was made on different kinds of buildings in the country and upon factories. Likewise the amount to be paid for damages by fire on certain classes of dangerous risks were reduced to three-quarters of the former amount. Foreign companies being forbidden to do business in Russia, much power is left in the hands of this combination, which reinsures a large proportion of its risks—some say from three-quarters to nine-tenths—in foreign companies at much lower rates, thus securing a very high profit.
From 1883 on to the time that the report was made in 1893, there had been a decided increase in the communal mutual insurance companies in spite of the direct competition of the combination.' In Moscow a competing insurance company was founded late in the eighties, but was soon absorbed by the combination. In country districts the communal mutual insurance being compulsory seems to make better headway against the combination. The various corporations which have united regularly pay annual dividends of 15 to 20 per cent, or sometimes even higher rates.
Janshul mentions, besides this fire insurance combination, agreements of producers of wire tacks, of paper, and of manufacturers of printed cotton cloths. There was also under consideration at that time the formation of a syndicate of salt producers with a joint selling bureau. Two other syndicates seem, on the whole, to have accomplished the most. On account of heavy exports of Russian oil to European markets, and on account of competition of American oil producers, the prices of petroleum fell so low that in certain instances the freight charge from one town to the other, even when the places were not far apart, amounted to more than the cost of the petroleum itself. Under these competitive conditions the oil producers of the Caucasus asked the Government for assistance. All the oil producers in that region chose 5 firms and empowered them to sell oil abroad on joint account. The Government then lowered the freight on the Caucasian Railroad, which made it possible to compete successfully with the American producers. These 5 firms acting as a selling bureau sold all the production of all the members of the syndicate under their own name, but for joint account. If any producer failed to furnish the share of oil agreed upon, he was fined for the damage due to the reduction of the export. The basis of the distribution of production was the amount exported from Baku in 1892.
Production of sugar from beets is an old industry in Russia, dating back to the beginning of the century. After the emancipation of the serfs there was a crisis in the sugar industry under the pressure of which the small factories disappeared and production on a large scale became the rule. The average profit under this new form of production was high, the home market being assured to the Russian producer by prohibitive tariffs. Besides this advantage he also received a premium as well as a rebate of internal-revenue duties on the sugar exported. It is estimated by Jolles that more than half the internal revenue collected from sugar manufacturers was returned to them in the eighties.
The system of bounties adopted by other European countries afterwards made the foreign field much more difficult for the Russian producers to enter, the price of sugar falling under this pressure of international competition to about half the previous amount. This reduction of the price led to the demand for combination. The first suggestion made by the producers was that the Government itself should fix the amount to be produced by all factories, thus preventing overproduction. The Government declined at that stage to adopt such a regulation. *It, however, did
1 Dr. G. Jolles, Kartelle in Russland. Schriften des Vereins für Social-Politik.
finally yield and passed a resolution fixing the entire amount that should be produced for the domestic market, the producers to divide this quantity among themselves. Should anyone exceed the amount which had been assigned him, a high additional revenue tax was to be collected. This plan, however, met with so vigorous disapproval that it was finally abandoned. "In 1887 the producers formed a combination on their own responsibility. Agreements are made every few years, the amount of sugar to be produced by each factory, usually on the basis of its production for, say, 5 preceding years, and each factory owner is required to export at his own cost 25 per cent of what he produces unless the price of sugar should reach a high point—4.50 rubles on the Kiev Exchange. Heavy fines are provided for infringements of the regulations of the combination. During the period 1891 to 1895, 201 out of 203 sugar producers had joined the combination. The independents, however, seemed to be able to make themselves felt decidedly in the market.
In 1892, owing to a partial failure of the beet crop, prices went up rapidly. The Government being afraid of a further and unreasonable increase, determined to buy up foreign sugar on its own account in sufficient quantities to affect the market, import it, and sell it at a fixed price. This at once, of course, set a maximum to the price that could be asked by the combination.
According to both Janshul and Jolles, there is a decided tendency toward the formation of combinations in Russia, and one or two brief reports of a later date seem to confirm this opinion. In the Deutsche Industrie Zeitung for January 17, 1901, there is a brief note which calls attention to the fact that the more important cotton manufacturers of Moscow and neighborhood have united with firms of like importance in Warsaw, Lodz, and other parts of Poland in order to organize, as far as possible, a syndicate that should have for its purpose to increase prices for cotton fabrics. Likewise there have been dealings between two syndicates already in existence of the linen manufacturers of St. Petersburg and wo large firms in Czenstochau and others in Warsaw, whose purpose is likewise the organization of a large syndicate which it was hoped might include all linen manufacturers in Russia. Many large syndicates will naturally await a more complete development of industry.