of representation abroad; (g) the time for which the agreement is made; (h) whatever agreements there are regarding the settlement of difficulties arising from the agreement itself. Upon these facts being given to the Government it was to make due examination and either grant or refuse the privilege of organization. Every change in the articles of association was likewise to be laid before the proper Government bureau. All combinations were in this way to be entered in the public register. For the purpose of carrying out in detail its powers the Government officials were to have the right to examine in detail the books and business papers of the combination, and to demand detailed explanations from the officers. Secret processes and technical details of the business need not in every case be given, and wherever given were to be kept secret. Under the finance minister there was to be organized a special commission of 12 members, half of them taken from among the officers in the department of finance and the other ministries, half from business men. Before the finance minister could refuse his sanction to the organization of any combination, he must take the advice of this commission. For violation of the law the combinations were subject to heavy fines and other penalties.

Although this law was introduced by the Minister of Finance and urged, owing to the political complications in Austria for the last two or three years the law has not passed, and has, in fact, for the time being at any rate, been completely set aside.

Meanwhile, the Ministry of Commerce of Austria had created a special committee of its council of industry to make a study of the question of combinations to see if they could formulate from their point of view a general law concerning combinations, the one which was introduced by the ministry of finance having merely considered those combinations which affect directly the income of the State. In 1900, after they had studied the question for some little time, they had reached two conclusions: First, that the combinations should be recognized as juristic persons; and second, that they should be put under State control. Further study of the question led to a report in more detail from the two members of the committee of the council of industry to whom the question had been referred. This report discusses the reasons for the existence of the combinations, their nature and tasks, the existing law of Austria regarding them, and finally lays out a plan for future regulation of the legal position of the combinations. The main points are as follows: First, the combinations are to be recognized as legal organizations and should, in accordance therewith, be brought into a regular legal form; second, every combination should be required to report its condition and its form of organization to a combination board (Kartellamt), which, in general, is to be considered as a judicial body, and which also takes charge of the registration of the combinations; third, this combination board would have also to act as a court of first instance for the settlement of all legal difficulties arising out of the organization and activity of the combinations; fourth, for the restriction of monopolistic tendencies carried to an unwarranted extent, through the setting aside or limitation of free competition, suitable measures should be taken in revision of the import duties; also in the field of State railway freight charges, as well as by the encouragement of organizations opposed to combinations (possibly trade associations); fifth, for the purpose of consultation and of decision regarding the measures of the administration which touch this question, there should be created a monopoly or combination council, which is to be considered as a consultative organ of the ministry of commerce; sixth, it is further suggested formally that the Government might properly, on the basis of the principles regarding combinations agreed upon by the committee, work out a bill and lay it before the committee on combinations for consideration.

This report of the special committee was taken up by the council of commerce and discussed at considerable length. On the matters under consideration the following actions were taken. The suggestion that it was necessary for the combinations to be given legal regulation was unanimously approved. A majority of the council were of the opinion that the combinations should be subjected to a certain degree of publicity, and registration was suggested on both legal and economic grounds. As regards the nature of the information that should be given for registration purposes, it was thought that there should be reported for registration in general the economic reasons for the organization of the special combination, its purposes, and the means which it employed. This general announcement of the combination should be examined by a special combination board in the ministry of commerce, to which should be given in general the oversight of all matters concerning combinations. It was further thought wise that there should be created a special court for combinations for the settlement of difficulties arising out of conditions of combination, which court should be created in a way that would correspond to its special purpose, i. e., it presumably should be made up in part of experts. It was further recognized as desirable that there be created also a monopoly and combination council for the purpose of advising and deciding upon those measures which needed to be

taken in the matters of changes of import duties or tariffs for the purpose of benefiting the industries with monopolistic tendencies. This combination council should be organized through the association of all interested factors in such a way that it would give the best possible guaranty of an objective judgment of the questions to be decided; and finally, the same committee that had had the matter in charge before was to formulate the principles in detail for the legal regulation of combinations, with the assistance of the bureau of the council of industry, keeping fully in view the results of the discussion at that time held. Later this committee was to make a final report to the full council.

It will be seen from these reports that at the present time the question of the legal regulation of combinations in Austria in any formal way is still a subject of merely academic discussion, although the matter was taken up as long ago as 1896. Considering also the present political situation in Austria and the difficulty, not to say impossibility, of accomplishing much in the way of definite political action, it does not appear that there is immediate prospect of final legislation. On the other hand, this report does show the matured conclusion of a special committee, which, with the assistance of the reports made before to the House of Representatives and to the chambers of commerce in Prague and in Vienna, has made a most unusually careful investigation of the entire subject.

THE INCORPORATION LAW.

In Part II there is given in some detail the leading points of the Austrian law regarding corporations, which tend to show how complete is the Government oversight of such organizations. In the first place, in accordance with the early law regarding corporations in Austria, persons proposing to organize such corporation must make a formal request for such organization of the proper Government bureau. It then remains discretionary with this bureau either to give or to refuse permission. In order that it may give an intelligent decision, the bureau has the power to get the most detailed information regarding the property concerned, the nature of the business, the form of share issue, the method of paying for the shares, and of similar matters. For several years after the law was first passed, in 1862, this Government bureau was in the habit of granting concessions with a good deal of freedom. After the crisis of 1873 there was a popular outcry against corporations, since they were thought by many to be responsible for the crisis. Thereupon the Government bureau became very particular, exacting the most detailed information, and in many cases refusing to give the required concession even when, from the point of view of most business men, there seemed to be no sufficient reason for refusal. This feeling of fear of corporations, and even of hostility toward them, seems also to have been reflected to a considerable extent in the tax laws, inasmuch as the taxes are very much higher upon corporations than upon private individuals. All corporations are required to make public reports of their accounts, and, speaking generally, there is a tax of 10 per cent of their taxable net income levied upon business corporations. If a corporation pays dividends in excess of 10 per cent in any year, it is subject to additional taxes which may amount to a tax of 4 per cent on any surplus income above 15 per cent. Such exceedingly high taxes, it can be seen, would tend to make the other departments of the Government rather more hostile toward corporations than would normally be the case.

In consequence of the hesitation of the Government board in granting concessions for incorporation there has been for some years an active agitation for a new incorporation act modeled after that of Germany, which should prescribe accurately the conditions of incorporation, and which should thus take away discretionary power from the Government.

Owing to the political difficulties in the legislature, however, it has not been possible to get such a law seriously considered. In order that some relief might be secured the business men made such urgent representations to the Government regarding the evils of the existing situation, that at length, on September 20, 1899, the ministries of the interior, finance, commerce, justice, and agriculture issued a special decree by which they laid down regulations for the organization and changes in form of corporations for industrial and trade purposes. In this decree they practically prescribed the methods by which the Government board should be bound to act, stating that if those wishing to organize a corporation would follow certain prescribed forms and furnish the information required in the decree, the concession should be granted as a matter of course. It was felt that by this decree, although it did not have the force of formal law, much relief would be given to business men, and that they would be in many ways free from the apparently arbitrary acts of the Government board. It was hoped that this decree might for the time being take the place of a new corporation law and furnish the necessary relief.

Late information from Austria, however, serves to show that, in spite of these regulations that have been made, and although there has been considerable improvement, it is still recognized that too much discretion has been left still to the Government board and that as early as possible a new corporation law should be passed. This situation as regards the difficulty of organizing a great corporation, especially when the public feeling is so strong in many instances against combinations as it is in Austria, taken together with the great degree of publicity required under even the present regulations and the extremely high tax which corporations have to pay, serves to explain why the combinations have not to any very great extent taken the form of corporations, although the decisions of the courts seem to make the combinations themselves quite insecure. It should be recognized, too, in this connection, that the tax burden does not merely come from the height of the tax itself, but also from the fact that corporations are so strictly under the oversight of State officials that the tax is certain to be collected in full, whereas in the case of private individuals or private companies often a considerable part of the tax is evaded.

Although the courts seem to have taken a position so hostile to the combinations that many of their regulations could not be enforced by law, it is still probable that in the great majority of cases the combinations will be able to hold their contracts even without the sanction of the courts. It is probably true that these combinations were first made owing chiefly to the pressure of very severe competition, or with the prospect of very high profits; and, with the provisions which have regularly been made for inspection of one another's books it is probably, under those circumstances, for the interests of practically all of the members to abide by their agreements. Under more trying circumstances there is more likelihood, of course, of the combination falling to pieces; but even then, although the courts will not enforce the conventional fine which has been agreed upon, there are still ways within the law of inflicting penalities upon a member of the combination who thus violates his agreement. The other members can, for example, comparatively easily sell to his customers or within his territory at very low rates until they can compel a loss greater than any gain that he would be likely to make from the violation of the contract. Likewise it should be borne in mind that the hostile acts of the courts have not gone further, and can not go further than declaring the contracts of a combination invalid; there is no criminal penalty attached to the organization of a combination. When one considers the scores of combinations that have been made, and the further fact that some of them, like, for example, the sugar combination, have almost an absolute control of the entire business in Austria, and when one keeps it in mind that some of these combinations have extended their contracts from period to period for more than a decade, whereas only a very few have invoked the aid of the courts to enable them to break away from their agreements, it can be seen that after all, much as the members of combinations would like to have a change in their law, they can still exist, and can even flourish without such change.

APPENDIX I.

THE TRUST BILL' SUBMITTED BY THE GOVERNMENT TO THE LEGISLATIVE BODIES.

SECTION 1. Whenever independent enterprises unite themselves for the purpose of influencing the conditions of production, price, and consumption of such articles of consumption which, like sugar, brandy, beer, oil from minerals, and salt, are subject to an excise, such alliances of enterprises (trusts), according to this act, are to be subject to the supervision of the Government.

The same governmental supervision takes place over agreements between two or more home trusts and over agreements between domestic trusts and similar organizations in foreign countries.

SEC. 2. A trust, in order to be valid, requires in all cases a statement, under a notary's acknowledgment, of the following details:

(1) Purpose and object of the trust.

(2) Branch of trade and number of members of the trust; name of each.

(3) Privileges and obligations of the members, and contracts or agreements entered into by the members as to penalties, etc.

(4) Seat of the trust (office of the home management) or,.should it be a foreign trust, the name of the manager and his place of residence in Austria must be given. (5) Management and general features of the business done.

(6) Names of the foreign representatives, if there are any.

(7) Duration of the agreement made by the trust members.

(8) Eventual agreement as to the way of settling litigations arising from the

trust.

SEC. 3. The provisions of the act of April 7, 1870, section 2 (law of coalition), as far as they concern agreements on prices of wares, under section 4 of the same act, as to trusts concerned in the proposed act, are hereby annulled; the other provisions of the first-mentioned act stand valid.

Any kind of agreements or settlements mentioned, either by statute or by resolution of trusts, are prohibited; any other provisions on associations and unions stand untouched by these presents.

SEC. 4. Notice must be given to the authorities of all statutes of trusts. Within eight days, at most, subsequent to executing the statutes of trusts notice is to be given to the ministry of finance. The validity of the statute of trusts, or any amendment to the same, especially any calling of sessions of members of trusts, require the authentication of a notary; these facts and also the dissolution of trusts are to be given notice of in the same way.

The notary shall present within eight days the statute or any modification of it to the ministry of finance in five authenticated copies.

A new trust is not permitted to take action, nor are any of the statutes efficacious, earlier than a fortnight prior to the presenting of the notice.

Any resolution relative to the fixing of prices, quantity of production, etc., is to be reported to the ministry of finance not later than one day after formation of the resolution.

SEC. 5. The members of the trusts are obliged to have the notification provided for in section 4 made in person or by a specially empowered attorney or representative. SEC. 6. The governmental supervision over the trusts mentioned in section 1 is to be managed by the ministry of finance.

It is authorized to examine for this purpose any commercial books of the trusts and notes of the business transacted by the same, and to demand from its directors, managers, and the interested enterprises any information respecting any business relation, external or among the members.

The obligation of giving information shall not be extended to any technical contrivances and procedures.

1 The translation of the text of the bill itself is taken from United States Consular Reports, Vol. LV, p. 47; the explanations are translated for the Industrial Commission.

SEC. 7. The ministry of finance is authorized to prohibit the execution of resolutions of trusts (mentioned in section 4) if they are apt to cause increase or decrease in prices of goods or services to the injury of the producers or performers (unless the resolutions have for object to effect economy in branches of industry by the establishment of prices and in view of the condition of competition), on account of the damage to the capacity of consumption, to taxation, and to the proceeds of excises which may result from such resolutions. For the said reasons the existence of a trust and any alteration of the statutes can be annulled if the trust has one of the aforesaid objects. In these cases the manager of the trust and representatives of the branch of trade are to be heard.

The ministry of finance has to decide, after careful examination, whether or not the circumstances are those provided for in the law. A trust trespassing on the provisions of section 3, paragraph 2, is to be annulled by the ministry of finance.

SEC. 8. The existence of a trust, any modification of its statutes, or resolution named in the last sentence of section 4 having been annulled by the ministry of finance on the ground of this act (sections 7, 13, and 19), becomes illegal and the statutes, amendments, or resolutions (section 4) shall be void.

SEC. 9. The ministry of finance is authorized to order at any time the managers of a trust to give bond, the amount of which is to be fixed in accordance with the extent of trades under the trust, but never exceeding 200,000 florins. This bond is to serve as security for the conformity of the trust to the provision of this act (section 19). The method of giving and depositing the bond will be controlled by special decree.

SEC. 10. A special committee, consisting of twelve members and presided over by the minister himself, or a substitute designated by him, is to be formed in the ministry of finance. Of these members, half will be selected by the minister from among officials of the ministry of finance and other ministries concerned. The other half are to be selected from the professions to act for a certain period. Tax or excise officers are not allowed to be members of this committee.

Prior to any decision (section 7) prohibiting a trust or a resolution of a trust by the ministry of finance, the opinion of the committee is to be heard.

The ministry of finance, according to this act, is entitled to confer upon the committee the superintendence of the trusts, above-mentioned decisions excepted.

The ministry of finance or the committee in charge is authorized to employ one or more commissioners, designated for special cases or for permanent service, to exercise governmental supervision. They have the authority noted in section 6, paragraph 2, to make the necessary inquiries, and they, too, shall not be selected from among tax officials. Particular provisions as to the selection and the nature of practice of the committee and as to the privileges of the commissioner will be issued by special decree.

SEC. 11. The members of the committee and the commissioner are bound by oath to secrecy, unless they are acting Government officers, who are bound by official oath to keep secret any official business. Duty of secrecy especially involves strict silence as to any object of business or trade.

SEC. 12. This law applies to trusts (section 1) already in existence, and they have to give notice (section 4) within a month from the day they begin work.

SEC. 13. Should one of the notifications provided in sections 4 and 12 be omitted within the fixed period any manager, member of a trust, legal representative of the companies, or their attorneys shall suffer for such an omission for any special case a disciplinary fine of not exceeding 2,000 florins. In the same manner the notary is to be fined who omits the performance of duty as provided in section 4.

When the persons aforesaid refuse to give information asked by the Government they shall be punished by a fine up to 1,000 florins. On a repeated refusal the ministry of finance may annul the existence of the trust.

SEC. 14. Whoever gives false or essentially incomplete information on points important for the consideration of the actions of the trust (whether by design or gross carelessness) is guilty of an offense and is to be punished with imprisonment of from eight days to three months and with a fine of from 100 to 5,000 florins.

SEC. 15. Whoever participates in the activity of a trust (section 1) designedly or by

gross error

(1) In spite of the Government's prohibition or prior to expiration of the requisite time provided in section 4;

(2) Whoever carries into effect a resolution of a trust which is prohibited by the Government;

(3) Whoever participates in a trust having taken action (a) on the ground of a statute of which the Government has not been notified, (b) without considering the provisions of the statute, (c) under an agreement of a trust which differs from that contained in the statutes, or (d) without any statute;