The coal syndicate itself is a corporation with its main business office in Essen. Its purpose is to buy and sell coal, coke, and briquettes. Its capital is 900,000 marks, divided into 3,000 shares of 300 marks each. These shares of course are held by the coal miners of western Germany. The syndicate has the general form of organization and the same methods of carrying on its business as other German corporations. It is not its intention to declare large dividends for its shareholders, but rather so to direct the business of production, purchase, and sale of coal that the different coal miners will make good profits.

A contract is then made between this coal syndicate and the various mines which belong to the syndicate, the same contract holding also between the different miners. The purpose has been, of course, to prevent extreme competition in the coal market; or, in other words, practically to control the coal market of western Germany.

A commission of 4 members, 2 of whom are technical miners, 1 a coal dealer, and 1 a presiding officer of the coal syndicate, on careful examination of the different mines, determines the percentage of the entire output which shall be allowed to each mine. This amount may be increased or lessened on a reexamination to meet the needs of the different mines and of the syndicate.

All of the mine owners are under contract to deliver their entire production of coal, coke, and briquettes to the syndicate, which, on its side, is under obligations to receive and sell the entire product in accordance with the terms laid down. The different mines are allowed to withhold from this delivery to the coal syndicate the coal that is needed for their own immediate consumption in carrying on their own works, as well as enough for the personal use of the different officers and miners. All orders are received by the syndicate and distributed in accordance with the judgment of its directors among the different mines, the amount of the output for each being fixed monthly. At the end of the year a general reckoning is made, and those mines that have delivered somewhat more than their required share pay over to the syndicate, to be distributed among those who have delivered less than their required share, a sufficient amount to make the profits proportional.

In case any of the mine owners fail to carry out their contract by delivering the coal required, they are compelled to pay a conventional fine to the syndicate of 50 marks for every ton wanting. For every breach of the contract every coal miner is liable to a fine of 1,000 marks, which may, however, be lessened by action of the board of directors.

As will be noted afterwards, this requirement of the contract has been held legal in two of the lower courts, the decision being translated in full in Appendix —.

The form of organization seems, on the whole, to have been very successful, and to have brought about what is, perhaps, on the whole, the largest and most effective combination in Germany, if not, indeed, in the world. The effects on prices, wages, etc., are discussed later."

The iron combinations.-The syndicates of the German iron trade are not less powerfully organized than those of the coal trade, but their functions are not quite so well known. However, as the object of all selling associations is identical, and as they all have similar difficulties to encounter, we need only give a rough outline of their organization.

Of course, the aim in view is to prevent undue competition by a mutual understanding as to prices, and for this purpose to concentrate the sale of the common output in the hands of a managing committee, which distributes the orders received among the associates, and at the same time endeavors to regulate production so that it may theoretically correspond to the demands.

The 6 principal syndicates of the German iron trade are the pig-iron syndicate, the ingot and billet steel syndicate, the girder syndicate, the wire-rod syndicate, the plate syndicate, and the drawn-wire syndicate. The consolidated pig-iron syndicate has its head office at Düsseldorf, and represented 3 subsidiary syndicates, the Rhenish-Westphalian syndicate, of Düsseldorf, the association for the sale of pig iron of the Siegerland, with its offices at Siegen, and the Comptoir of Lorraine and Luxemburg. The foundation of the consolidated syndicate in its present form dates from the year 1897. Prior to that time there existed only certain undertakings between the different producers; but these agreements, of a more or less lax character, were without any well-defined principles of definite authority, and were easily evaded. The Rhenish-Westphalian syndicate dates from 1894, that of the Siegerland from 1896, and the Comptoir of Lorraine and Luxemburg likewise from 1896.

1The following account is taken largely from Kuhlow's German Trades Review and Exporter, Berlin, May 16, 1900, as translated in Special Consular Reports, vol. XXI, Part III.

The ingot and billet steel syndicate (Halbzeug Verband) existed in the year 1897 under the form of an association, the functions of which were exclusively to control the selling prices of their products. The following year it assumed a more definite organization. Its seat is at Düsseldorf, and it represents the steel works of the Moselle, the Saar, Luxemburg, the Rhine, and Westphalia. (The works recently erected at Luxemburg, at Rombach, Differdingen, and Aumetz are independent, and they have established among themselves a separate association, the director of which resides at Coblenz.)

The girder syndicate has its head office at Düsseldorf in the same building as the steel syndicate. It was constituted in the year 1899 and, like the pig-iron syndicate, comprised 3 sections-the South German girder syndicate, founded in 1884, which is composed of the rolling mills of the Saar district and of Luxemburg, and has its seat at Saarbrücken; the girder syndicate of the Lower Rhine and of Westphalia, with its head office at Düsseldorf, the operations of which extend to the north of Germany; and finally, the Peine Works, in Hannover, which supply that province and eastern Germany.

The wire-rod syndicate dates from the year 1896 and has its seat at Hagen, in Westphalia.

The plate syndicate has its head office at Essen, on the Ruhr. It was originally established in 1897 and assumed its present form as a limited liability company in 1898. The drawn-wire syndicate was founded in 1899, and the seat of the association is at Hamm, in Westphalia. Its commercial functions are distributed over 4 zones, viz, North Germany and the northwest, with an office at Berlin; Saxony, Silesia, and, lastly, South Germany, with its bureau at Mannheim. The export business is attended to at Hamm.

When first started, these cooperative selling associations acted with great moderation. As had been the case with the coal syndicate, prices made slight progressive rises, in order not to call forth protests of their customers. The plan of organization resembles that of the coal syndicate. The association appointed a number of experts whose mission it was to visit each of the confederated works and to determine their capacity of production, according to which they were to be participating firms. Subsequently Germany was divided into a number of zones, and the production for each day duly subdivided among the contracting parties. All orders are received by the general manager of the syndicate and they are divided among the associated works, having regard to the capacity of production, to the quality of the product, and to the conditions of transport. Of course, in this allotment the geographical situation of the respective works must be taken into account, as this plays an important part in the question of determining the mode of transport and the freight charges. In cases where, by virtue of its topographical position, one of the associated works receives orders in excess of its proper quota, the excess is deducted in the allotment of the next quarter. At the end of the year, when the accounts are balanced all around, compensation for the excesses and deficits of production is effected, so that each of the associated works is credited only with the part assigned to it in the table of the allotments.

This rule is subject, however, to certain exceptions. The zones situated on the frontiers of Germany are favored by the syndicate, with the idea of hindering the importation of foreign products. Again, certain export bounties are allowed to those which send abroad their surplus production, the accumulation of which might influence the sales at home, and consequently affect prices. The losses are borne by the funds of the syndicate.

The contracting parties are under obligation to sell their products to the syndicate. The selling prices are fixed by a mutual agreement of all the associates, as are also the purchase prices. In fixing these prices account is taken, first, of the amount of wages; second, of the cost of the raw material, and, last, of the needs of the trade and the quantity of orders on hand.

The general conditions under which the production is sold are settled, and modifications proposed in any particular case must receive the sanction of the general meeting.

Each associated member undertakes to submit unconditionally to the decisions and measures taken by the syndicate. When joining the association each member has to deposit as a guaranty of the due execution of his obligations blank acceptances, which, in case of a contravention of the statutes, are placed in circulation to the amount of the fine incurred.

The working expenses of the syndicates are covered by a levy, which is fixed by the general meeting at a certain per cent on the invoice prices. If the funds thus obtained exceed the expenses, the surplus is divided among the members.

There is also a compact which the German wire drawers have just concluded with their Austrian colleagues, with the aim of preventing a commercial struggle for the interior markets. The agreement applies both to drawn wire and to wire nails, and similar arrangements between the coke syndicates of Germany and Belgium are in existence. It will be seen, therefore, that the syndicates have already inaugurated the era of international commercial conventions.

The directors of the iron combinations have apparently much discretion left with them by the different members, as they seem able to control the business and to determine prices almost absolutely. As they themselves say, they are under obligations to the different members to make the best terms, and, in consequence, they are compelled in competition with foreigners to deal as merchants, securing the best terms they can without an attempt to make an absolute uniform price to all. They have been charged with making prices unduly high, but they themselves claim that their power has not been abused, their chief purpose on the whole being to secure steady prices.

3. In certain special instances it is somewhat better, instead of forming simply a combination which by agreements fixes prices and output, to organize corporations which buy up the different establishments, and thus, under one absolute management, control the largest part of the output. Owing in part, probably, to the great degree of publicity that obtains under the German corporation law, and in part to taxes, this form of combination as yet, at any rate, has not been very common. will perhaps be worth while to call attention to two or three of the more important ones and to note in brief their history and effect, and to print in an Appendix the form of the articles of incorporation and by-laws under which they are organized and managed.

It

The United Brush Manufacturers, Nuremberg.-One of the most successful of these corporations in distinction from the other form of combination is the United Brush Manufacturers in Nuremberg. These manufacturers long ago came to Nuremberg, where they were for many years successful. At length, in 1889, it seemed best for 15 establishments, at that time fairly successful, to unite into a single corporation. They had before this at various times tried a looser form of combination, but that had not proved firm enough. The capital was fixed at 3,000,000 marks, fully paid in. The corporation purchased from the separate firms 9 factories, with a total value of 2,000,000 marks. The corporation engages in all forms of brush manufacturing and has connected with it also various collateral industries. It employs about 2,000 workmen and superintendents. The direction of the business is in the hands of the earlier firm members, all of them, of course, trained technical men. There is a special aepartment for selling and 7 technical departments, all in Nuremberg. They have formed also various branch factories, for example, in Linz on the Danau, London, and New York. The company keeps on hand about 2,000,000 marks' worth of finished stock and of materials in different stages of manufacture, including raw material. Its output is worth about 4,000,000 marks a year, and the product is sold in practically all civilized countries. It has a complete monopoly of some of its best material, but has considerable competition in certain places in its cheaper products. The corporation has found it desirable to establish a fund for improving the conditions of the workmen, and has one special fund for the support of workmen who are in immediate need.

The articles of association are translated in full in Appendix IV, p. 193, but it is interesting to note here in contrasting the corporation form of combination with the others mentioned the way in which the annual income is divided. Later, in speaking of prices, attention has been called to the dividends and to the price of the stock, in order to show the success of this special combination. The profits after the annual balance has been determined are divided as follows: First, 5 per cent to the regular reserve fund until this amounts to 10 per cent of the capital stock; second, to the extraordinary reserve fund, an amount determined by the board of directors; third, 4 per cent dividends on the stock; fourth, the remainder after the above allotment of the regular and extraordinary reserve funds, the division of 4 per cent dividends, and the setting aside of any special fund determined by the general meeting is to be divided as follows: (a) Ten per cent to the board of directors as premium (Tantième); (b) 10 per cent, according to the decision of the board of directors, to the presiding officers (Vorstand), the other officers, and the employees of the company; (c) the remainder is at the disposition of the general meeting, which passes a resolution regarding the division of the same upon suggestions made by the board of directors. The United Ultramarine Manufacturers.-This corporation has its headquarters at Cologne, with a branch at Nuremberg. The corporation took its final form in February, 1900, although it had existed as a corporation earlier. It controls 95 per cent

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or more of the German output. There is little competition left in Germany, but some in England and the United States. It, however, does a very large export business, sending its product all over the world. In making the final combination they found it best to retain most of their former brands, and the various manufacturing establishments kept largely to their specialties. The chief reason for bringing about the organization of the corporation was the desirability of securing unity of management. The difficulty in securing this form of combination, according to the managers, was the dislike that separate manufacturers had of giving up their individuality, and particularly the publicity and the rate of taxation.

They were led into this organization by the fierce competition which drove prices down, and also by the fact that they expected to make some savings in administration, especially in freight and in traveling men. These questions have not been of so great importance as has been the special control of prices. There has been no decided change in the output, but probably a slight lessening in quantity. There seems to have been quite a decided increase in the profits, but, on the whole, the account coming from the director seems to be somewhat more hopeful in this regard than one coming from a prominent stockholder, who thinks that the organization has not been especially successful. The dividends have, on the whole, been low, having been passed in two or three of the earlier years, and running about 5 per cent during the later years. It was thought even that they might not have been able to pay some of the latest dividends if they had not sold some land which was available but which was not needed for the business.

In form the corporation is in the main the same as others under the German corporation law, but it has some special arrangements that make it noteworthy. Some of the persons going into the combination, very prominent manufacturers, as a special payment for good will, received some special preferred stock, 250 shares being given to each of four. This stock, made redeemable, is rather strictly limited as regards voting power, but in case of liquidation the company is obliged to redeem these shares first by paying their owners an amount equal to twelve and one-half times the average dividends on this stock for the 3 years preceding the liquidation, but not less than 1,000 marks for each share.

The combination also in organization had other special agreements with the founders regarding the purchase of their output, the amount of their production, etc. It will be seen that in this instance the combination of the United Ultramarine Manufacturers, while taking the form of a corporation, also seems to have retained some of the customs more usual in Germany when the combinations are made simply by general contract.

PROMOTION.

Owing to the strictness of the corporation law, the promoter as found in England and the United States does not appear prominently in connection with the organization of these combinations. Generally speaking, they have come about by mutual agreement among the different parties concerned on account of the severity of competition, and they have been carried through by agents especially paid for their services. In probably most cases in Germany, as in Austria, the banks are to be considered the promoters; in some instances this term could, perhaps, better be applied to the lawyer who has had charge of drawing the contracts. Very frequently in Germany the banks are holders of stocks in the larger corporations and manufacturing establishments, having their full proportion of directors in the board and assuming to a considerable extent the management. Until within the last 2 or 3 years this method of procedure has not been very common in the United States, but for many years this line of business, different from what is usually considered ordinary banking, has been usual in Germany and Austria.

The reason for this activity is explained by the bankers themselves to be the difficulty of securing good investments for themselves and their depositors. The rate of interest is low, particularly in the case of government securities, and ordinary shorttime loans do not furnish sufficient employment for their capital. It is not uncommon to have banks established particularly for some special line of business; as, for example, some years before the final organization of the spirits combination a spirits bank was started with the hope that it would be able to bring about a union of interests among the distillers, but it failed to carry through its purpose at that time. As will be seen later in the consideration of the corporation law, all profits of promoters must appear at the time of the organization of the corporation. It will be noted also that stock watering, so common in the United States, is practically entirely excluded under the new law in Germany. Any advantage that comes to the promoter from his stockholding must come through the advance in the price of his shares above par.

SAVINGS.

Speaking generally, in Germany as in Austria, the chief benefit that is ordinarily anticipated from the organization is to be found in the better adaptation of the supply to the demand, whereby the prices can be steadied and in certain cases increased. With the exception of the comparatively few combinations that are in the form of single corporations, there is little expected in the way of savings in costs of management, the lessening of office expenses, the closing of the poorer establishments, and similar savings frequently made in the United States. On the other hand, certain other economies made in the United States are also common in Germany.

Savings in freight.-While there is no discrimination among different producers in the same line of industry on the part of railroads, it not infrequently happens that the State railroads make special rates for the purpose of benefitting certain classes of producers in the community, or for the purpose of furthering the export trade. In Appendix III, p. 191, is given a translation of a petition sent by the managing officers of the new spirits combination to the Prussian minister of public works, asking for a special classification of alcohol used in the arts. This petition was granted. On the other hand, many of the larger combinations, such as the coal combination, the various iron combinations, the salt combination, as well as some of the smaller ones, such as the ultramarine corporation, are able to secure advantages in freights from shipping their goods to consumers from their nearest plants. In the case of the manufacturers of heavy materials, such as coal and iron, this is a material saving. Whenever an especial effort is being made to extend the export trade, this saving becomes especially noteworthy from the fact that those establishments on the border of the State are likely to be devoted particularly to the export trade, so that in addition to the bounty on export, sometimes paid by the combination itself, comes the further advantage of the lessened freight rate.

Common purchase of supplies.-Even when the organization is not in the form of a single corporation it is sometimes true that the central bureau purchases the chief supplies and materials of manufacture for the different establishments, in that way effecting also a considerable saving.

Costs of selling.-The greatest single saving made by the German combination comes ordinarily from the fact that they have a common selling bureau which is able to take advantage of the market, and which can lessen materially the costs of traveling men, of advertising, etc. At times, through this united action, as has been noticed for example in the case of the potash syndicate, the combination advertises widely through sending out pamphlets which call attention to the uses which may be made of the product, and in that way makes savings which would be entirely impossible to separate companies.

In a

Wages. In this connection it will be seen that there is likely to be at times certain small savings in wages, but the savings in Germany in this particular are not so large as those made in countries like England and the United States, where the combinations are much firmer, so that they are enabled to close their poor establishments. Certain exceptions, however, are found in Germany. For example, the corporation of the united ultramarine manufacturers were able to shut down 2 of the poorest of their 10 factories, in this way, of course, effecting certain savings in wages. few cases also combinations have been made with the special purpose of obtaining better control over workingmen. For example, some years ago the gold beaters of the cities of Nuremberg and Furth formed a trade combination to regulate working hours, to regulate the wages paid to their workmen, to protect the interests of the manufacturers in strikes, etc., as well as to make standard prices and to avoid overproduction. In that special case it is perhaps noteworthy that at one time, something over a year ago, on account of the manufacturers having large stocks of goods on hand, the combination closed every factory for a fortnight. During this period the workmen received a certain indemnity from the funds of the combination. The total indemnity amounted perhaps to $1,500, on an average being about 10 per cent of the ordinary wages.

PRICES.

There seems to be little doubt that the larger part of the German combinations are formed with the deliberate purpose of fixing prices. In most cases the matter is put from a somewhat different point of view, it being suggested that the purpose is to adapt the supply to the normal demand, so as to secure regularity in production and to avoid speculation which would bring about fluctuations in prices.

It perhaps will be well to call attention to certain special instances in which the course of prices is given. It is probable that, though the prices have in many cases been raised, this increase has sometimes come from circumstances outside of the