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Show Cartels Hinder Trade And Stifle Competition Big Monopolies Regulate Commerce Between Be-tween Nations; Valuable Information Given Axis Under Business Pacts. By BAUKHAGE News Analyst and Commentator. .Srad WNTJ Service, Union Trust Building Washington, D. C. When the political smoke of the campaign dies away we are all going go-ing to hear a lot more about cartels. Most people probably have a general gen-eral idea of what they are but those of us who have followed the hearings hear-ings of the Kilgore subcommittee on war mobilization learned a lot of things we didn't know. I think I heard about cartels first from Bill Shepherd, a newspaperman news-paperman whom I was always meeting meet-ing in different parts of the world. He had just come back from Germany Ger-many shortly after the last war and was full of the subject on which he had written an article for Colliers'. But we didn't know the half of it then. I mention that because it seems Incredible that more was not done to break down the cartel system before. be-fore. The simplest definition of a cartel Is a monopoly and its most obvious effect is to gouge the consumer with monopolistic prices. A chemical chemi-cal plastic which can be sold to commercial com-mercial moulders at 85 cents a pound, costs dentists $45.00 a pound. Same stuff. Atabrine, a synthetic substitute for quinine, sold to the government, gov-ernment, presumably at a profit, at $4.50 for a thousand tablets, by a company with a cartel - controlled patent, under a contract that will The Kilgore committee makes this statement, for instance, in its report: re-port: "The Japanese were able to get technical know-how on some processes proc-esses for production of 100 per cent octane gasoline before they were generally available to American firms and in at least one case as late as June, 1941, to find out through commercial channels the amount of our oil and gasoline shipments to Pearl Harbor." Some Agreements Sanctioned by U. S. It must be said in frankness that in some cases American companies specifically the one which had the right to certain manufacturing processes proc-esses in high octane had permission permis-sion from the war department to extend ex-tend their use in foreign countries. The Universal Oil Products company com-pany made special inquiry of the general staff regarding installing plants in Germany and Japan and they were told in July, 1938, "The war department has no objection for the exploitation of these processes proc-esses abroad." Other manufacturers were not so scrupulous. The Kilgore report reveals re-veals an interesting letter written on April 17, 1940, three months after the President had announced a "morale embargo" against Japan. The letter was written by an official end six months after the war. Atabrine Ata-brine costs you and me $12.00 per thousand tablets. Another feature of some cartels involved in-volved patent-leasing and this practice prac-tice has resulted in most of the furor today because, by means of international inter-national cartels, both Germany and Japan got hold of secrets of value in the war. For example, the American Boscb corporation provided its German affiliate with information developed by the signal corps of the army which the German army used as the basis for radio communication between be-tween tanks and ground and air forces. The Bosch company got the information in the form of specifications specifi-cations in army contracts on which it was bidding. Government Moves To Smash System Naturally the government had to take action in cases like that. Recently Re-cently the state department established estab-lished an industries branch in the commodities division of the office of economic affairs and for some time the department of justice has been conducting investigations and in several sev-eral cases has taken action. Cartels are one of the highly complicated matters which the peace negotiations nego-tiations will deal with. of a Texas oil company to a Mr. Darcy, representing the Mitsubishi Oil company of Japan. It was sent to Darcy' s home following up the conveying of "certain technical r information" in-formation" which Mr. Darcy sent to Tokyo. This is an excerpt from the letter: "For your confidential information enclosed herewith please find photostatic photo-static copy of Saybolt's analysis No. 1433 covering the supposedly 92 Octane gasoline for the Maritime Oil company. . . . You have conclusive con-clusive proof that our oil will run up to 93. . . . The attached report is sent you in complete confidence and be very careful to whom you disclose dis-close it, as it would get me into a terrific jam if it ever leaked out that I sent you this data." . But the government of the United States seized the files of the Mitsubishi Mitsu-bishi company and "it" has leaked all over the place and what is more "it" is a comparatively harmless sample of other things which will come out later on. , One of the interesting cartels deals in a product that few people not in the leather business know anything about. It is the quebracho, a substance sub-stance used to tan and preserve leather and it comes from the bark of a tree grown chiefly in Argentina. Assistant Attorney Gen. Wendell Berge, who has charge of investigations investi-gations now going on, said: "It seems abundantly clear that America Ameri-ca can never have a foreign policy based on the principles of democracy democ-racy and international goodwill so long as international trade is dominated domi-nated by cartels." Berge believes the principle involved in-volved in the operation of the internal inter-nal pools and monopolies is the greatest threat to full employment and therefore in many respects is one of the central issues of our time. This type of organization, he believes, restricts rather than promotes pro-motes trade because it hot only drives out competition but also enters en-ters into agreements to limit production. pro-duction. That came out in the war and wherever there was a serious shortage, short-age, rubber, aluminum, magnesium, drugs, a cartel was discovered in the woodpile. These combinations tend to become little governments of their own and their effect on foreign relations is clearly evidenced in the case of South America where the Germans obtained exclusive rights in many trade fields through these trade agreements and used these rights to build up their Nazi propaganda propa-ganda machine. Before the United States entered the war Germany was able to prevent pre-vent firms in this country from supplying sup-plying certain types of explosives to Britian because the American manufacturers manu-facturers had an agreement with the German affiliate not to do so. The same applied to optical goods. There are other examples which make your hair curl. The cartel is controlled by a company com-pany owned and managed by the British. It has an exceedingly tight monopoly and to an extent can there.fore control leather prices. Since it has been in operation quebracho que-bracho prices have shot up and production pro-duction has gone down. The figures disclosed by the investigation show that before the cartel was formed quebracho was selling at just about one-half what it costs today. Six price-boosts were made in seven years and the firm is said to be now making 3314 per cent profit. All but 10 per cent of the quebracho que-bracho production is controlled by the cartel and many methods are used to hamstring the independents, the chief of which is to make secret arrangements with shippers not to, allow cargo space to the competitors, competi-tors, and the cooperation which the cartel enjoys in high places is revealed re-vealed in the course of indictment proceedings by the department of justice. The two firms involved were represented by no less than an of-, ficial envoy of the Argentine government. gov-ernment. I The quebracho pool sent vital supplies to Japan up to the last few years and did it at cut-rates absorbing absorb-ing the loss by boosting the price toj this country. It has recently been predicted that if this pool continues in operation there will be a serious leather shortage after the war. But substitutes are no solution of the cartel problem. A world in which one man has to use ersatz-sauce for his goose while another gets the gravy for his gander, isn't exactly I according to the American idea of' fair play. |