WENDELL BERGE'S INDICTMENT The Challenge of the Cartel Mr. Berge says we must outlaw these artificial trade barriers and thus preserve our free-enterprise system. N so long ago some of our citizens By WENDELL BERGE the first ties between American firms and were urging this country to avoid Assistant Attorney General foreign cartels, one cartel agreement after war by making a compromise with another was entered into by American fascism and nazism. They insisted that free enterprise. For cartels are attempts firms with regulated European combines. the Fascists and the Nazis were riding the by private groups to regularize trade by "wave of the future"-that unless we too determining through private agreement these American cartel mem- made provisions to ride the wave it would how much of each commodity shall be bers the idea of a "partnership" between engulf us. We rejected their arguments produced, where it shall be produced, who Government and monopoly companies when we accepted the challenge of Pearl shall produce it, and the conditions and gained prevalence as a way of achieving Harbor. terms upon which new producers shall stability. They forgot that this very Similar arguments are being made today come into the industry. Cartels also "partnership" has always been the fore- in favor of accepting the cartel system. undertake to say how goods shall be dis- runner of increasing governmental reg- "Cartels divide world terri- We are told that we must adopt and rec- tributed, what quantities shall be sold and ulation, and that in Europe these "part- ognize cartels whether we like them or where they shall be marketed. Thus car- tories into a number of non- nership arrangements" had undermined not. We are told that the rest of the tels are an attempt to put each industry anti-monopoly legislation. competing trade areas." world is irrevocably committed to the car- into a strait-jacket in accordance with a Thus American companies became full- tel system; that we cannot trade with preconceived plan of those who dominate fledged cartel members during the period cartel countries unless our companies be- the cartel. between the two World Wars. The effects long to the cartels; and that, in general, of this cartel domination and control on we should not try to buck the inevitable. O our economy are now generally well UR own national policy toward car- The anxiety of European and American known. They have been exposed in a tels and monopolies is clear. It was monopolists to get this country into the series of Congressional investigations and enunciated more than fifty years ago in cartel system is due in part to their recog- anti-trust suits. the Sherman act and has been redeclared nition of the obvious truth that if this The political effects of cartels are also in subsequent legislation. One may won- country, with its immense productive re- of most serious moment. By the creation der how cartels came to acquire their vast sources and its tremendous buying power, of artificial trade barriers, cartels subvert economic power if this country's policy so stays out of the cartel system the cartels public policies of Government. It may be long ago was set against them. It is even then will be unable to dominate and con- governmental policy in a given situation interesting to note that France, Germany trol the world market and will fall of to lower tariffs and encourage imports- and other European countries which be- their own weight. Thus, because of the a policy impossible of accomplishment if came the greatest exponents of cartels pressure for revival of the cartel system, the product involved is controlled by a also directed legislation against them. with legalized participation of American cartel which has decreed that no imports These European countries sought to out- companies, the whole question of the eco- shall take place. law monopoly abuses by direct legislative nomic and political effects of cartels is Cartel control collides with governmen- prohibitions like our own Sherman act. most timely. tal foreign policy in such important mat- "They take the position But, unfortunately, these countries were ters as the Good Neighbor policy. During Cartels commonly divide world tutil that price fixing between not ready to embrace an economic policy a period when it was of the utmost im- tories in non-competing areas, the mem- based on a free market and a minimum competitors is not illegal." portance to encourage trade between this bers from one country agreeing not to of governmental regulation. Their courts country and South America, cartel agree- compete in certain other specified terri- interpreted their own anti-monopoly laws ments turned over South American trade tories in return for immunity from com- as authorizing "good" cartels. They gen- to Germany in such significant commod- petition at home. They operate as private erally took the position that price fixing ities as drugs and pharmaceuticals, trade barriers against imports and they between competitors was not illegal if the arbitrarily cut off exports. participants did not make more than a CARTELS have interfered with Gov- "normal" profit, and if the prices were ernment policies in other ways, such as NOTHER common characteristic of found to be "fair." As their statutes were the agreements between American and cartel agreements Is provision for dividing thus interpreted, it became necessary for German companies which prevented Great technical fields of operation. Thus one Governments in most European countries Britain and France from buying military party will agree not to make certain prod- to set up commissions to regulate the optical instruments in this country when ucts in return for freedom from competi- business conduct of the cartel companies. national security required close coopera- tion in regard to the manufacture of other Thus legalized cartels became the order tion with both of those countries. In sub- products. of the day in Europe. stantially every cartel-controlled field Cartels generally restrict production, We followed a different policy in this there was a critical shortage at the begin- thus enabling their members better to country. The interpretation which our ning of the war-an inevitable result of control distribution and prices. They also courts gave to the anti-trust laws rendered restrictionist policies. often suppress technological developments illegal the essential features of cartel ar- But the most serious political conse- in order to prevent competition from new rangements. But our error lay in failure quence of cartels is their effect on the "They operate as private products. to enforce the anti-trust laws. In the very structure and function of Govern- barriers against imports Obviously the whole cartel approach is Nineteen Twenties, when vigorous anti- ment itself. Cartels call for a larger and they cut off exports." incompatible with American traditions of trust enforcement would have struck down measure of Gov- (Continued on Page 38) "They suppress technologi- "They determine through private "They undertake to say how "They are an attempt to put cal developments in order agreement how much of each goods shall be distributed and industry in a straitjacket ac- to prevent competition." commodity shall be produced." what quantities shall be sold." cording to a preconceived plan." THE NEW YORK TIMES 14