Transcriber’s Note

This file uses _underscores_ to indicate italic text. Small capitals
changed to all capitals.

CARTELS

Challenge to a Free World

_By_ WENDELL BERGE
_Assistant Attorney General of the United States_

_Public Affairs Press_
WASHINGTON, D. C.

_To My Father_

GEORGE W. BERGE

_who throughout his life and in his public career was
guided by the conviction that the people’s rights
are not won without struggle and will not
be maintained without vigilance_.

_Public Affairs Press, 2153 Florida Ave., Washington, D. C._
_Copyright, 1946, by American Council on Public Affairs_
_M. B. Schnapper, Executive Secretary and Editor_

_Preface_

Plastics, television, new chemical and electrical techniques are but a
few of the instruments which will furnish the stuff for the pioneers of
a new age. The challenge of housing will excite bold minds to action,
on a scale never before attempted, to wipe out slums and give dwellers
in country and city alike a new and higher standard of living. Not
only at home, but also abroad, the opportunities for daring enterprise
which will be offered by the needs of world reconstruction will surpass
anything ever before known.

How are we going to meet this challenge? At the outset, we must face
frankly the greatest obstacle to making the most of our opportunity.
It is the threat of cartel control of major world industries. Unless
this threat is understood and dealt with decisively, our opportunity
to realize the great potential benefits of a free economy will be
lost. And worse still, the hope of maintaining democratic political
institutions will be seriously impaired.

The pattern of cartel operations has been clearly revealed in recent
years by antitrust investigations. From public records in antitrust
proceedings and congressional hearings, information about cartel
operations is now available. The public should be familiar with the
facts. As head of the Antitrust Division of the Department of Justice,
I have frequently been called upon to discuss cartel problems before
congressional committees, trade associations and civic groups. Since
my testimony and speeches received varying degrees of public notice
at the time they were given, the casual reader of newspaper reports
necessarily obtained only an impressionistic picture of the far-flung
ramifications of the subject. Something more is needed for thorough
understanding.

With this thought in mind, a number of friends and associates have
suggested from time to time that my material should be woven together
in book form. This I have undertaken to do in the present volume.

Merely to make assertions about the evil effect of cartels is a simple
matter. But I believe that the real usefulness of this book will depend
upon its fairly detailed explanation of the operation of particular
cartels, with direct quotations from letters, memoranda and other
documents.

While I have not tried to compile a complete source-book, I have
striven to make this discussion as non-technical as possible. The
factual material is drawn largely from the documents of the Kilgore,
Truman and Bone Senate Committees, and from the public records of
antitrust cases.

The investigations which unearthed the facts cited in this book were,
of course, the work of a great many men and women in the Antitrust
Division extending over a period of years. Acknowledgment of credit to
all of them would be impossible. Many of the men who have developed
these facts are now serving their country in the armed forces.

I cannot praise too highly the ability, energy and devotion to public
service of the men and women of the Antitrust Division. It is a
privilege to head such a splendid staff, as it is to serve under such
an able and distinguished Attorney General as Francis Biddle, who
has maintained at all times an extremely deep interest in our cartel
work and has given it his fullest support. Attorney General Biddle
has repeatedly impressed upon me his own conviction that the vigorous
enforcement of the antitrust laws against cartels is an indispensable
condition to the maintenance of a free competitive economy in this
country.

In the preparation of this book I am particularly indebted to Joseph
Borkin of my staff, who is in my opinion one of the best informed men
in America on the activities of international cartels. For more than
five years Mr. Borkin has devoted his great resourcefulness and energy
to investigation and study of cartel problems. His contribution in this
field has been invaluable.

I also want to acknowledge my deep obligation to my First Assistant,
Edward H. Levi, with whom I have spent many hours discussing the legal
and economic problems of cartels, and on whom I have relied so heavily
in the practical administration of the Antitrust Division. And I am
greatly indebted to Myron W. Watkins, Charles A. Welsh, Ernest S.
Meyers, George P. Comer, Herbert A. Berman, Bartholomew Diggins, Robert
Hunter, and Heinrich Kronstein of the Antitrust Division staff, all of
whom have been of great assistance in the preparation of this book and
in the cartel work of the Division. Professor Walton Hamilton of Yale,
who has been a part-time member of the staff, has also worked closely
with me on these matters and has made a signal contribution to our work.

Mr. M. B. Schnapper, Executive Secretary of the American Council of
Public Affairs, has been of greatest assistance in the planning of this
book and in the editorial work which it has involved.

WENDELL BERGE

CONTENTS

_1_: Trusts to Cartels 1

_2_: Enterprise Eclipsed 10

_3_: Technology 19

_4_: Patents 36

_5_: Medicines 52

_6_: Synthetic Hormones 58

_7_: Vitamins 82

_8_: Quebracho Extract 112

_9_: Titanium 124