various other subterfuges in order to carry out its plans. the open, and its existence and methods were known to all.

It could work in

The Kartell. The first trusts, formed after the depression of 1873, took the form of rings. These worked badly, for the usual reasons; so the German capitalists sought to repair their defects, while retaining the general principle. The ring was improved upon, and the better form of control became known as the kartell. So successful was it that in 1906 no less than 384 kartells were in existence, covering the coal, iron and steel, chemical, textile, rubber, paper, glass, bricks, food, drink, and electrical industries. The chief were established in the iron, steel, and coal trades, and the best idea of their nature can be obtained by examining the Westphalian Coal Kartell.

This kartell was established in 1893, and was to run for five years; it was renewed till 1905, and again till the end of 1915. The arrangement was thus a temporary one, terminable unless renewed at the end of a certain time. It covered the activities of about 170 mines, on the richest coalfield in Europe, producing over 50 per cent. of the coal supply of Germany. These mines had tried in vain to maintain agreements, and were therefore at the mercy of the ironmasters and other coal buyers. The kartell, therefore, was established to take the selling completely out of the producers' hands. A central sales bureau was established at Essen. It fixed the maximum output for each mine. All coal produced must be sold to the bureau at a 66 taking-over price" of, say, 7/6 per ton. The bureau then sold the coal to consumers at as high a price as it could get, and after taking off a small sum for working expenses handed over to the producer the difference between the taking-over price and that paid by the consumer. In this way the producer lost all chance of under-selling rivals, and since there is only one seller the prices could be kept higher than if all the mines were competing.

The prices at which goods were sold by the bureau depended on the presence or absence of competition at the place where the consumer lived. In 1905 coal-buyers in Essen had to pay 12/6 per ton, because the Kartell had a monopoly over the mines in that area and coal could only be brought from other fields at considerable cost in freight; but at Dessau, 300 miles to the east, where Westphalian coal had to compete with that of Saxony and Silesia, the same coal was sold at 11/73. Further, a kartell might allow more goods to be produced than the local market could absorb, and then dump the surplus abroad. For instance, in 1900 Essen coal sold for 10/9 in Essen, and for 9/10 abroad.

The kartell plan worked quite well, and largely realized the aims for which it was formed. It was especially suitable for handling crude or standardized commodities, such as coal, pig-iron, raw steel, fertilizers, etc. For manufactured articles it was not so useful, and so Germany also had her big corporations and monopolistic enterprises. Integrations were built up, some of them complete and powerful. Since the War two lines of development can be traced. On the one hand, big units have grown bigger, amalgamations have been common. On the other hand, plans have been formulated for subjecting all the independent firms in any industry to the general control of a trade parliament, containing equal representation of employers and employees. The policy of the trade parliament, which is to be carried out by an executive, is to regulate production, to control distribution of raw materials, to further efficiency, to organize sale and

eliminate unnecessary competition, and to promote research work. This machinery may in practice remain merely a ring for price-fixing, outputdetermining, or market-dividing; it may possibly go on to undertake distribution as the kartell did; or it may lead to the full amalgamation of the various firms.

Trusts in Australia. Australian industries have passed during the last 20 years into the hands of trusts, and competition to-day is probably as restricted in Australia as in any other part of the world. The trust movement has been most marked since 1900, and has gained a strong grip upon some branches of primary industry, manufacture, the sale of imported and locally made goods, and interstate shipping. The result of all this activity has been summed up by a recent writer (H. L. Wilkinson) as follows:-"The trust movement, while increasing the economies of production and distribution through the elimination of competition, has been responsible for the far greater profits being taken by the owners and controllers of the industries involved in it than would have been the case if there had been no restraint of competition. In Australia in several services the addition in prices due to a trust taking control has been very appreciable. On the other hand, much wasteful competition has been eliminated, and combinations and agreements have led to improved efficiency and a reduced cost of production.''

Conditions Favourable to Trusts. Australia presents most of the conditions necessary for and favourable to successful trust operations. (1) The geographical position of the continent offers a natural protection to Australian goods. The nearest competitor is Japan, 6,500 miles from Sydney, while American and European goods have to be brought an even greater distance. This advantage is, however, reduced considerably by the comparatively heavy freights on interstate traffic. Railway interstate charges are heavy, and the interstate shipping companies, on which Australian domestic commerce really depends, demand freights which give the local article very little advantage in another state over the imported wares. Before the war a German piano could be brought from Hamburg to Brisbane for little more than it cost to send an Australian piano from Melbourne to Brisbane. During the same period the freight between Melbourne and Fremantle was for many classes of goods almost the same as that between Melbourne and London, via the Cape, and thus the isolation which should give Australian industries a chance to beat their foreign rivals is in many cases rendered worthless, or is used as the basis of a shipping trust.

(2) The congregation of half the population into the capital cities places industrial and financial control in the hands of men who work near each other, and can therefore act more easily in unison. The economic life of each state is controlled from the capital, where the chief offices and factories are situated; hence the heads of rival firms know each other and tend to combine. Further, these capitals are so far apart that each enjoys a local monopoly, especially for industries dealing with heavy goods, perishables, printing, etc.

(3) The tariff gives a high artificial protection to manufacturers.

(4) The growth of trade unionism and industrial legislation has indirectly fostered the spirit of solidarity among employers. Organizations of employers soon arose to confront organized labour in the eighties of last century. Since 1896 wages legislation has tended to view employers in each trade collectively; it has been based on the idea of the existence of two "sides,'' capital and labour. The result has been to bring rival employers

together in order to decide upon their attitude in the Industrial Court or on the wages board. From discussions on wages the transition to other topics has been easy, and thus the system of wages regulation has generated a sense of unity among employers, a unity which has made possible trust agreements.

For these reasons the trust movement in its many forms has become firmly rooted in Australian soil, and rings, kartells, monopolies, and corporations exist and flourish.

Some Rings. Of the many agreements by which competition among doctors, lawyers, surveyors, banks, commission agents, and others is limited little need be said, except that the professional classes in Australia, like the wage-earners, are probably more strongly organized than in any other part of the world. The ring idea has been adopted in scores of industries, and is the most common form of trust in Australia to-day. Hairdressers, licensed victuallers, master bakers, dairymen, cobblers, fruit producers and sellers, etc., all have their associations, which control prices and the general conditions of sale. Such associations seldom cover the whole industry, for generally some members of the trade refuse to sacrifice their liberty to undersell. In such cases the pool often has at its disposal some method of crushing a non-member, such as asking wholesalers and manufacturers to refuse supplies to the outsider. A typical ring is that which controls prices in the printing trade. After an era of excessive competition master printers came together and established associations in each capital. Each organization compiled a list of minimum rates for every conceivable kind of work. Hence a customer finds that all firms charge about the same price for any piece of work, and interstate agreements will prevent him from getting the work done any more cheaply in another state.

The Shipping Combine. The biggest ring in Australia is that which controls interstate shipping. Before the war the interstate coastal trade amounted to about £50,000,000 yearly, with some 180 steamers engaged therein. That trade is almost completely in the hands of seven large companies, who by agreements about freights, fares, etc., have raised charges much above those prevailing in the days of smaller, older, and less efficient ships. Thirty years ago the trade was carried on by many small lines owned by individuals or little companies. Between these there was keen competition, resulting in the crushing or buying out of the weaker lines by the stronger, until by 1896 seven large companies had emerged. This reduction in the number of competitors only accentuated the fierceness of the rivalry. Low freights and fares were the rule.

The advent of Federation and of interstate free trade opened the way for a big increase in the coastal trade. At the same time the competing companies saw the folly of their policy, and determined to co-operate rather than compete. There was plenty of work for them all. Why, therefore, continue a fight which benefited no one except perhaps the travelling public? In 1901, therefore, the Steamship Owners' Federation was formed, and four results were soon apparent. (1) A province agreement was made. Tasmanian and New Zealand trade with the mainland was given over completely to the Union Steamship Co. and Huddart, Parker, Ltd., and the remaining companies divided out the mainland traffic among themselves. The small coastal lines were allowed to carry on a state traffic, provided they did not enter into interstate work, except between Tasmania and Victoria. (2) A price agreement was reached. The former rate-cutting came to an end, and uniform

charges became the rule. Though one may have the choice of travelling by three or four lines, the fare by each one is the same. (3) A system of deferred rebates was established. In order to bind shippers and agents to the combine, and so prevent the growth of any rival companies, the Federation agreed to grant deferred rebates of 10 per cent. to loyal shippers. The rebate was not to be paid until a year after the goods were sent, and if in the meantime it was discovered that the shipper had patronized any line outside the combine, the refund was forfeited. Thanks to this bait the companies gained abundant loyalty, and no outside line had any hope of successful rivalry. By 1910 the rebate had done its work. Competition had been killed, shippers could not be disloyal if they wished. In that year, therefore, the rebate was discontinued. (4) The Federation became the means by which the shipowners fought the seamen's unions.

Success attended the operations of the shipping companies once the pool was formed. Fares increased 50 to 70 per cent. between 1901 and 1914, and freights even more on some routes. Against this it may be urged that the accommodation and speed of the ships to-day are far superior to those of 1900. True; but the new steamers have been almost entirely paid for by the travelling public out of the abnormal freights and fares. The balancesheets of the various companies show dividends of 10 to 15 per cent., although the stock has been plentifully and frequently watered. But the general policy of the companies is probably not one which is most conducive to the development of Australian industries. The high freights have practically nullified the advantages of interstate free trade; they have facilitated the formation of local trusts and monopolies; they have destroyed the natural protection which Australian industries should enjoy by reason of our geographical isolation. Finally, by their control over the coal trade the shipping companies dominate the industrial progress of all the states. Let us see how this coal monopoly works.

The Newcastle Coal Vend. As early as 1891 the mine-owners of the Newcastle area were endeavouring to restrict competition, but for many years. their efforts met with little success. In 1902 a new effort was made to fix prices, and give mutual help in labour disputes, but the scheme came to grief. In 1906, however, the Newcastle Coal Vend was set up, and has operated successfully since that date. The unsigned agreement which was accepted by all members of the vend provided for the fixing of (a) a maximum output for each mine; (b) a minimum price, which is revised from time to time. The effect of this combination has been an increased price of coal at the pit-head and bigger profits. On the whole, it seems that these increases were not beyond the point of giving a fair return to the owners. The real grievance in the coal supply came from the agreement between the vend and the interstate shipping companies. Up to 1906 the sale of Newcastle coal in other states was in the hands of four shipping companies and two or three coal merchants. In 1906 an arrangement was made whereby these companies and merchants were given the monopoly of sale for Newcastle coal outside New South Wales. The vend promised to sell coal for other states to these dealers only, and the shipping concerns consented in return to ship no coal but that of the vend.

This agreement has been responsible for excessive increases in the price of coal in all the states concerned. The Victorian railways in 1905 were paying 10/6 per ton, in 1910 15/5. The South Australian railways in 1906 paid 11/9, in 1910 17/-. Retail dealers in Adelaide had to pay 26/3 in 1910,

as against 17/- in 1906, and throughout the southern states of Australia similar increases were extracted. The effect of this has been very serious on industries in those states where no good coal supply exists, while the heavy cost of railway fuel is a distinct detriment to the development of cheap and adequate land transit.

Corporations in Australia. The trust movement has not confined itself to agreements; we find several amalgamations, with a number of firms merged under one control. Chief among these are the tobacco, jam, and sugar trusts. Before Federation there were many jam factories in the different states. Competition was keen, and while the price of jam was low the prices obtained by fruit-growers were often good, because there were many competing buyers for the fruit. After Federation the whole Australian market was thrown open to interstate competition, and the large factories of Hobart and Melbourne beat down their smaller rivals. Eventually the industry became concentrated in the hands of two Hobart firms-Jones and Peacock-and a few rivals in Melbourne and Sydney. Gradually, Henry Jones entered into association with some of these rivals, thus giving unified control over the big factory in Hobart, two factories in Melbourne, one in Sydney, and a large fruit agency in London. In 1910 the amalgamation became complete by the forming of the "holding corporation" of Henry Jones Co-operative, Limited. This corporation not merely took control over the factories just mentioned, but spread its cloak over the three chief remaining firms, thus acquiring an almost complete monopoly and a unified policy of control. The company is almost the only buyer of jam fruits, and therefore can fix its own prices, except where the growers have co-operated in self-defence.

The tobacco trust enjoys a monopoly over the Australian tobacco market, and is one of the few instances of a foreign trust with a footing in the Commonwealth. (Two others are the American Meat Trust and Lever Bros., Ltd.) Prior to its formation, the trade was in the hands of importing firms (American, British, and Australian), manufacturers (American and Australian), and an American company containing some Australian capital. Amalgamations took place, and eventually a holding corporation, the British Tobacco Co. (Australia), Ltd., was set up in 1903 with a capital of £5,000,000. At once the results were seen. Travellers were dismissed, and advertising expenses reduced; at least one factory was closed, and the trust brands were pushed everywhere on retailers. Hostile newspapers soon changed their tune or disappeared from circulation, and retailers were compelled to sell at prices fixed by the trust. Prices went up, but this increase was not accompanied by any grant of higher rates to the Australian grower. The fusion of many companies into one put the growers at the mercy of one buyer, who could fix his own price. Lower and lower prices were offered, growers were driven out of the industry, and the percentage of Australian leaf used in factories fell from 27 per cent. in 1902 to 11 per cent. in 1913. Finally, in order to win the tacit support of its employees the trust gave excellent industrial conditions, well ventilated and lighted factories, good wages, and a profit-sharing scheme which in some respects is the best in the world. The holding corporation declares a regular £500,000 profit, but the profits of the constituent companies are not divulged.

The Sugar Monopoly. The last trust worthy of note is the Colonial Sugar Refining Company (C.S.R.). The sugar industry is in three partsthe growing of the cane in Queensland and northern New South Wales, the