SPECIAL REPORTS FOR FEDERAL TRADE COMMISSION, 15
the increased use of furnace gases for industrial purposes (gas
engines), for running lighting plants for neighboring towns, also
the concentration of all stages of production in a few large mills,
have made it increasingly difficult to reduce production in any one
line of all the allied processes without causing grave losses and disorganization
 in other lines. Also the combination of the steel works
with the coal mines and coke burners, which, in turn, also must work
at a certain maximum capacity in order to be profitable, makes the
reduction of its steel output directly affect the entire coal mining,
ore mining, and smelting industries. Of the entire coal output the
members of the Steel Verband absorbed about half, the other half
being controlled by the Coal Syndicate (treated separately). A
reduction of steel production to a marked degree would therefore
bring about a crisis in the coal industry. The Steel Verband therefore
 maintains that it is better for the entire economic life of the
country in slack years at home to dispose of surplus products abroad
at prices which may even cause a loss, inasmuch as the loss incurred
by dumping abroad is in no comparison to the losses which would
be incurred if production were reduced at home. Also, if production
were reduced at home, the cost of production would rise in mills
running at half time, which in turn would increase the prices of the
products to such an extent that the home consumers would suffer
a greater loss in the end than they would gain by a momentary
price reduction.
Immediately after the formation of the Steel Verband the Verband
sought an understanding with foreign competitors as to foreign
markets. What little is known about these arrangements is treated
under the heading of “International combines.” The dumping
policy has at times led to extremely low prices. For instance, at one
time iron rods were sold f. 0. b. Antwerp for 90 marks ($21.42) a
ton, which meant a price of 82 marks ($19.51) to 85 marks ($20.28)
a ton f. o. b. factory. |
An important element in the price policy abread is the export
bounty. The increasing saturation of the home market makes. export
imperative, if plants are to run at full efficiency. This has brought
about a settled policy on the part of the Verband to encourage exports
 in “B” products and manufactured articles quite separate to
the dumping policy just described which only affects momentary
overflows of production. The first effort at regulation was made in
1902, when the “ Diisseldorfer Abrechnungsstelle fiir die Ausfuhr?”
was organized by the Coal Syndicate, the Pig Iron Syndicate, the
Half Finished Products Syndicate, and the Beam Union. In 1905
this association was reorganized and the directorate became identical
with the directorate of the Steel Verband. The peculiarity of the
situation in Germany is due to the division of products into the “A”
and “ B?” classes—i. e., the 31 plants which make up the Verband are
widely different in their capacity and organization. Some of them
combine all the steps of production from ore to finished products,
while others make only “ B ” products and must buy “A” products as
materials for the manufacture of “ B” products. Inasmuch as the
Verband has only a moncpoly on “A” products and the “ B ” products
are sold in the open market by the plants manufacturing them, there
arises a certain tension between the firms manufacturing “B* products
 from their own “A” product and those firms which must buy