SPECIAL REPORTS FOR FEDERAL TRADE COMMISSION, 17
Relations to the home government.-—So far as I can learn the
Aktiengesellschaft Stahlwerksverband has no particular connection
or relationship with either the State or Imperial Government. The
subject of freight rates for exports is an extremely complicated one,
an explanation of which has been attempted with more or leds success
In various special reports on that subject. (See reports on “ Railway
 rates,” of February 15, 1910, and “ German agricultural railway
rates,” of June 15, 1914, from this consulate general.) These rebates
are not peculiar to the Steel Verband, but are accorded by the railroads
 to all exporters. The export bounties are paid by the Verband
as described above, but so far as known the Government does not pay
such bounties.
There has been no legislation bearing particularly upon the Steel
Verband. This combination comes under the laws affecting all business
 organizations, such as the Gewerbeordnung, Handelsgesetzbuch,
(esetz gegen den unlauteren Wettbewerb. Under these laws the Government
 may step in at any time if it considers a combination to be
harmful to the public interests of the country. The Government railroads
 also place enormous power in the hands of the Government
either to harass or encourage the steel combination through their
purchases of railroad materials or manipulation of freight rates.
Relations to other business interests at home.—The Steel Verband
is associated with nearly every allied industry through personal
union or interlocking directorates. The four great groups—coal, iron,
and steel, and steel manufactured products—are composed in the main
of the same men. -Nearly every combination for purchasing, manufacturing,
 selling, or exporting in these lines show among their
directors Thyssen, Krupp group, de Wendel, Haniel, Stumm, ete.
These interlocking directorates, however, are backed up by the interlocking
 firms themselves. For instance, if Thyssen owns coal mines
that are in the Coal Syndicate, a woven-wire factory that is in the
Woven-Wire Syndicate, etc., he, in his capacity as the head of the
firm, which is a member of each syndicate, has an important influence
in that syndicate. The influence of these interlaced business interests
on the entire business of the country is naturally very great: on the
Government, however, it is negligible.
Relations to foreign Governments and to foreign business interests.—It
 is impossible to learn anything regarding the influence
of the Steel Verband on the Government of foreign countries, because
the entire foreign policy is kept strictly secret.
The results attained by combination.—The formation of the Steel
Verband came at a critical time in the German steel industry. The
introduction of protection in 1879 made it possible for the German iron
industry to introduce the Gilchrist Thomas process and made usable
the enormous ore deposits of Germany and Luxemburg, which have
a large percentage of phosphorus. From 1879 until 1900 the curve
of production shows a sharp incline, but this production was entirely
absorbed by the rapidly growing home market. At the beginning of
1900 there is a bend in the curve, showing a depression due to the
fact that the production of halt- finished. products was increased
faster than could be absorbed by the industry of the country. This
led to disorganization. The formation of the Verband in 1904 stabilized
 the home market and provided for a distribution of the sur-27941°—
 pm 9 168.