SPECIAL REPORTS FOR FEDERAL TRADE COMMISSION, 63
The Association of Silk Manufacturers was opposed by outsiders
and at first undertook to force them to join the cartel. An agreement
 was made with the Association of Velvet and Silk Wholesale
Dealers by which both parties agreed not to sell to or buy from
outsiders. The cartel gave the dealers’ association preferential treatment
 as against all other customers. It excluded department stores,
with the exception of the three largest. In March, 1907 , the assos
ciation sent a circular to its customers, according to which every
customer, be he wholesaler, garment manufacturer, or retailer, who
had bought goods from outsiders, should in future be required to pay
an additional charge of 10 per cent upon all bills of the cartel. This
scarcely affected the wholesalers because of their exclusive contracts
with the cartel. The result was successful in forcing thig group of
outsiders to join the combine.
The Cartel of Umbrella Cover Manufacturers conducts the fight
against outsiders by an agreement with factories which dye their
material. These concerns, four in number, guarantee to dye exclusively
 for members of the cartel. The dyers informed all manufacturers
 that they proposed to raise their prices 33% per cent, but
would grant 25 per cent rebate to members of the cartel. To avoid
circumvention the members of the dyers’ concern are nnt permitted
to sell to noncarteled concerns. Commission houses and wholesalers
may obtain goods only on the guaranty not to deliver directly or
indirectly to concerns which are not members of the cartel. Thus
the Cartel of Umbrella Cover Manufacturers forced all but three
outsiders to join it, and these three concerns are obliged to run their
own dyeing factory.
A number of South German independent concerns compete sucressfully
 in the export trade by reason of their specialized products.
Can Americans successfully compete?—American producers will
find it difficult to compete with these combinations owing to the
tariff protection, low cost of production, and quality of the product.
Tre Avrcouor, CARTEL.

Name, location, and preliminary remarks—The alcohol industry
of Germany is controlled by the Zentrale fiir Spiritusverwertung
(Central Agency for Distribution of Alcohol), organized March 29,
1899, as a CG m. b. H. (limited liability company), with its headjuarters
 in Berlin.
Organization.—The present form of the Alcohol Cartel is the result
of a natural growth in the organization of the industry, beginning
in the years between 1870 and 1880, when alcohol first began to assume
 a position of importance in Germany. The strenuous competition
 of those days between the individual distillers and the fights
between the distillers and refiners led to continual uncertainties and
ductuations in the market, which brought about in 1897, in an effort
to overcome these conditions, the formation of two separate cartels,
the one a distillers’ organization and the other a refiners’ syndicate.
This arrangement proved, however, to have no better effect on the
alcohol market than the old system of unlimited competition. The
fact that these two strong combinations operated in at least closely
related, if not exactly competitive, fields led to speculation on the
Berlin Alcohol Exchange, which threatened at times almost com-