MINERAL SUPPLIES — BLISS. 



253 



phrases it, to " swarm " and in a comparatively short time a network 

 of German banks was established in South America, Italy, Greece, 

 Turkey, and Asia Minor. The dangers attendant upon such a 

 wholesale participation of the banks in industrial promotion resulted 

 in some heavy losses and caused the banks to adopt a system of 

 grouping by which each great bank supports several undertakings 

 and on the other hand each large financial enterprise is backed by 

 a group of several banks. This grouping of banks is rendered pos- 

 sible by a mutual interchange of paper, a method which however 

 advantageous from the point of view of business promotion is never- 

 theless susceptible of most dangerous collapse in the event of sudden 

 slump. The relation of the original German bank to the home in- 

 dustry is reproduced in the relations of the subsidiary foreign banks 

 to the importer and exporter. They supply the manufacturer with 

 credit that enables him to furnish his customers with the par- 

 ticular type of long-term payment best suited to their convenience. 

 Moreover, the practice of gradually withdrawing German capital 

 from overseas banks after the institution had been successfully 

 manipulated into German control has resulted in the financial domina- 

 tion of foreign countries without the locking up of home capital 

 to any large extent. The loans made to a foreign state are repaid 

 in orders, insurance companies instituted abroad replace their re- 

 serves in German securities; in short, the trend of capital is all to- 

 wards Germany. Such a condition of affairs leads to what even a 

 German was forced to characterize as " an unhealthy rise in industry " 

 and furnishes the possibility of a phenomenal and predominating 

 industrial expansion. 



The cartel system. — The celebrated cartel system to which Germany 

 owes so much of her industrial efficiency is characterized by Hauser 

 as a combination of producers for the cooperative sale of their out- 

 put or of certain classes of their output. It differs from our trusts 

 in that the individual enterprise retains its entity, but shorn of all 

 independence in the sales transaction which is either carried out by 

 the sales bureau or else regulated as to price, geographic limitation, 

 quota of production by individual factories, etc. There are two 

 factors which check the domination of the cartel. The larger es- 

 tablishments, such as Krupp, escape its domination because they 

 are able through their far-reaching interests to supply themselves 

 with all the essentials of their industry within their own domain. 

 Moreover, the changeable nature of the cartel which adapts itself 

 to and changes with the condition of the market renders it not 

 so much an ironclad yoke as an adjustable harness by which compe- 

 tition is restrained, overproduction regulated, and lowering of 

 prices prevented, provided the adherents of the cartel submit to 

 the rigid discipline of its authority. Hauser explains how the 



