116 SECTIONAL ADDRESSES. 



that a sanction is provided by such strong instances as these for the 

 proceedings which define as rationalisation the inclusion in a new private 

 enterprise of the whole fringe of excess capacity, plus the endeavour to 

 counteract this diseconomy by the further rationalisation of grouped 

 interests under strong leadership. 



XII. 



It was pointed out earlier in this paper that the whole question was 

 thrust on public notice by the recent argument on the international 

 extension of grouped control, bringing strongly into prominence the 

 influence of industrial leaders in their own countries. They had obtained 

 a leadership which enabled them to speak for their own nations in these 

 arrangements. This authority, derived also from the impressive magnitude 

 of the international plans, imposed on public opinion nearly everywhere 

 an attitude of assent, so that in a sense these leaders ' got away with it ' 

 in their claims for rationalisation by Big Business. But whatever may 

 be thought of the system of grouping and leadership on a national basis 

 would not necessarily apply internationally. A community may accept 

 the evolution of competition into a type of industrial administration, 

 relying always on the foreign market for limitation of monopolistic policy. 

 When this guarantee is endangered, it may go back on its assent to 

 national combination under purely private leadership. 



For example, it is a usual form of international agreement to ' respect 

 home markets,' and this in effect creates prohibitions on trade which are 

 greater than the considered fiscal policy of the country was prepared to 

 allow. It is argued that tariffs thus become ' superfluous,' a designing 

 expression which can scarcely have deceived the distinguished writers who 

 have used it. The suggestion to rationalise international production by 

 giving to private interests a treaty power overriding that of the Govern- 

 ments concerned, compels us to consider in what form such international 

 relations are compatible with any system of domestic combination. 



There is, of course, a wide extension of what may be called ' direct 

 international capitalism,' through the creation of foreign branches and 

 shareholdings. These do not create the problem just referred to, which 

 only arises out of agreements to restrict output or markets, and so 

 endangers locally the conditions of the consumer. 



A distinction may be introduced here between two types of agreement 

 with the aim of rationalisation. There are those which are called ' agree- 

 ments for conditions,' and those which are more directly restrictive of 

 volume of output and sale. Examples of the former are given by 

 agreements on length of credits, or for standardisation of types, or against 

 rebates on price. But perhaps the most notable instance is that 

 rationalisation of the conditions of competition which is known in the 

 United States as a ' trade practice submittal.' If there is any practice 

 which may be considered unfair — as in the case where various wares were 

 marked ' Sheffield steel ' though produced anywhere — the firms in the 

 industry may be called together to a voluntary conference by the Federal 

 Trade Commission, and an expression of opinion obtained, which practi- 

 cally establishes a law-merchant for the industry. This is an agreement 

 on conditions of trading, with no other limitation on competition, and 



