The Working of the Decree

The peculiar application of the decree to the circumstances under which it was promulgated may be seen from the fact that it provides remedies not only against the unfair maintenance of prices (Sec. 4), but also against such trading conditions and modes of price fixing as are dangerous to economic life generally (Sec. 10). These sections are among the least frequently in use, but it seems clear that they have played a considerable role by the influence they exercised. ¹ The Minister of Economic Affairs has not, at the time of writing, instituted proceedings under Sec. 10; his powers under Sec. 4 have been used twice only, once in the case of a tile syndicate in Halle, ² and once against a union of coal merchants in Lubeck ³ ; in both cases the ministerial decree is based on the unjustified raising and maintenance of prices, while in the second instance there is a further complaint that boycotts were imposed without the necessary 117consent of the President of the Kartell Court (Sec. 9). Sections 4 and 10 have given to the Minister of Economic Affairs important powers of interference which, for practical purposes, constituted a right of veto upon the various devices used by industrialists to protect themselves against the risks of a falling currency. Their very existence seems to have acted as an effective deterrent, and, under fear of authoritative action, to facilitate the transition to a stable currency. Where this transition was not voluntarily envisaged prices remained so far in excess of the general level that competition increased. Such circumstances led to an early suit before the Kartell Court, ¹ in which a wholesale cotton Kartell sought an injunction forbidding the withdrawal of a member. The organisation was a Price Kartell, drawn up as a registered association; the seceding firm claimed a right to withdraw under Section 8, since the difficulty of selling at Kartell Prices under competitive conditions proved a genuine. menace to its existence; it pleaded that the Kartell prices were based on an unfair reckoning of the Dutch exchange, which was no longer necessary on account of the stabilisation of the mark, and that high prices were responsible for the newly-arisen competition. The Court refused the injunction 118and upheld the withdrawal, holding that a Kartell must change its policy within reasonable time if economic conditions demanded it. The judgment goes on to say: “At the beginning of December, 1923, the efforts of the national authorities were actively directed towards the introduction of a new currency and a stable means of exchange, with a view to reducing prices, as the latter had, in many instances, risen inordinately high on account of the danger of further devaluation of the paper mark. At such a time the action of the Association … involving the maintenance of inordinate prices is not in accordance with public policy (Gemeinwohl). The fundamental objects of a Price Kartell, to avoid a change in the price policy with every movement of the trade-cycle, may, in normal times, lead to economies. On the other hand, in the present critical period of transition from inflation to stable currency and business conditions, a rapid adjustment to new circumstances must be unconditionally demanded of the Kartells.”