The Opening Gun

The Administration last week attacked international cartels. The attack, well-staged and publicized, was opened by President Roosevelt before the Quebec conference began, with word that he had written to Secretary of State Cordell Hull "to keep an eye" on cartels. The problem of curbing them, said Mr. Roosevelt, is one of the No. 1 international problems which must be faced soon.

Mr. Hull's reply was big news; it was issued from Quebec. Secretary Hull announced that he is already planning an international conference on cartels. Washington believed that what Mr. Hull had in mind was a convention against cartels, that he would like other nations to subscribe to the philosophy of the U.S. antitrust acts. Next day, for plain citizens still hazy on why the Administration was so excited, the Justice Department's antitrust division provided an example.

Borax Cartel. Seven companies, headed by British-owned Borax Consolidated, Ltd., and American Potash & Chemical Corp. and eleven individuals (four living in Britain) were indicted by a federal grand jury in San Francisco. The charge: violating antitrust laws by operating a worldwide cartel in borax. The antitrust division alleged that the companies controlled over 90% of the world supply (used for bombs, steel and copper alloys, etc.), most of which comes from California's Mojave Desert. The companies allegedly had kept prices skyhigh, had eliminated competition, and had hampered the war effort seriously. The antitrust action further charged that American Potash & Chemical was secretly owned by Germans, through a Netherlands dummy company, until October 1942 when the Alien Property Custodian took over.

Cartel Hater. The man who sketched this picture was balding, dimple-chinned Wendell Berge (rhymes with dirge), 41, boss of the antitrust division. Berge had gone West to present his case, making seven anti-cartel speeches along the way. Before that, he had done the spadework for the Administration's campaign, with 28 indictments now pending.

Born in Lincoln, Neb., Berge learned trust-busting from the speeches of his politician-father against the railroads, the axle-grease monopoly, the binder-twine trust. Berge learned to make speeches in fact-packed, coldly logical style while stumping the state with his father. At the University of Nebraska he was a star student, once passed a course on Poet John Milton with a grade of 95 after only a week's study. He got his law degree at the University of Michigan, gave up work in a Manhattan law firm as too dull, and went to the antitrust division in 1930. When Trust-Buster Thurman Arnold was promoted to the bench last year, the antitrust division seemed to quiet down. But not really: indictments came out as fast as ever and, under Wendell Berge, increased their global scope.

In his comfortable, book-lined Washington office, with fireplace, Berge works quietly, with few press conferences. Like Arnold, he is a pipe-puffer; he keeps twelve pipes cooling in his desk drawer. In the next year, he expects to hack at cartels with another batch of indictments.

Patents for All. Berge's fight against cartels is based on his belief, backed by investigations of such industries as vitamins, optical instruments, matches (TIME, May 8), that cartels "restrict trade, reduce production and employment, bring higher prices and a lower standard of living," that Government-sponsored cartels are as wicked as private ones. He feels that effective Government control would require such a degree of interference and surveillance over private industry as "to place in great jeopardy our own free enterprise-private property system."

But on the complex problem of patents, whereby most cartels are forged, Berge is less precise. The antitrust division has no intention of a large-scale attack on the present patent laws. To help even up the tremendous advantage big business has over little business in research and invention, Berge has suggested a Government-financed bureau of invention whose discoveries would be available to all. But there is the bigger problem of the international exchange of patents--e.g., how can U.S. industry get the real benefits of foreign patents without trading their own?

By such an interchange many a U.S. industrialist has found himself, willy-nilly, in a cartel. Berge favors registration of all such agreements with the antitrust division, thus giving it the power to annul them, if advisable, without court action.

Since action against cartels will be effective only as it is implemented with action against tariffs and other hindrances to the flow of trade, the Administration's campaign, despite its start, may move slowly.

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