V. I.   Lenin





Dr. Fritz Kestner, Compulsory Organisation.

A Study of the Struggle between Cartels and Outsiders, Berlin, 1912.

A systematic study of conflicts between cartels and “outsiders” and within cartels—and methods of “struggle”:

  1. 1) Stopping supply of raw materials....
  2. 2) Stopping supply of labour by means of alliances....
  3. 3) Stopping deliveries....
  4. 4) Closing trade outlets....
  5. 5) Binding purchasers by exclusive agreements.
  6. 6) Systematic price cutting.
  7. 7) Stopping credit....
  8. 8) Boycott.[1]
[From Inquiry into Cartels (5 vols. 1903–06) and others.]

A host of examples. Very detailed examination of the state and legal significance....

“The Rhine-Westphalian Coal Syndicate, at its foundation in 1893, concentrated 86.7 per cent of the Rhine-Westphalian coal output ... in 1910—95.4 per cent (p. 11)....[2] The United States Steel Trust in 1911—45 per cent of the output of pig-iron”.... (Other examples: 98 per cent—85 per cent, and so on.)

“The entry of a particular enterprise into a cartel is a business act decided by considerations of profit. Like the operation of cartels in general, its implications are felt mainly in periods of depression. Conflicts between cartels and outsiders arise chiefly because of the differing impact restriction of trade outlets, the inevitable result of the cartel activity, has on individual enterprises. Restriction of trade outlets has a particularly severe impact on enterprises capable of expansion, which is why their resistance is the strongest” (pp. 25–26)....

...“The difference between the two concepts” (cartel and trust) “is really one of ownership: various owners in the cartel, only one in the trust” (p. 53 and a reference to Liefmann).

“It has been repeatedly established—and this can be regarded as a general phenomenon—that the profitability resulting from cartelisation attracts new entrepreneurs and new capital into the industry” (57). For example, the Potassium Syndicate raised prices. Result:

in 1879 there were 4 enterprises
” 1898 ” ” 13 ”
” 1909 ” ” 52 (p. 57)

[[ARC-ARROW BETWEEN LAST AND LAST-2 PARAGRAPHS.]] Provisions concerning higher prices for outsiders sometimes take the form of lower discounts for them (p. 73)....

The Buchh\"andler B\"orsenverein—forbade the sale of books “to dealers selling at bargain prices” (84).

“Stopping the supply of materials, along with binding purchasers by means of exclusive agreements, which will be dealt with below, must be regarded as one of the most important means of compelling entry into the cartel” (91)....

...Export subsidies... (107).

“dependent traders’ organisations are set up” (109)... (coal—paraffin....)

Price cutting.... There were cases of benzine prices being reduced from 40 to 20–22 marks (118)—of alcohol in Upper Silesia to 49.5 marks (in Breslau the price is 62.2 marks)....

Credit refusal: Phoenix declined to join the Federation of Steel Plants. The director of the firm was against joining. The banks bought up its shares—withdrew its export subsidies—and secured a vote in favour of joining at a meeting of shareholders!! (pp. 124–25).

Agreements with members within the cartel .... (penalties; arbitration courts instead of general courts)....

The best means of control—“joint sales office” (153)....

“Jeidels (p. 87 of his book) is undoubtedly right that the foundation of a new big independent bank in Germany would be impossible” (p. 168).

“Even in the purely economic sphere a certain change is taking place from commercial activity in the old sense of the word towards organisational-speculative activity. The greatest success no longer goes to the merchant whose technical and commercial experience enables him best of all to estimate the needs of the buyer, and who is able to discover and, so to speak, ‘awaken’ a latent demand; it goes to the speculative genius who knows how to estimate, or even only to sense in advance, the organisational development and the possibilities of certain connections between individual enterprises and the banks...” (p. 241).[3]

| “The heads of the big firms are able at any time to enlist the services of the most learned and skilful lawyers, and if they themselves are not highly versed in commercial matters, they can enlist the aid of outstanding businessmen. It is common knowledge that the central offices of big enterprises employ a whole number of persons who have no relation to | !! the undertaking as such, including even a doctor of political economy for economic propaganda on behalf of the firm” (p. 242).

||| N.B. The formation of cartels—and this has been established in the case of those formed so far—leads to an alteration of prices, and also incomes, in favour of heavy or raw-materials industry and to the detriment of manufacturing industry. The prolonged raising of prices which results from the formation of cartels has hitherto been observed only in respect of the N.B. most important means of production, particularly coal, iron and potassium, but never in respect of manufactured goods. Similarly, the increase in profits I resulting from this raising of prices has been limited only to the industries which produce means of production. To this observation we must add that the industries which process raw materials (and not semi-manufactures) not only secure advantages from the cartel formation in the shape of high profits, to the detriment of the finished goods industry, but have also secured a dominating position over the latter, which did not exist under free competition” (p. 254).[4]

Cartels, says Kestner, do not always lead to concentration (they may “rescue” small establishments joining the cartel), but the cartel always leads to “intensification of capital” (274) ... to an enhanced role of rich, big-capital enterprises (272 and 274).

Regarding the importance of cartels one should not overlook, Kestner says, the difference between an organisation, say, of consumers (this is socialism, p. 282), and an organisation of manufacturing or raw-materials industries.

“The present situation, the dependence of a much bigger section of industry on the output of raw materials, has a certain superficial resemblance to it [to a union of consumers, etc.][5] but internally it is the exact opposite” (p. 282). ((Liefmann, he says, constantly overlooks this difference—note, p. 282.))

“It is a matter of dispute whether cartels have led to an improvement of the workers’ position, as is asserted by some and contested by others, and whether they embody a co-operative democratic principle” ((Tschierschky!! The   author rejects that view: note, p. 285)), “or whether they indicate, precisely in the case of Germany, an anti-democratic attitude, owing to the shift to heavy industry which is hostile to the trade unions” (285)....


[1] See present edition, Vol. 22, p. 206.—Ed.

[2] Ibid., p. 203.—Ed.

[3] See present edition. Vol. 22. p. 206.—Ed.

[4] Ibid., p. 207.—Ed.

[5] Interpolations in square brackets (within passages quoted by Lenin) have been introduced by Lenin, unless otherwise indicated.—Ed.


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