among the securities negotiable on any German stock exchange, unless at least a year has elapsed from the date of the registration of the company, and unless the first yearly balance sheet of the company has been published together with the profit and loss account. Power is given to the state government of the place in which the shares are to be dealt in, to dispense from this rule in exceptional cases. It will be noticed that this close time is only prescribed in the case of companies taking over an existing business; the shares of a company starting a new business may be publicly dealt in at once. The wisdom of the rule

is very doubtful.

A company cannot be registered before its capital is fully subscribed. The promoters must therefore hold the whole of the shares for at least a year and probably some months longer, as in most cases some time will elapse after the end of the year before the balance sheet can be drawn up and published; some compensation must, of course, be sought for the prolongation of the risk and capital outlay, and this compensation has, of course, to be paid by the public. On the other hand the safeguard is purely imaginary. By judicious manipulation profits belonging to a former year or to the subsequent year may be squeezed into the critical twelve months, so as to produce a specially good profit and loss account, and the idea. that the public in this way have an opportunity to see the working of the undertaking before they are asked to subscribe to it is therefore purely imaginary.

The third regulation introduced by the stock-exchange statute is intended to prevent stock-exchange transactions in the shares of companies having a small capital only. The fixing of the minimum capital for each stock exchange is left to the federal council by section 42, which section also gives power to the same body to make further regulation for the admission of securities to any stock exchange.

An order was issued by the federal council pursuant to this power, containing the following provisions:

(1) The minimum capital of companies whose shares are to be dealt in at Berlin, Hamburg or Frankfort must be £50,000, whilst for all other stock exchanges a minimum capital of £25,000 is fixed.

(2) The prospectus must state (a) the name of the company, (b) the clause in the articles or resolution authorizing the issue, (c) the purposes for which the proceeds of the issue are to be applied, (d) the amount of the total issue, the amount offered, and the amount retained, and the time during which the lastnamed amount is to be retained by the promoters.

The provisions about statements in prospectuses and dealings on the stock exchanges are of minor importance and affect a limited class only; those relating to the prevention of overcapitalization and the preservation of capital affect the whole trade of the country. It is stated on good authority that some branches of trade (such as the cycle industry) are rapidly going down in England owing to the fact that they are worked by overcapitalized companies. This will show that the reform of company law has other objects than the protection of careless persons against unsound investments. If this fact could be understood and realized by public opinion, it would be seen that measures like those proposed in the bill which is now before Parliament touch the real mischief as little as the previous voluminous legislation on the subject.

ERNEST SCHUSTER

XXIII

THE GERMAN POTASH SYNDICATE: A TYPICAL

KARTELL1

I. INTRODUCTORY

HE actual source of the world's potash supply is at present in the deposits of potash salts found in northern Germany. The great Stassfurt potash industry is based on the presence of those salts in the so-called Magdeburg-Halberstadt rock salt basin. Smaller and commercially unimportant are the deposits of the same type found in Galicia, Chili, Persia, and Eastern Asia. Germany thus possesses a practically complete monopoly of potash salts. Their solubility and the ease with which they can be converted into concentrated products are the qualities which have made the world envious of Germany's possession of this great resource.

The story of the discovery and development of these deposits is interesting. For hundreds of years salt springs had attracted attention in the Stassfurt region. At length, after a number of unsuccessful attempts in the decade 1850 to 1860, rock salt was discovered after penetrating several strata of peculiar bitter salts. The salts designated "Abraumsalze" were regarded as worthless, an obstruction to the mining of rock salt. Professor Marchand showed that they contained certain valuable elements, whereupon the Prussian government started to sink a shaft in 1858 for the purpose of mining them. Small quantities of the crude salts were subjected to a process of concentration and sold for industrial uses. The success which attended the opening of the Prussian mine induced the Grand Duchy of Anhalt to open a second one, which began operations in 1862. But the value of the "Abraumsalze" was immensely enhanced when, after a series

1 Quarterly Journal of Economics, XXIII, 1913, pp. 140 ff. I am indebted to Professor Tosdal for additions and emendations bringing the subject to date. Copious footnote references, except for such new material as is added to the original, have been omitted from this scholarly piece of work on account of space. ED.

of painstaking investigations, Dr. Frank, assisted by Justus von Liebig, demonstrated their value for fertilizing purposes. These discoveries inaugurated a new era for the Stassfurt industry, which now, by reason of its lower cost of production, possessed a great advantage over other sources of potash. The price of muriate of potash, which ranged from $75 to $100 per metric ton in 1862, fell to one third that price in 1864 and 1865.

At present only the potash salts with the highest potash content are mined. Of these, the most important are carnallite, kainite, hard salts, and sylvin. Carnallite is a hydrated double salt of muriate of potash and magnesium chloride, used especially as the basic salt for concentration into muriate of potash. Kainite is also a double salt containing potash in the form of sulphates and chlorides of potash mixed with sulphates and chlorides of magnesium. It is more valuable than carnallite and can be used directly as a fertilizer. Hard salts are a mixture of kieserite and kainite with sylvin. Sylvin is the most valuable of all the crude salts. Like hard salts it finds its chief employment in industry, while kainite is used chiefly in agriculture.

In the export trade the concentrated salts play a much more important part than the crude salts. Muriate of potash (KCl) is the most important, being used in immense quantities as a fertilizer for sugar beet, cotton, and other crops. Sulphate of potash (KSO2) is manufactured in smaller quantities, of which a large part is absorbed by tobacco culture in the United States. Such potash products as carbonate of potash, manure salts, and the crude salts, bergkieserit, sylvinite, schönite, are of less importance.

The annual output of the German potash industry shows an extraordinary increase during the past half century, as is indicated by the following table:

creases.

The production of muriate of potash also shows large inA significant change in the demand appears in the fact that, whereas in 1861 no potash was sold for agricultural purposes, by 1880 agriculture took 42.5 per cent of the total output and in 1905, 84.5 per cent. Although the consumption of potash in the glass, soap, and other industries has increased in absolute amounts from year to year, it forms relatively a steadily diminishing portion.

The United States is the largest consumer of potash outside of Germany itself. The increase in the importation of potash during the past twenty-five years has been marked. Owing to the frequent changes in classification it is difficult to obtain a comparable set of figures; but for muriate of potash, the most important of the products imported, the increase since 1884 has been nearly tenfold. Sulphate of potash and manure salts show a slower but still significant growth. Nevertheless, the American consumption per acre of tillable land is as yet only one eighth of the consumption in Germany. Three fourths of the potash imported into the United States is used in the Atlantic and South Central states, in the form of commercial fertilizer, of which potash is a constituent.

The potash trade in the United States is handled by the New York agency of the potash syndicate. Several groups of buyers may be distinguished. First, the powerful fertilizer manufacturing corporations, of which the largest are the American Agricultural Chemical Company, of New York, and the Virginia-Carolina Chemical Company, of Richmond, both organized in the late nineties as combinations of existing fertilizer concerns. To these was added, in 1909, the International Agricultural Corporation, a result of the developments of 1906-1909, which led the so-called independents to combine. The Virginia company owns a controlling interest in the Einigkeit potash mine in Germany, while up to the end of 1912, the International owned the Sollstedt mine. A second group of potash buyers is formed by the large packing houses, which buy potash for their fertilizer plants, and the smaller independent fertilizer manufacturers. Finally there are manufacturers of chemicals, dry mixers and jobbers of fertilizer, farmers' associations, and local dealers.