time a review will be made of the results achieved towards elimination of outsiders. It is hoped and expected that co-ordination on these lines will go far to rectify the present regime under which independent actions by the S. E. A. and the Comptoirs are liable to result in mutual competition rather than co-operation.

E. I. A.

EXHIBIT S-72

12.5.39

NOTE DU DELEGUÉ CONTINENTAL AU COMITÉ DE LONDRES

RELATIONS DU COMITÉ DE LONDRES AVEC LES COMPTOIRS ET LA SEA

Se référant à la note présentée par le Délégué britannique au Comité de Londres en date du 9 mai, le Délégué continental croit devoir faire les suggestions suivantes, qu'il demandera d'examiner lors de la réunion prévue entre le Comité de Londres et les Présidents de Comptoirs.

Ce serait aller au devant d'inutiles complications que d'appliquer également à tous les produits et à tous les pays les principes généraux de coopération entre le Groupe américain et le Groupe européen par l'intermédiaire du London Committee, qui résultent des nouveaux arrangements. Une première distinction doit être fait, pour chaque produit, entre

(a) les affaires traitées dans les pays où les usines américaines n'ont jamais eu d'intérêt notable, c'est-à-dire où elles n'ont pas pris une part raisonnable des affaires faites sur ces marchés:

(b) les affaires traitées dans les pays auxquels s'intéresse l'industrie américaine et où nous rencontrons ou pourrions rencontrer la concurrence des outsiders.

Dans le premier cas, nous devrions obtenir une déclaration formelle des Usines américaines liées par l'accord, suivant laquelle elles ncus laisseraient libres d'agir au mieux des intérêts communs. Les Présidents de Comptoirs seront alors à même de juger avec sécurité, au cas où des offres irrégulières seraient faites pour ces produits et dans ces pays, par des intermédiares qui ne sont pas en relation avec les Comptoirs, qu'il s'agit d'offres d'outsiders, et ils pourront les combattre par tous les moyens. Des rapports réguliers au sujet des affaires de combat qui seront ainsi traitées, devront être faits au London Committee, qui les examinera et fera à leur sujet les suggestions qui paraîtront convenables.

Il en résultera que le modus operandi envisagé et discuté jusqu'à présent pour établir un travail harmonieux entre le Groupe américain et le Groupe européen, ne s'appliquera plus qu'aux produits et aux pays où il existe un intérêt commun et une concurrence certaine de la part des outsiders américains. Il faut considérer qu'il existe d'autres outsiders que ceux-là; leur action est bien connue des Présidents de Comptoirs, qui ont à lutter contre elle depuis longtemps; nous citons notamment la concurrence des producteurs suédois, de Broken Hill, de la Hongrie, du fer No. 3, du Canada, etc. L'intérêt général exige que cette lutte puisse être continuée de la façon la plus commode et la plus rapide.

Il s'agit de déterminer quels sont les produits et les pays où l'intérêt des Groupes européen et américain est commun et où des mesures arrêtées par accord mutuel doivent combattre la concurrence américaine. Pour tous les pays non désignés, le statu quo ante serait maintenu et l'intervention du Comité de Londres se bornerait à un contrôle général, laissant aux Comptoirs et à leurs Présidents une compléte liberté.

Pour la détermination de ces territoires communs, on doit admettre que

(a) pour les tôles navire, toutes les affaires seraient contrôlées en commun; l'action combinée du Comité de Londres, du Président du Comptoir et de la S. E. A. devra être soigneusement étudiée en vue d'éviter des retards et fausses manoeuvres.

(b) Pour les demi-produits, les Américains ont surtout travaillé dans les pays actuellement libres au point de vue tonnage et prix; il conviendrait donc que le Comptoir ait une liberté complète, sauf peut-être en ce qui concerne la Grèce, le Canada, le Mexique et le Chili, pays auxquels les Américans se sont dans une certaine mesure intéressés.

(c) En ce qui concerne les profilés, les pays qu'on peut qualifier d'intérêt commun nous paraissent être la Grèce, l'Italie, le Brésil, le Mexique, la Colombie, le Chili, le Pérou, le Vénézuéla, Cuba, Panama et l'Afrique du Sud. En pratique, nous devons relever que la concurrence des outsiders

américains n'est pas vive en profilés; cela s'explique notamment par la différence des profils.

(d) En aciers marchands: la Grèce, la Russie, la Bolivie, le Brésil, le Chili, le Pérou, le Vénézuéla, la Colombie, Cuba, Guatémala, Panama, Salvador, l'Afrique du Sud sont d'intérêt commun.

(e) Pour les feuillards: la Grèce, le Canada, la Nouvelle-Zélande, le Brésil, le Chili, le Mexique sont d'intérêt commun.

(f) Pour le fil machine, la Grèce, la Turquie, le Canada, le Brésil, la Colombie et le Vénézuéla sont d'intérêt commun.

(g) Quant aux tôles fines et galvanisées, des dispositions semblables devraient etre prises d'accord avec Mr. Summers, Président des Ententes intéressées.

Dans tous ces pays d'intérêt commun, les prix seraient fixé naturellement, par les Comptoirs en accord avec le Groupe américain. Les Présidents de Comptoirs et la S. E. A. auraient, d'autre part une marge de réduction à determiner, dont ils useraient en tout ou en partie chaque fois que la concurrence étrangère serait à craindre, étant entendu que le Comité de Londres serait tenu au courant et mis en possession de tous les éléments d'appréciation utiles. Des mesures particulières pourraient être prises par le Comité de Londres, en cas de sérieux déséquilibre dans la situation d'avance/retard.

Il devrait être admis aussi que les prix fixés s'appliqueraient de part et d'autre au même matériel (Thomas ou Open Hearth/Bessemer), le différentiel prévu de 12/6 étant de règle générale, mais le Comité de Londres avant le droit, chaque fois qu'il jugera que la situation d'avances et retards nécessite la protection de l'un ou l'autre Groupe, de suspendre temporairement l'application de ce différentiel.

Following upon an interchange of cables and conversations between Sir Charles Wright, Mr. E. G. Grace, and Mr. Paul Mackall of the Bethlehem Steel Corporation, a small delegation sailed from America consisting of Mr. G. B. Wolf (president of the United States Steel Products Company), Mr. A. C. Mundle, and Mr. S. M. Bash.

A small private dinner was arranged, at the request of Mr. Todd, immediately after their arrival, to enable these gentlemen to meet Sir Charles Wright, Sir Andrew Duncan, and Mr. I. F. L. Elliot, at which a full interchange of views took place. Following upon this the attached Memorandum of proposals has been submitted by Mr. Todd.1

Mr. Elliot spent some time on Saturday morning endeavouring to elucidate these proposals in discussion. The following comments and suggestions are now submitted for consideration at the International Relations Committee:

1. It must be recognized that the hopes entertained last Autumn of bringing the remaining American outsiders into the Agreement have been frustrated through the continued success of such outsiders in securing tonnage largely in excess of what they would receive under any quotas which could be given to them by the American colleagues. It is true that the position has improved steadily, as the attached Statement of monthly losses to American outsiders shows. The value of such improvement, however, has been completely destroyed in the eyes of the Members of the S. E. A., on account of the placing of an order for 25/30,000 tons of Plates for Japan with the Alan Wood Company at the very low price of 1.45 f. a. s. (approximately £6.19.0 per ton sterling) without any Members of the S. E. A. or of the European producers receiving the enquiry. The Members of the S. E. A. have in fact been told by the Japanese buyers that they do not consider it useful to give them enquiries, since they can obtain much lower prices from outsiders.

It was on this account that the S. E. A. requested a free hand for markets under Japanese buying control, in default of which Mr. Todd was instructed to give notice to terminate the Agreement under the relevant Clause. This Clause provides for automatic termination after the expiry at 6 months, unless the parties agree on an earlier date.

1See exhibit S-73A.

2. From the European point of view it is proposed that, for a trial period up to the end of June, the London Committee should operate with full authority to determine whether or not in fact it can fulfil its two principal functions— (a) to exercise statistical and quota control ensuring effective realisation of quotas.

(b) deal effectively with outsider competition.

N. B.-It must be understood that the American Group are almost entirely concerned with (b).

3. In the discussion which took place after Thursday's dinner it was admitted that the trial period could not be regarded as any sort of test for the London Committee if the excesses of the American Group as at February 28th (see attached Statement) were carried forward, necessitating the American Group being practically off the market. To obviate this it was suggested that the statistical position as at February 28th should be held in suspense for later consideration and that for the 4 months' period from March 1st to June 30th the London Committee should be instructed to endeavour to apply the quotas as provided in the Agreement.

4. It will be seen that the proposals now submitted by the American Group postulate complete liberty for all parties to the Agreement to meet or beat outsider competition in all markets, and in effect under clause 3, practically abrogate the quotas. It is clear that the effect of these proposals, with intelligent buyers, would be to make all business competitive against outsiders.

5. The American Group have so far shown no disposition to agree to any modification of these proposals. The following, however, is suggested as representing the limit of concession upon which the European Groups might agree:

(a) That the principles embodied in the American proposals should be applied by markets selectively, e. g., for markets under Japanese buying control, both the American and European Groups should have the right to meet outsider competition, subject to reporting immediately on business taken.

That for other markets the control of the London Committee should be maintained strictly.

N. B. As regards European markets, only in the case of Sweden should it be necessary to give the American groups equal opportunities with the European Groups, America having approximately 50 percent interest with Europe in the Swedish shipbuilding market. It should be borne in mind that practically the whole of the Swedish tonnage which has gone to America has in fact gone to Members of the S. E. A.

(b) That business taken in competition with outsiders must still be charged against quota.

It is, of course, the object of a Fighting Fund to neutralise the disadvantage of taking such business at cut prices. The American Group are not parties to the discussions in regard to the Fighting Fund. It might be worth consideration, however, establishing the amount due from the American Group as compensation on their large excess at February 28th, estimated by them at 800,000 dollars, and using this as a common Fighting Fund during the 4 months' trial period.

(c) The demand under (4) of the American proposals-that separate quotas and prices should be established for "breakdowns" and alloy steels outside existing quotas-might be conceded if essential to secure agreement, as the tonnage involved is not of serious consequence.

In the case of "breakdowns", which at present come under the Sheet quota, no substantial business is recorded as having passed.

In the case of Alloy Steels, which in any case are not subject to price control, the tonnage estimated by the American Group is 10,000 tons per annum. This falls under the Merchant Bar category, for which the American Group have consistently complained that their quota is totally inadequate.

(d) No discussions have so far taken place with the American representatives on the Sheet position. Their claim in this respect, however, is understood to be as follows:

That whereas the quotas provisionally established for the American Group, in accordance with the Agreement, have been found to be in excess of their Agreement rights, on account of the tonnage shipped in the reference period to the Philippine Islands, which should have been excluded, the Sheet Group was only informed last October on the basis of these actual quotas and cannot be maintained unless they are admitted. It might be considered preferable to a breakup to extend the provisions as between the 1934 and 1936 quotas accordingly,

thus giving the American Group the right to go up to these quotas without penalty.

The alternative to the foregoing is clearly to accept the Notice of the American Group, which in the absence of agreement, will be given, the Joint Co-ordinating Committee to decide at what date, up to 6 months, this Notice takes effect (presumably June 30th). It must be recognised, however, that continued operation under such notice would certainly be accompanied by even scantier observance of prices and regulations than in the past and that this would inevitably apply to all markets.

EXHIBIT S-73A

MEMORANDUM OF PROPOSALS SUBMITTED BY MR. W. B. TODD, 14TH APRIL '39

For the purpose of correcting the U. S. outsider situation, and in order to redirect enquiries to the cartel members, the London Committee authorises all members:

1. To advise purchasers when necessary that their members will meet any outsider price.

2. That from time to time the S. E. A. members will advise the London Committee the schedule of minimum prices by markets considered necessary to prevent business being taken by outsiders. Where members encounter lower outsider prices authority to meet such prices is granted. Immediate report by cable in all such cases will be made to the London Committee giving: (a) Name of outsider competitor.

(b) Price quoted by such competitor.

(c) Market affected.

3. Outsider sales, or sales in excess of quota occasioned by outsiders, and as substantiated in accordance with the previous paragraph, will not be charged against members.

4. That until such time as separate quotas and prices are established for "Breakdowns" and Alloy Steels, the majority of which U. S. A. exports go to North East Asia, such products will not be charged against the American quota. 5. That the above provisions will be effective and apply for the period March 1st to June 30th, 1939, inclusive, on Semis, Wire Rods, Bars, Shapes, Plates, Hoop Strip, Skelp, Black and Galvanised Sheets, and are in the nature of experiments designed to eliminate outside competition.

PRIVATE & CONFIDENTIAL

EXHIBIT S-74

FOURTH MEETING

E. I. A. / U. K. / U. S. A. AGREEMENT-MINUTES OF THE MEETING OF THE LONDON COMMITTEE HELD AT STEEL HOUSE, TOTHILL STREET, WESTMINSTER, LONDON, S. W. 1, ON TUESDAY, 18TH APRIL 1939

Present:

Mr. R. M. Peat (in the Chair).

M. H. Dieudonné, Continental Group.

Mr. I. F. L. Elliot, British Group.

Mr. Wm. B. Todd, American Group.

In attendance:

Mr. G. B. Wolff, Mr. A. C. Mundle, Mr. S. M. Bash, Mr. R. V. Kennard, American Group.

Mr. H. Craig, Mr. V. N. Malcolm, Mr. S. J. Summers, British Group.

M. E. Conrot, Continental Group.

Mr. J. R. Mackay, Peat, Marwick, Mitchell & Co.

This meeting of the London Committee was held following the meeting of the Joint Coordinating Committee held on the same day.

All products

ARRANGEMENTS WITH THE AMERICAN GROUP

The following formula as agreed by the Joint Coordinating Committee was noted as a supplement to the Agreements dated 26th February 1937, and 14th June 1938, between the S. E. A., E. I. A., and B. I. S. F. :

1. As at1 18th April 1939 the excess/deficit position on deliveries and orders shall be ascertained. This position shall be held in suspense for future consideration by the Joint Coordinating Committee.

2. For the period from 18th April 1939 up to and including 31st October 1939, the American and European Groups agree, for all sales to accept the control of the London Committee for the purpose of eliminating the competition of American outsiders, and ensuring the maintenance of quotas in accordance with the Main Agreement. It is understood that quotations may only be made and orders booked at such prices and under such conditions (other than standard prices and conditions fixed by the Comptoirs) as the London Committee may from time to time authorise. For this purpose the London Committee shall have complete authority under the Joint Coordinating Committee, and the Comptoirs shall be bound to take the necessary steps to ensure that the decisions and recommendations of the London Committee are effectively carried out. 3. Orders resulting from quotations outstanding at1 18th April 1939 shall be regarded as coming within the new period, i. e.,' 18th April to 31st October 1939.

4. In the territory of NORTH EAST ASIA, comprising JAPAN, COREA, MANCHUKUO, and NORTH CHINA, all members are given full liberty, both as regards price and tonnage on all products. In this respect every effort will be made to avoid members competing against each other, rather than against the American outsiders. It is agreed that all quotations or sales to that territory shall carry a clause stipulating that they are for consumption in that territory only. Consequently, quotas based on 1934 and 1936 performances shall be reestablished with deliveries to the above-mentioned markets omitted for all Groups.

5. From 18th April to 31st October 1939, inclusive, the American Group shall no longer be debited with any deliveries by their outsiders.

In regard to paragraph 2 of the above formula, it was agreed that in order to establish a temporary modus operandi and until such time as experience shall indicate a better or more practical one, the American members will refer any special price requests to the London Committee. In exceptional cases involving price cutting by an outsider, immediate action on which is considered by the American S. E. A. as necessary to avoid a loss to such outsider, authority is granted to meet such competition without reference to the London Committee. In this case the onus of proof as to the necessity for such action rests on the S. E. A. and a full report shall be made to the London Committee.

E. I. A.

EXHIBIT S-75

ACCORDS AVEC LE GROUPE AMERICAIN.-COMPTE-RENDU D'UNE REUNION EN COMITE RESTREINT TENUE À LONDRES 18 AVRIL 1939, À L'OCCASION DE LA SÉANCE DU JOINT CO-ORDINATING COMMITTEE

Etaient présents:

Pour le Groupe allemand: MM. Poensgen, Maulick, Heinmann-Kreuser.

Pour le Groupe américain : MM. Wolff, Todd, Bash, Mundle, Kennard.

Pour le Groupe belge: M. D'Heur.

Pour le Groupe britannique: Sir Andrew Duncan, Sir Charles Wright, MM. Dorman, Elliot, Malcolm.

Pour le Groupe français: MM. Th. Laurent, Goldberger, Queyras, Charbonnel. Pour le Groupe luxembourgeois: MM. Meyer, Dieudonné.

Pour la maison Peat, Marwick, Mitchell & Co.: MM. Peat, Mackay.

Pour le Bureau de l'E. I. A.: M. Conrot.

Présidence: Sir ANDREW DUNCAN.

Sir Andrew Duncan, émet l'espoir que les conversations permettront d'arriver à un arrangement. Il déclare avoir exposé à ses Collégues du Cartel la situation telle qu'elle se présente effectivement et le point de vue du Groupe américain. Le fait qui domine la situation est que le Groupe américain est convanicu qu'en l'état actuel des choses, il faut abandonner provisoirement l'idée d'une adhésion des outsiders à nos accords. Le Groupe américain est d'avis que la seule constitution du Comité de Londres ne suffit pas à faire face aux difficultés devant

1 Subsequent to this meeting the members of the London Committee have agreed that for the convenience of the parties, the excess/deficit figures which are to be held in suspense shall be those at 20th April, since the figures as at that date will be ascertained by the parties in the ordinary way for statistical purposes. The period referred to in clauses 2, 3, and 5 above will therefore be from 21st April to 31st October 1939, inclusive.