Les prix précédents sont valables pour des chargements complets de 20 T. minimum.

Pour les tonnages inférieurs à 20 T., ainsi que pour les spécifications comportant de très petits postes par échantillon d'une même qualité, les extras prévus par les Classifications en vigueur à l'exportation sont applicables.

Les écarts de classe, majorations de qualité et plus-values diverses seront ceux prévus par les classifications en vigueur à l'exportation, multipliés par le coëfficient 2.

Le délai de paiement maximum pouvant être appliqué sera: paiement net à 30 jours de fin de mois d'expédition de l'Usine.

Nous ous serions obligés de bien vouloir transmettre à tous les Groupes les instructions nécessaires en avisant en même temps pour la bonne règle les Bureaux Centralsisateurs des différents produits à titre documentaire et, dans l'attente de vos nouvelles, nous vous prions d'agréer, Messieurs, l'assurance de nos sentiments destingués.

EXHIBIT S-93

PUCHEU.

MEMORANDUM ON THE INTERNATIONAL STEEL CARTEL (ENTENTE INTERNATIONALE DE L'ACIER) AND THE INTERNATIONAL SALES COMPTOIRS, DATED JANUARY 1937

(Translation)

PRELIMINARY NEGOTIATIONS

In the years immediately after the war, European steel production showed a heavy decline from the 1913 level.

This decline was caused by the destruction of a large number of iron and steel works during the war, and by the scarcity of raw materials, particularly fuel. Moreover, the market could not have absorbed larger quantities of steel owing to the reduction of new construction resulting from the shortage of capital.

Gradually, however, the devastated works were reconstructed with increased output capacity and, together with the plant laid down during the war in various countries for the manufacture of armaments, constituted a large volume of equipment for steel manufacture.

With the resumption of normal operations in the various branches of activity the difficulty of obtaining supplies of raw material was overcome and a point was reached when consumption, adversely affected by the lack of capital, no longer kept pace with production: the equilibrium between these two elements was lost. The resulting depression in the iron and steel market prepared the way for the conclusion of international agreements in the iron and steel industry. As early as December 1921 negotiations began in London between steelmakers of various countries with a view to concluding an agreement controlling exports of rails, the market for this product being particularly chaotic and uncoordinated. Before the war there had been an international convention for this product-"I. R. M. A."

After a long interval these negotiations were resumed at the beginning of 1924, resulting on the 12th March 1926, in the formation of the International Rail Makers' Association, in which the German, Belgian, French, British and Luxemburg producers participated. (On the 1st January 1927, the Central European producers, Austria, Hungary and Czechoslovakia joined the Association, and on the 1st April 1929, a new agreement was concluded with the participation of the "Steel Export Association" which groups the principal rail makers in the United States of America. The Polish Works joined the agreement in July 1935).

A second international agreement was prepared after the expiry, laid down by the Peace Treaty, of the period of free entry of Lorraine and Luxemburg steel into Germany. Negotiations were opened in April 1925 in Luxemburg with a view to controlling future exports of this steel to Germany. These negotiations resulted on the 4th November 1926, in the signing by the German steel makers on the one hand and the French and Luxemburg on the other of an agreement which was to play an important part in the negotiations for the Franco-German trade treaty.

In February 1926 negotiations were begun in Luxemburg for the organisation of European steel production. These negotiations resulted in the formation of the International Steel Cartel (Entente Internationale de l'Acier). This agreement between the German, Belgian, French, Saar, and Luxemburg groups of

steelmakers was signed on the 30th September 1926. The producers in the Central European countries, Austria, Hungary, and Czechoslovakia subsequently joined the Cartel under the agreement of the 4th February 1927.

The E. I. A. has been the basis of all the individual agreements subsequently concluded for the production and sale of isolated steel products. The abovementioned agreement between the German and Franco-Luxemburg steel industries was concluded in association with the E. I. A. and was an integral part of the steel pact.

There now follows an account of the development of the International Steel Cartel (which has not retained its original form) and of the International Sales Comptoirs which are now attached to it.

THE AGREEMENT OF THE 30TH SEPTEMBER 1926

The International Steel Cartel, set up on the 30th September 1926, in the form of a "Gentlemen's Agreement" aimed at regulating raw steel production in the member countries by attempting to adapt production to consumption.

Each quarter the Executive Committee fixed a tonnage programme for steel production, each national group having a quota in accordance with an agreed scale. Groups exceeding their quota had to pay a fine, while those who did not fill it received compensation.

The Cartel was not concerned with sales nor with the determination of prices for steel products: it aimed only at controlling steel production and this control, together with the permanent contact established between those directing the industries of the four countries, undoubtedly contributed in a large measure to the improvement of the market and the elimination of the frequent extreme price fluctuations which had been witnessed before 1926.

The organisation of the Cartel may be summarised as follows: it was composed of the four national groups of the member countries, which were responsible for the total output of the works in their territories. An Executive Committee was responsible for administration. It was composed of the chief delegate of each group assisted by two deputies. The Saar had no delegate, its interests being entrusted to the representatives of the German and French groups.

In order to ensure the smooth working of the agreement each group deposited a certain sum by way of guarantee. The verification of the steel output statistics was entrusted to a Swiss accountancy company. Any dispute which might arise was to be settled by arbitration.

This agreement came to an end on the 30th October 1929; it was however renewed provisionally until the 1st October 1930.

Unfortunately the effectiveness of the control inaugurated by the first E. I. A. was adversely influenced by the wide divergences between the home market conditions of the member countries during the period 1926-1930.

The prewar similarity between home markets had disappeared and been displaced by divergent tendencies, which were aggravated by currency manipulations undertaken at different times, and by widespread State intervention in economic matters. Thus, while there was a remarkable expansion of the German home market in 1927/28/29, the markets of the three other countries were far from sharing this development. The German group was therefore obliged to exceed its production quota. As a result the members soon had to agree to reduce the amount of indemnity for which the German group was liable on account of quota In exchange for the reduction of penalties the latter agreed to reduce its exports. The reduction of penalties was subsequently applied to all groups.

excess.

THE 1930 COMPTOIRS AND THE CRISIS

1

At the beginning of 1930 the crisis affected the iron and the steel market so acutely that the E. I. A. had to admit its inability either to provide a remedy or to alleviate the effects of the crisis with the means at its disposal. The Cartel management came to the conclusion that the system of controlling total production must be abandoned and that instead, export sales of iron and steel products must be regulated. An agreement was concluded between the German, Belgian, French, and Luxemburg groups covering semis, joists and sections, merchant bars, heavy plates and hoops.

It was agreed that during the period 1st February to 31st July 1930, an attempt should be made to unify the prices and the terms of sale for these products on the export markets and to divide between the groups the export tonnages for each product. This division was to be based on the respective sales of each Groun during a reference period extending from 1st January 1928, to 31st October

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1929. This trial was to prepare the way for the establishment of international sales comptoirs or, at the least, for national sales comptoirs acting under general instructions and subject to common control.

As already stated, this agreement was chiefly concerned with exports. Each group had an export quota for each product, fixed by a percentage of the total exports of the four countries during the period of reference. This export quota might be modified if the home market of the country concerned expanded or contracted in relation to the reference period. In the event of a contraction, the export quota was increased by 50% of the tonnage lost on the home market: inversely, in the event of expansion, the export quota was decreased by 50% of the tonnage gained on the home market. The amount of such modifications either upward or downward, was, however, limited to 25% or 35% of the basis quota.

The Executive Committee and the special ad hoc Committees working under it exercised permanent control over exports and sales. They were entitled to impose special measures on the Groups to secure fuller compliance with the rules of the Agreement and with the decisions reached by common consent regarding the allocation of order, application of prices, and other matters of general interest.

The weakness of this organization, known as Provisional International Comptoirs was that it left the works and trading companies free to conduct their own export sales, as in the past. The enforcement of official prices suffered in consequence, in spite of all the measures taken.

The provisional Comptoirs ceased to exist on the 31st July; during the period of their existence all control of raw steel production had been abandoned. It was revived shortly afterwards, on the 1st November 1930, but in a much attenuated form, with much reduced penalties for excesses. This mere shadow of control disappeared in its turn on the 28th February 1931. Thereafter there was no control either of exports or production of steel. Each country was com pletely free to produce and export as it chose at whatever price might suit it. The consequences of this situation, as shown by the attached tables, were disastrous.

The lowest price-figures recorded are far below the lowest level reached before the war, which was 78/- per ton f. o. b. Antwerp 1913-14) for merchant bars which can be considered as the standard product.

The normal margains between the prices of the various classes of products, normally determined by production costs, were reduced during the period of unlimited competition. Such a collapse had never been witnessed before the war, even in the critical years 1913 and 1914. It was completely unwarranted even taking into account the fall in production costs since the war.

This complete collapse of prices had a very serious result: as prices fell, those countries which were both importers and producers raised their tariffs in order to protect their home markets. An example of such action is afforded by Great Britain which had always been one of the chief consumers of continental steel. The protectionist tendencies which had developed in that country found a new justification in this abnormal state of affairs. The result was that iron and steel products, which had entered the country free until October 1931 now became subject to a duty, first of 10% (ad valorem) and then 33%% (April 1932).

THE NEGOTIATIONS OF 1932-1933

During this period of unlimited competition, which lasted two years, all official negotiations for the reconstitution of an agreement were suspended. Only a few attempts were made by certain groups of works to conclude agreements with a view to limiting the continuous fall in prices. In every case they lasted a short time and had practically no effect.

At the end of 1932 official discussions were renewed between the four original groups of the International Steel Cartel. For various reasons the former method of controlling total production of steel was to be considered no longer. In order to re-establish normal market conditions direct measures had to be taken to reorganise the export market, each Group being responsible for the control of its own home market. In the same way, any idea of balancing home against export markets even partially was abandoned.

The aim was now:

(a) To control general exports by giving each Group its share in the total market.

(b) To exercise close control on sales of the principal products.

Control of tonnage only would have proved useless: it would have failed to prevent competition between the merchants, between the works-agents and consequently, between the works themselves. It was essential that this and the speculation of the past two years should be stopped.

Dual control of tonnages was necessary. On the one hand, exports needed to be controlled by product (semis, joists and sections, merchant bars, heavy plates, medium plates, universals, hoops and tube strip), each Group having a prorata share in the export of each product. On the other hand control was required to cover total steel exports, including all rolled products, whether grouped in an association or not. It was hoped thus to obtain some measure of control over products for which no special agreement could be concluded and to establish a certain balance between the levels of operations in the various classes of products. At the same time the conclusion of a general agreement created a framework within which it would subsequently be easier to set up new special organisations.

The text of the agreement was drawn up quite rapidly. The negotiations over quotas for raw steel and rolled products proved much more difficult owing to the loss of balance between groups which had occurred during the period of unlimited competition.

On the 25th February 1933 the general crude steel agreement, or International Steel Cartel Agreement (Entente Internationale de l'Acier) in its new form was signed in Luxemburg. The members were: the German Group, representing the German and Saar works, and the Belgian, French, and Luxemburg Groups.

This agreement, which constituted the framework within which the other organisations were established, comprised the following principal clauses:

(a) Total raw steel exports to be divided between the four Groups on the basis of percentages varying according to the total tonnage exported. These variations corresponded to a curve beginning in the relative proportions secured during the first half of 1932, when annual exports were 6,660,000 tons and changing to those of the period 1927/28/29, when exports totalled 10,600,000 tons. The proportions of the various groups were therefore as follows:

Raw steel quotas (with allowance for transfers between groups effected since the inception of the agreement)

Any Group exceeding its quota was to pay a fine of 3/-, 5/- or 10/- gold, according to the amount of the excess, the receipts from these payments being used to compensate Groups in arrears.

(b) Within a limited period International Sales Comptoirs were to be formed for semis, joists and channels, broad-flanged beams, sections and merchant bars, heavy and medium plates, universal plates, hoops and strip and thin sheets.

(c) Finally, the principle of territorial protection was established. It was however to be modified by special agreements which had to be concluded between ten groups for the control of interpenetration established under Treaties and by old established trade custom.

Failure to establish within the given period the Comptoirs enumerated in paragraph (b) or to conclude agreements on territorial protection, might involve denunciation of the Agreement.

In the same way at present, the anticipated dissolution of these Comptoirs or Agreements could be invoked as a reason for terminating the main Agreement and all the existing organisations.

An Executive Committee, on which each country is represented by one principal delegate and two deputies, is responsible for administering the Agreement. The covenant also stipulates that sums shall be deposited as guarantee of the satisfactory fulfilment of its commitments by each member, that all statistics shall be verified by a company of accountants and finally, that any dispute shall be settled by arbitration.

THE SALES COMPTOIRS

Negotiations for the establishment of Sales Comptoirs continued until May. Agreements covering semis, joists and channels, merchant bars, heavy plates, medium plates, and universal plates were initialled on the 5th May 1933 and finally signed on the 18th July 1933. They were put into operation at the same time as the Raw Steel Agreement, on the 1st June 1933 and for the same period of five years. The Hoop and Strip Comptoir was instituted on the same date. The Wire Rod Comptoir had already been in existence for some years: this organisation also controlled sales on the home markets of the membercountries as the quotas covered all deliveries of each group. The Wire Rod Agreement expired on the 31st December 1936 but was renewed on a temporary basis: its renewal in the form of an export agreement is at present under discussion.

The principal clauses in the Comptoir Agreements are identical. Their provisions are:

(a) Each Group is allotted a percentage of total exports and from time to time a balance sheet is drawn up showing excesses and deficits of sales and deliveries. The Management Committee which administers the Agreement has the right to order tonnage transfers, and to compel a group to withdraw from the market or quote prohibitive prices. Excesses and arrears of deliveries are settled at the end of the year by fines varying from 15/- to 25/- gold according to product.

In order to enable each Group to regulate sales and deliveries a tonnageprogramme is fixed from time to time. This programme is not binding but is intended only as a guide. It was however intended that the tonnage programme for the last quarter of the Agreement-year should be binding so as to prevent speculation by certain works, which might be tempted to violate the spirit of the Agreement, by exceeding their share of exports and paying the fines levied for excesses.

The quotas fixed within the various Comptoirs varied from year to year as means were given of effective transfers between Groups, so as to coordinate raw steel and steel-product quotas. The latter are at present fixed, as follows:

(b) All export sales are centralised by four national sales organisations. These organisations are run by the following:

Stahlwerks-Verband A. G. Düsseldorf,

Comptoir de Vente de la Sidéurgie Belge,
"Cosibel", Brussels,

Comptoir Sidérurgique de France, Paris,

Groupement des Industries Sidérurgiques Luxembourgeoises, Luxembourg,

to which all the member-firms of the country concerned are attached. (c) The sales policy of these four organisations is subject to common regulations and control. This includes fixing of f. o. b., c. i. f., and delivered prices, and all terms of sale, classifications and extras, as well as defining the funcitons and remuneration of agents and merchants.