agreed in February 1937 and in the United States, and Sir Andrew Duncan and Mr. Elliot considered that an agreement which was not based upon the principle of this responsibility was of no value whatever.

Mr. Elliot added that the meeting of the Iron and Steel Institute which was to take place in October next in the United States would enable a delegation of the European Groups to resume contact with the Presidents of the big firms with whom they had negotiated at the beginning of this year. Meanwhile, they would have time to arrange the final details of the mechanism of the agreements. M. DIEUDONNE supported Mr. Elliot's opinion. He thought the American claim was inadmissible. Both M. Meyer and he thought they should not depart from the agreed principles, although they could say that if these principles should give rise to any hardship, they would in practice effect the necessary modifications in order to avoid any injustice. In this respect he made several suggestions, pointing out that in any case the Joint Co-Ordinating Committee would have to decide.

M. PUCHEU thought it would be necessary to settle the excesses of the associated works on the 30th of June by some financial arrangement.

Mr. Elliot was of the same opinion. The personal suggestion he had already made to Mr. Todd was as follows:

(a) Settlement of excesses up to 30th June (calculated on deliveries of the associated works only) according to the same formula as that to be applied between the British and Continental Groups.

(b) From 1st July to the month of October, debit of 50% of the outside tonnages.

(c) Thereafter complete responsibility unless on reexamining the position in October next, experience acquired in the period July/October should shew the necessity for prolongation of the provisional system.

Although Mr. Todd had not committed himself in any way, he had not formally excluded the possibility of an arrangement upon this basis.

M. Dieudonne feared that the transitory period of 3 months (July to September) would not be sufficient.

M. MAULICK suggested that instead of a financial settlement at 30th June the excesses of the associated works should be gradually liquidated, spread over 6 months for instance.

THE DELEGATES OF THE OTHER GROUPS pointed out that the American excesses were so great (see figures in appendix) that liquidation would necessitate a complete withdrawal from the market, moreover from the psychological point of view it was preferable that effective penalties be imposed at 30th June.

An interchange of views then took place regarding sheets, where the position was particularly difficult in view of the enormous productive capacity of the outsiders and the impossibility of obtaining any figures. After this the question of "breakdowns" was discussed. These are intermediate products between sheet bars and sheets, supplied in coils of a thickness varying between 12 and 3 mm. and employed just as they are or rolled into sheets, tinplates or strip. The opinion was that these products should be regarded as sheets and not sheet bars, as special plant was necessary if they were to be utilised instead of the latter. With regard to the London Committee, it was generally admitted that it should be constituted as soon as possible, on the understanding that its role would be simply that of supervision and liaison and that this Committee would not encroach upon the duties of the Executive Committees of the Comptoirs. The American delegates joined the meeting.

Mr. GREENWOOD was requested to state the viewpoint of the American Group. He proposed the following arrangement:

Complete exclusion of exports by outsiders.

Constitution of the London Committee which would commence at the earliest possible moment to put the agreement into practice and would constantly watch the position of the outsiders.

The Groups concerned should have the right to request cancellation of the Agreement if the problem of the outsiders were not solved in a satisfactory

manner.

Mr. Elliot considered this formula to be very dangerous; the result would be that the Americans would lose all interest in establishing control of their outsiders.

He stated that although it were true that at the start of negotiations no one was able to foresee the present development in outsiders exports, it was undeniable that the American Group had formally committed itself. The Continental Groups could not abandon this principle, which they considered to be essential. Nevertheless, as for various reasons, above all, owing to the absence

of an adequate organisation, these outsiders exports had increased to such an extent that they now constituted a very heavy burden, it seemed necessary to interpret the principle in a broader manner until an efficient and complete collaboration were arranged. The Delegates present had the inward conviction that the problem was not impossible of solution and that with an appropriate organisation they would finally be able to control the risk and confine it to such limits as would enable the agreement to be applied without difficulty exactly as it had been concluded.

Mr. Greenwood was not acquainted with the previous negotiations, but stated that when Messrs. Bash and Mundle came to Europe the outsiders represented only 5% of the total American exports. Since then the position has completely changed. Mr. Greenwood understood that the Cartel would agree to delete the clause regarding responsibility; he saw now that this was not the case and regretted that the Groups did not appear willing to face the actual position in which they found themselves. The American Group had the same interest as the others and was quite prepared to collaborate. Mr. Elliot repeated that maintenance of the principle of responsibility for outsiders, to which principle the American Group had formerly committed itself, not only in February 1937 but again in 1938, was considered by the Cartel to be fundamental; to abandon it would be to take away all value from the Agreement; but the Cartel was prepared to make proposals to the American Group which were inspired by a broad minded spirit of comprehension. These proposals were

(a) For the present, complete cancellation of outsiders tonnages up to 30th June.

(b) Settlement of excesses of the associated works up to 30th June in conformity with the Agreement (or according to a formula to be decided).

(c) Immediate constitution of the London Committee; establishment of efficient collaboration and adoption of all possible methods for combatting the outsiders.

(d) Establishment of a transitory period during which only 50% of outsiders exports would be debited. This period would be at least 3 months. At the end of this period, the representatives of the Cartel would proceed to New York; the experience acquired during these 3 months would enable the position to be examined afresh.

(e) The American works would no doubt realize that their present fears were groundless and that there was no objection to passing to the stage of complete and definite application of the agreed principles (complete responsibility for outsiders).

Mr. Greenwood considered that this suggestion was not of a nature to enable the American works to sign the agreement. They were up against an absolute impossibility. He had the impression that they were wasting precious time discussing principles and he feared that they would miss the opportunity of concluding an agreement and a collaboration which would comprise (without the outsiders) 80% of the iron and steel industry of the world. The idea of a transitory period was the only suggestion which seemed appropriate. Why did they wish to cling to a principle which the American works could not accept? The negotiators had no idea of the significance of the clause regarding responsibility. In spite of the firm desire of the associated works to bring down the outsiders tonnage to a normal figure, no one knew what the future might bring. The tonnage of the American reference period had been supplied almost exclusively by three firms, and there was absolutely no comparison between the extremely small quotas which had been agreed and the output capacity of the outsiders. The object desired by both sides was the same; they differed only in their methods, but the experience in tinplates shewed that the American desire for collaboration was sincere and that the possibility existed of achieving this. After the interval Mr. GREENWOOD again referred to the idea of a provisional period and suggested that the agreement should be applied as a trial, without taking the outsiders into account, up to 15th October, at which date they would again go into the matter thoroughly. In the meantime, the London Committee would control its application and effect supervision of the Agreement.

Mr. Elliot stated that if the object of this postponement was to shew the American works up to the month of October that with a suitable sales policy and organisation the risk which they now feared did not exist in practice, and that the agreement could be applied exactly as concluded, they might possible consider it. But if this were not the spirit of the proposed formula, what guarantee would the Cartel have that even if it were shewn that the problem of the outsiders did not arise further, the American Group would not say next October that the latent risk did, however, still exist, and that consequently they could not modify their position and assume any responsibility?

Mr. Greenwood replied that he was unable to commit himself. In his opinion the most important matter was to constitute the London Committee, to establish collaboration, to adjust prices and not to enter into endless discussions upon the past and upon principles. The meeting was adjourned.

The Continental and British delegates conferred.

On resumption of the discussion Mr. ELLIOT again explained the point of view of the European Groups. They considered that there should be some way of achieving results upon the following basis:

(1) Settlement of excesses and deficits at 30th June without taking the outsiders into account, upon the basis fixed by the Agreement or upon a basis which the Joint Co-Ordinating Committee would decide to apply between the British and Continental Groups.

(2) Establishment of a provisional period from 1st July to 15th October during which the agreement would be put into practice, taking care to prevent the outsiders from securing business. As regards responsibility for this, both parties would maintain their respective positions. The question would not be discussed again until October, when they would have the experience of the 3 months' trial. They would then come to an agreement regarding "solution" of the problem concerning both that period and also the future, i. e., the moment in which they were to pass to a strict application of the agreement. In the other words, the question of debiting tonnages exported by outsiders would be temporarily suspended, both parties maintaining their respective positions.

Mr. Greenwood considered they were losing sight of the important fact which was that rightly or wrongly the American works would not sign the agreement if the principle of responsibility for outsiders were not excluded. If their collaboration were desired, something would have to be done. For more than a month no progress had been made.

Messrs. Dieudonne and Elliot pointed out that the American Group's difficulties had been duly taken into consideration; the suggested formula took both viewpoints into account and postponed the practical settlement of the question of outsiders until the month of October, when they would be in a better position to make a decision, as they would then have the experience which was lacking at the present time. It was impossible to abandon a principle which had been agreed and which in Europe was considered to be essential. Moreover, the outsiders were already exporting much less today than a short time ago and the whole future policy of the Cartel would be directed towards preventing them from securing business. If they succeeded in spite of the efforts of the European Groups, the Joint Co-Ordinating Committee would make their judgment in all fairness, on the principle that strict application of the agreements should not lead to injustices; they would examine the position product by product and decide what modifications were justified by the situation. The American delegates were convinced that the suggested solution was not constructive and that it would be preferable to clarify the situation in order that the agreement might be signed immediately.

The meeting was adjourned for lunch.

A lengthy interchange of views took place during lunch without any progress being made. The American delegates suggested leaving everything as it was until 15th October, the London Committee commencing its work in the meantime. Mr. Greenwood repeated that he was not in touch with any of the previous negotiations or with the American discussions of the European Commission. He was aware only of one thing: that the Associated works refused to sign if the clause regarding responsibility for outsiders were not removed. The "diplomatic" formula proposed by Mr. Elliot was not satisfactory, and experience had shewn that unsigned agreements are often of more value and work better than signed agreements, and they were often more flexible.

Mr. Elliot replied that not one of the delegates present was authorised to abandon a principle which had been formally accepted by the Presidents of the large American firms. Could the American representatives give the assurance that if the experience between now and the month of October was satisfactory they would accept responsibility for outsiders? Mr. Greenwood's formula gave no guarantee whatever in this respect.

M. Dieudonne pointed out that this formula made no reference to the question of American excesses up to 30th June, whilst the formula proposed to the American Group would enable them to start at zero at 1st July.

Mr. GREENWOOD AND HIS COLLEAGUES replied that after submitting to the instructions of the London Committee during three months they would not wish to have to submit to the judgment of the Comptoirs again in October. They had

96347-50-ser. 14, pt. 4b- -15

the impression that their present excesses arose from the fact that the European Groups had not listened to their recommendations regarding prices. Tonnage secured by the outsiders could have been secured by the Cartel.

M. Dieudonne made it clear that in many cases the prices suggested by the American Group were above those of the Entente. He added that the agreements allowed for arbitration in case of divergence of interpretation of the principles or application of the clauses: consequently, if the American Group considered that their excesses at 30th June resulted from an arbitrary application by the European Groups of the commitments they had undertaken, they would request arbitration on the matter.

Mr. Elliot agreed that misunderstandings might have arisen on both sides in view of the fact that no organisation existed, although the agreement was in force there had been a formal agreement upon the dates of commencement. THE AMERICAN DELEGATES stated that they could not agree to the European Groups being masters of the situation all along the line.

MM. Elliot and Maulick pointed out that the American Group had underquoted unnecessarily and had deliberately secured business at lower prices under the pretext that they ran the risk of losing the business to outsiders. The Comptoirs had agreed to follow the American price suggestions as far as the zones of American influence were concerned, but all the same they had lost business mostly because of the unilateral action of the American works.

Mr. MUNDLE remarked that when the commencement dates had been discussed the American Groups' orders on books were normal: there excesses had arisen owing to the sales policy of the Comptoirs, and to an unforeseen retrogression of tonnage.

Mr. Elliot considered that it was useless to continue the discussion as the European delegates could not go back on all that had been agreed.

It was finally agreed that in view of the meeting of the Joint Co-Ordinating Committee, the American Group would draw up a Memorandum stating their views and their justifications:

(a) Regarding settlement on 30th June.

(b) Regarding responsibility for outsiders as from that date onwards. Position of the American group (associated works for the period 1-12-37 to 30-4-38 (excluding supplies to Canada)

NOTE.-Continental deliveries to Great Britain, European deliveries to the U. S. A. and American Pos sessions, American deliveries to Great Britain, countries of the Cartel and American Possessions are excluded from the statement, in conformity with the Agreement.

EXHIBIT S-97

[First meeting]

E. I. A./U. K./U. S. A. AGREEMENT-MEETING OF THE LONDON COMMITTEE

In accordance with the decision of the Joint Co-ordinating Committee in Luxembourg on the 8th March 1939 the London Committee met at Steel House, Tothill Street, Westminster, London, S. W. 1, on Tuesday, 14th March 1939 at 10 a. m. The following were present:

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

The Committee reviewed the situation generally and in particular certain matters which have caused difficulties in the Comptoirs, and decisions and recommendations to the various Comptoirs were approved as stated below.

In the course of discussion during the meeting it was agreed that the prime duty of the Committee was to exercise statistical and quota control.

The Committee expressed the hope and belief that the Joint Co-ordinating Committee would take the view that the decisions of the London Committee should be strictly observed, and that any departure therefrom by any of the parties be regarded as a breach of agreement.

PLATES

It was agreed, on account of the excess of the American Group and the confusion caused through offers being made by Members of the American Group which could be represented as outsider quotations, that until further notice the EUROPEAN MARKETS should be left to the European makers, and the American representative undertook to give to the President of the Comptoir all information at the disposal of the American Group on the question of outside competition. The Committee discussed a recent order from MANCHUKUо for 20,000 to 25,000 tons, which apparently had been placed with an outside American firm without the American Group or the Cartel being asked to quote, and it was noted that the information which had been received by telephone from America confirmed the report as to the placing of the order. The Committee decided to wait for further details before reaching any conclusion in the matter.

A suggestion by the American Group that the NORTH CHINA, CHOREA, MANCHUKUO, and JAPAN MARKETS should be "free" temporarily on account of the loss of this order was not accepted, but it was agreed the Central Bureau should meet all competition arising in these markets, and the American Group were requested to furnish all particulars of any outside interference in these markets immediately it became known to them.

In regard to SOUTH AFRICA it was agreed to recommend to the Groups that Gazette prices should be quoted for all business until further notice.

In regard to CANADA, the Committee agreed that owing to the excess figures of the American Group the British Group's differential in this market should be increased to 20 cents per 100 lbs. until further notice.

HOOP AND STRIP

After consideration of the reduction of the price in EGYPT to £13.10.0, in a recent order it was agreed that the Comptoir be recommended not to reduce the