coöperation, with or without government aid, particularly in the case of certain food products, is being defended, however, on the ground that

it lowers distribution costs and that its chief object is a stabilization of prices in the interests alike of the producer and of the consumer.

Actual government administration of production is rare as compared with government supervision or support of private enterprises. In actual practice, however, the interest of government in the exploitation and distribution of essential resources is a matter of degree. If a raw material is, or is believed to be, vital to a nation's welfare, public opinion will force the use of the agencies of government in support of the private company which controls that raw material, or in other cases, governments themselves directly control the enterprises.

Government monopolies may be for the purpose of profit as in the case of the spice trade, or it may be to assist the consumer as in the case of the Nauru phosphates.

GOVERNMENT MONOPOLIES IN SPICES

Nile and down the Nile to Alexandria. The Venetians, by means of large fleets, controlled the ocean passage from Alexandria to Venice and maintained a monopoly of the spice commerce with the Moorish merchants. Western Europe and England were served yearly by fleets of galleys, although the shipments to Germany were transported overland by closely-guarded pack trains.

At her peak of power it is estimated that the Venetian traffic in spices alone amounted to over $10,000,000 annually, a large sum of money in those days.

The large profits made by Venice in the handling of spices of course caused many other countries to think of reaching the Oriental source of supply. The problem was finally solved by Vasco da Gama in 1498. In 1497, King Manuel of Portugal sent Vasco da Gama with a fleet of three small vessels to discover the spice countries. The expedition sailed around Africa and after visiting Mozambique and Zanzibar reached Calicut, India, in August, 1498. The first cargo that da Gama took back was composed of pepper, cinnamon and ginger. The expedition returned to Lisbon in 1499 and was promptly followed in 1500 by a fleet of thirteen ships. Numerous other ships were sent out, all of which largely traded for spices along the Indian coast.

The immense profits of the Venetians were gone, never to return, and the subsequent mercantile career of this republic was now only in the distribu

tion throughout Europe of the products brought by the Portuguese to Lisbon, for, strangely enough, the latter never seemed to care for the profit beyond the original handling and this indifference was eventually to cause them the loss of the entire trade.

The first steps the Portuguese took were to secure the absolute monopoly of the spice trade. They attempted to maintain this monopoly and destroyed all Moorish vessels encountered on their journeys. The policy of the Portuguese was not to annex territory but to establish numerous "factories' or supply stations.

In 1505 the Portuguese reached Ceylon, the land where the finest cinnamon grows. In 1509 they obtained a foothold in Malacca, more than a thousand miles to the east, and in 1511 they reached Banda Islands, now the chief source of the world's supply of nutmeg. The Molucca Islands, or Clove Islands as they have been called (because they were the only islands in the world at that time where the clove tree was found), were reached in 1512. The Portuguese were the first Europeans to arrive at these tiny islands which were to cause centuries of strife between the Moors, Portugal, Spain, Holland and England, in which strife the islanders were exterminated and the trees destroyed. At the present time the clove tree does not exist even in the wild state in its original habi

tat.

The Dutch revolted from Spanish rule in 1567. In 1580, when Spain and Portugal became united, Philip II decided to strike a final blow at the Dutch and destroy their commerce. He forbade Dutch vessels to trade in Spanish or Portuguese ports under penalty of confiscation and imprisonment of their crews. This action became the occasion for developing direct intercourse with the Indies, the large

profits of which had already made their appeals to the Dutch.

In 1596 an expedition was sent out from Holland by the Cape route. It visited numerous native ports and was greeted everywhere by the evidence of Portuguese hatred. The fleet returned to Holland in 1597 laden with spices. Within a few months another and larger squadron was sent out and this reached Bantam Harbor in 1598. This important harbor, at the extreme west end of Java, was a large pepper market.

Soon after the Dutch commenced their trade with the East, the merchants of Europe began to complain that spices were becoming too cheap. The Dutch, therefore, granted to the East India Company a charter conferring the exclusive right to trade to the east of Cape Good Hope, and to sail through the Straits of Magellan. This Company was given the power to make treaties, levy troops and build forts.

The English broke the Dutch monopoly by cultivating nutmegs, mace and cloves in Sumatra and Penang. The East India Company sent Christopher Smith in 1796 to the Molucca Islands to collect spice plants. As soon as Penang spices were being produced in commercial quantities, it was noted that they were of better quality than the average run of Dutch spices. With the increase in the production in the English colonies the prices fell and in 1865 nutmegs sold for 1s. 3 d. and mace for 1s. 4d. The price since has been steadily declining, except for a few large fluctuations. At the present time the price for nutmegs is about 20 cents per pound. This fall in market value has been interpreted by an authority such as Ridley as not being due to overproduction because the exports from the Dutch East Indies have not shown any increase in the last forty

years, and yet the price fell to as low as 10 or 11 cents in 1909. However, consideration must be given to the fact that in trying to break the Dutch monopoly the English introduced the nutmeg tree in Grenada in the West Indies, and the production there has been steadily increasing both for nutmegs and mace. In 1922 there was exported from Trinidad, B. W. I., 2,524,704 pounds of nutmegs and 356,832 pounds of mace. The exportation of nutmegs from the Dutch East Indies in 1906 was 6,155,970 pounds. This figure is about normal for present exportations also.

The Dutch used similar methods for maintaining a monopoly in cloves by confining its production to Amboyna and making periodical trips to other islands to exterminate the clove trees. They pursued this policy with great inhumanity. Their attempts to keep the trade entirely in their hands were not altogether successful. Large supplies reached England independently of their Government. However, the the Dutch maintained almost a complete monopoly until the end of the 18th century, when the English and the French seriously challenged their supremacy. Clove trees were introduced in various parts of the world at that time, particularly in the French colony of Mauritius. From this point an Arab from Zanzibar conveyed clove plants to his country and laid the foundations of the important and extensive plantations in Zanzibar and Pemba, which are now the chief source of the world's supply of cloves. The English, as mentioned before, introduced the clove in Penang in 1786. The development of these new sources broke the Dutch monopoly so completely that the Dutch East Indies are no longer an important factor in the trade. In 1920 the total exports of the Dutch East Indies of cloves was 92,560 pounds. As long ago as 1890 Zanzibar

and Pemba exported more than 18,000,000 pounds.

THE GERMAN MONOPOLY IN POTASH

The United States is almost entirely dependent upon foreign sources for its normal requirements of 250,000 tons of actual potash per year. Before the war our requirements were all imported from Germany. Germany then controlled the world's production and markets.

Under the terms of the Versailles Treaty the potash mines in AlsaceLorraine were ceded to France, so that the German monopoly has been partially broken. tially broken. France shortly after assuming control of the Alsatian deposits formed an organization for the purpose of controlling production and sales. Prices of the French agencySociété Commerciale des Potasses d'Alsace have followed those of the German syndicate.69

During the war potash was produced from numerous sources in this country but the maximum output did not exceed 55,000 tons of actual potash in any one year, or 20 per cent of consumption. Since the war the domestic production has declined, and the United States is again dependent upon Europe for its supply. Known potash deposits in the United States are at geological and geographical disadvantages as compared with the German and French deposits.

The industry in Germany is controlled by a syndicate in which the Prussian Government is a partner, and which has been supported by the Government to the extent of compelling all mines to join it. The syndicate fixes the price of potash and has maintained it above a competitive price, but low

69 Federal Trade Commission: "Report on certain phases of the fertilizer industry” in response to Senate resolution of June 17, 1922 (1923), Document 347, p. 6.

enough to keep an almost complete monopoly of the world's markets. The syndicate has been active in stimulating the sale of potash throughout the world by means of advertisements, demonstration farms and exhibits. Higher prices have been exacted from the foreign than from the domestic

consumer.

French competition in potash has not developed to the extent that was expected; imports into the United States from France have probably not exceeded 20 per cent of our consumption. An unsuccessful effort was made within the past year to reach an agreement between the German and French producers as to division of markets and fixing of prices. The French occupation of the Ruhr may have the effect of decreasing German competition, as the German potash mines are dependent on Ruhr coal. This would give France an opportunity for further development of her potash deposits.70

SPAIN'S MONOPOLY IN QUICKSILVER

Spain in the Almaden Mine possesses the richest deposit of quicksilver in the world. Formerly, and for a number of years, through an agreement with the Spanish Government the Rothschilds controlled the marketing of the Spanish product. This agreement expired recently and the Spanish Government now markets its product direct. They practically control the quicksilver market of the world, for their resources are such that, if they so desire, they could flood the market with cheap metal. According to the terms of the Peace Treaty, the Italian Government took over the rich Idria Mine, formerly belonging to Austria, so that with the Monte Amiata deposit they now have resources of quicksilver comparable with those of Spain. Recently there

70 Chemical Trade Journal and Chemical Engineer, Mar. 2, 1923, p. 254.

have been rumors that the two governments are seeking to form a combination with a view to controlling the quicksilver market of the world.

JAPAN MONOPOLIZES CAMPHOR Camphor occurs in the volatile oils obtained by distillation of the camphor trees. It is an important ingredient in the manufacture of celluloid. The camphor tree is indigenous to the Island of Formosa, to China, and to Japan, and has been successfully grown in Florida in this country. Formosa furnishes the great bulk of commercial camphor. In 1899 the Japanese Government took over the camphor industry of Formosa, improved methods for obtaining the camphor, and established a system of replanting. In the years 1900-1909 some 11,500,000 camphor trees were planted within Japanese territories. A tree is 50 years old before it is cut. This camphor monopoly is controlled by the Japanese Government. The Government licenses producers of camphor and camphor oil, and reserves the right to restrict production. The crude camphor is sold to the Government at a fixed price, the refining of which is the exclusive right of the state. The Government fixes the selling price and allocates periodical supplies to the consuming countries. Its ability to fix prices is limited only by competition from synthetic camphor and the exactions which the celluloid market will bear.

In an endeavor to prevent the destruction of their camphor trees the Chinese placed a tax of 75 cents per 100 pounds of camphor, and 28 cents per 100 pounds of oil, the taxes collected to be expended in planting and cultivating new trees.

During 1919 and 1920 the du Pont Company manufactured synthetic camphor on a large scale from turpentine,

the price of camphor at this time being very high. The price of natural camphor now (1923) is such that none of the synthetic product is made in this country, but it has been made successfully not only in the United States but in Germany. Some camphor groves are also being developed in Florida.

THE BRITISH MONOPOLY OF NAURU PHOSPHATES

An unusual case of the control and exploitation of a natural resource by governments is the case of the purchase of the phosphate concession in the Island of Nauru by Great Britain, Australia and New Zealand. This case is of particular interest since the Island of Nauru is held by the British Empire as a Class C mandate under the League of Nations.

The Island of Nauru is situated in the Pacific Ocean to the west of the Ellice and Gilbert Islands and south of the Marshall Islands, and is believed to be the largest reserve of high-grade phosphate in the world." The Island was annexed by Germany in 1888 and on September 9, 1914, was surrendered unconditionally to an Australian ship. It was turned over by the Allied and Associated Powers under a mandate to the British Empire. The phosphate concession was held from the German Government by a private syndicate.

On July 2, 1919, the governments of Great Britain, Australia and New Zealand entered into an agreement to purchase this concession. This agreement provided, among other things, that the phosphates are to be sold at cost to the three governments, the cost price to include interest, a sinking fund for the payment of the capital, working expenses and contribution to administrative expenses. No phosphates are to be sold to or for shipment to any 71 Morocco has deposits reputed to be rich.

other country until after the requirements of Great Britain, Australia and New Zealand have been met, and then only at the market price. The agreement was ratified by Australia and New Zealand and when presented to the House of Commons called out a very interesting debate. The British Government contended that the agreement was not contrary to the Covenant of the League of Nations. Colonel Leslie Wilson, the Parliamentary Secretary to the Ministry of Shipping, who sponsored the bill for the Government, declared that the question of this transaction between the three governments

was

entirely distinct from any other question which might arise as to the mandate under the League of Nations. This is a purely commercial transaction between the phosphate company and the three governments concerned. Whatever happens, I cannot see that the League of Nations has any right to interfere with this particular transaction between the company and the difference between the purchase of this governments concerned. I do not see the trading company by the three governments and the purchase by an individual.

Colonel Wilson even went so far as to deny that other nations were entitled to equal treatment in trading with Nauru.

The mandate (he asserted) was granted to There is no doubt the Empire. from the papers laid on the table of the House, and from facts which have been accepted by that great exponent of the League of Nations, General Smuts, that there never was the slightest intention that Class C mandates should be subject to the principle of the open door."

Mr. Bonar Law, then leader of the House, took the same position.

Nauru in effect is a phosphate island (he argued). It has been a commercial under

72 Parliamentary Debates, House of Commons, Vol. 130, No. 78, p. 1358; and No. 80, p. 1609. 73 Ibid., Vol. 132, No. 102, p. 195.