Word: marketing
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Dates: during 1950-1959
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...answer is international agreements to control production and exports. Though the U.S. still considers "cartel" a dirty word, it has been forced to change its ideas about cartel-like marketing agreements simply because drops in raw material prices can easily undo all the good of U.S. foreign aid programs. The U.S. is a member of the International Sugar Council, which has tried to stabilize sugar prices since 1954 by setting up export quotas for 25 nations. It has reluctantly led the way in trying to set up an international stabilization plan for coffee to save the world market from...
...stabilization plan for sugar has worked reasonably well. But restrictions on metals present greater problems, largely because of wide variances in production costs. Canada is reluctant to enter a lead and zinc cartel because her mining economy is booming, would prefer a free market in which high-cost producers, such as in the U.S., would be eliminated. Says W. S. Kirkpatrick, executive vice president of Canada's Consolidated Mining & Smelting: "The only real cure is to reduce output by closing down the high-cost producing mines. The natural economic law of supply and demand should be allowed to work...
...argument against metals controls is that agreements tend to set prices too high, make quotas too rigid. Furthermore, metals controls are easily frustrated by the discovery of new or cheaper sources of supply-or by the market dealings of a maverick. The International Tin Council ran out of cash trying to support prices in the face of Russian dumping because it set its floor price at an unrealistic level of 91¼? per lb. With the council out of support funds, the price dropped to 80? per lb., is now firming...
...economists consider stabilization plans only short-term, stopgap methods of straightening out world markets, are convinced that they are as harmful as farm price supports-and will work no better in the long run. Says Simon D. Strauss, vice president of American Smelting & Refining Co., the world's largest smelter and refiner of lead, zinc and copper: "Such agreements, in the short run, would restore order to the market. But, for the long run, metals restrictions are useless. They usually protect the weakest, least efficient party to the pact...
...governmental plan but voluntary agreements to trim output and bring supply in line with demand. The copper industry has shown how producers can solve many of their own problems. Copper producers voluntarily cut back production in the face of a big supply and falling prices. The market stabilized itself without any artificial controls, and last week copper prices were moving...