taking. It was in the possession of a company and if we do not pass this bill, that company would have every one of the rights which we are now claiming for the British Empire. It could treat the product of that Island in any way it liked, and therefore it is obvious that, so far as the general good of the world is concerned, nothing is lost by transferring this power to a body represented by the British Empire as compared with a private trading company.74

He declared, however, that

passing this bill does not in any sense preclude the League of Nations, if they think the arrangement is an unfair one, from refusing to confirm it. I have myself no doubt that the League of Nations will agree to it. I do not think any supporter of the League of Nations could say that they have the right to upset a purchase of this kind. They have the right to interfere with the administration. I think this is so vital that I would like to make it clear. The two questions quite distinct. One is the administration of territory, which the League of Nations has a perfect right to see is properly done. The other is the purchase of a trading company. I do not think that is a subject which would properly come under the League of Nations at all.76

are

On the subject of the open door the leader of the House said:

It is only in the fifth paragraph of Article XXII of the Covenant of the League of Nations that "equal opportunities for the trade and commerce of other members of the League" are expressly provided for. The territories to which this provision applies are those which formerly constituted German East Africa, the Cameroons and Togoland. In the case of the former German colonies, which, under the sixth paragraph of Article XXII are to be administered "under the laws of the mandatory as integral portions of its territory," the provision of equal opportunities for trade and commerce will be a matter for the discretion of the mandatory."

74 Ibid., Vol. 130, No. 78, p. 1324.

The position of the Government was vigorously assailed in the debate on the bill, particularly by the Liberal and Labor parties of the House, who charged that the agreement was a violation both of the spirit and letter of Article XXII of the Covenant of the League of Nations. Mr. Ormsby-Gore questioned the right of a government which is acting as a mandatory to establish a government monopoly of the raw materials of the territory of which it is trustee.

That is a root principle (he said). Because, if that is once established, I do not see why the French in the Cameroons should not establish a government monopoly of all the native produce of that country, and why all the produce of other places should not be similarly regulated.

A great many people want to see the League of Nations a reality and to see the Treaty of Versailles carried out, and they do not want this country to be the country which is going to fly in the face of a conference with results which are bound to be

extremely far-reaching, because it is really a test question. If these mandates are a sham, are only camouflage, it is much better to be out of the Covenant, much better to withdraw our signature from the Covenant. Then we should know where we are. Either you are going to act up to Article XXII or you are not, because that is going to be the question asked in Mesopotamia, Palestine, and all these countries of the world. There is no use in saying that we are working this in the Belgian part of East Africa, that we will see that the French are not allowed to conscript people in Togoland under Article XXII, but when it comes to applying that article to our possession, then we are going to tear up the mandatory principles and create these government monopolies.78

Lord Robert Cecil, leader of the opponents of the agreement bill, said:79

78 Ibid., Vol. 130, No. 78, p. 1311 et seq. 79 Ibid., p. 1321.

Some honorable gentleman suggested that this is nothing but sanctioning a purely commercial agreement handing over the powers of the phosphate company to the British Government. It is nothing of the kind. The phosphate company, in fact, was working under the German Government-let us remember that-and while working under the German Government it traded freely with those who became subsequently the enemies of Germany. Here we are going to preclude the possibility of a single ton of phosphate being sold to anybody except the three governments concerned and for our own personal use.

I will not say (he continued) if the League were to sanction that arrangement that that would not be consistent with the terms of the Covenant, but I do say it is altogether inconsistent with the spirit of Article XXII. Undoubtedly, there was no idea that the mandatory was to use this power in order to

secure a monopoly of the riches of the mandated country. That is absolutely inconsistent with the whole framing of

Article XXII.

It seems to me if we go on with this proposal it is perfectly fatuous for us to talk any more about scraps of paper.& 80

Mr. Herbert H. Asquith, leader of the former Liberal Government, asserted that the agreement is one which has no legal or international validity of any sort or kind and which, indeed, in the terms in which it is made, is in flagrant contravention of both the letter and the spirit of the Covenant of the League of Nations. It is a small case in itself, but it would be a precedent. If this is done in the case of the Island of Nauru, there is no reason why similar agreements should not be secretly and behind the back of the League of Nations concluded all over the world.

This is the latest form of preference! Here is a mandate given to the British Empire, confined so far as its practical operation is concerned to three of its constituent members, and, what is much more important, when you come to hand over the phosphates for them to go to three selected parts of the Empire and not to the rest. You are going to give preferential 80 Ibid., p. 1319.

treatment to particular parts of your own Empire as against the rest of the world. A worse example to set and one in more open contradiction to the provisions of the fifth paragraph of Article XXII, which provides that in the execution of a mandate equal opportunities shall be secured for the trade and commerce of all the other members of the League, I think it is impossible to conceive. It is illegal in its origin, unequal in its operation, it is opposed in all respects to the letter and the spirit of the Covenant of the League of Nations.81

The bill providing for the ratification of the Nauru agreement was finally amended in its ratifying clause to read:

The agreement is hereby confirmed, subject to the provisions of Article XXII of the Covenant of the League of Nations.

No action has been taken by the League of Nations and the agreement concerning the exploitation of the phosphate deposits is now being carried

out under the direction of the British Phosphate Commission. The minutes of the Permanent Mandate Commission indicate, however, that there is some doubt as to whether this agreement among the three governments is not in violation of the Covenant of the League of Nations. The following passages are from the minutes of the second session of the Permanent Mandate Commission held in Geneva August 1 to 11, 1922:

M. Orts was anxious for a slightly more detailed explanation of the position. The territory was under the mandate of the British Empire. The British Empire was apparently a shareholder in the British Phosphate Commission, having combined with the governments of Australia and New Zealand to buy out the Pacific Phosphate Company. At the present moment, the Australian Government, and, in general, one of the three Governments in turn nominated the Administrator. It would be

81 Ibid., pp. 1322–23.

82 The Nauru Island Agreement Act, 1920 (10 and 11 Geo. 5, Chapter 27).

desirable that, in the next report, definite information should be given on the method by which the mandatory government exercised a control over the British Phosphate Company (p. 37).

Sir Joseph Cook replied that the British Empire was not a shareholder in the British Phosphate Commission. It was the sole owner of the works, which had been purchased by the British, Australian and New Zealand Governments from the old

company at a cost of £3,500,000. There was an Administrator, nominated at present by the Australian Government, and subsequently to be nominated by one of the three Governments concerned. On the other hand, the British Phosphate Commission was administered by the three Commissioners, subject, as to duration of office, to the will of the Mandatory. The relations between the Administrator and the Commissioners were as follows: The Commissioners were not subject to the control of the Administrator, except in so far as they were bound to observe the terms of the Nauru Island Agreement Act, 1920, and to comply with the various ordinances promulgated by the Administrator for the government of the island. The Administrator had all the powers of governmentadministrative, legislative and judicial—in the island, e.g., police, education, justice, etc. (p. 37).

On the other hand, the British Phosphate Commission exercised control over deposits which were contemporaneous with the island itself. In this connection, it should be remembered that nothing in the island was of much economic importance excepting the phosphate deposits. The original Jaluit Gesellschaft had virtually administered the island as a concession, under the nominal oversight of the Imperial German Government. The rights transferred from the Jaluit Gesellschaft to the Pacific Phosphate Company were purchased in 1919 by the governments of Great Britain, Australia and New Zealand, and these Governments had in their turn vested the control of the works in the present British Phosphate Commission. The duty of the three phosphate Commissioners was, therefore, to work the deposits and to administer the

liability incurred as a result of the purchase before mentioned (pp. 37-38).

Finally, the Commission noted the following points in connection with the Island of Nauru:

This tiny island, which is hidden in the vast extent of the Pacific, has only about 2,000 inhabitants. Its sole wealth-and it is considerable-consists in vast and rich

deposits of phosphates. The Mandate for this island was conferred by the Principal Allied and Associated Powers upon the British Empire, which delegated the working of this mineral wealth to Australia, Great Britain and New Zealand. These three Governments have devolved upon Australia the responsibility for the administration for a first period of five years. From information supplied by the mandatory Power, the Commission finds ground for fear that the fundamental principle of the institution of mandates may, as regards its application to this island, be prejudiced in two ways.

It fears on the one hand that the disproportion between the material wealth of this island and the small number of its inhabitants may induce the mandatory Power to subordinate the interests of the people to the exploitation of the wealth. It is, therefore, not without deep concern that it considers the question whether the wellbeing and development of the inhabitants

of this island, which, in the words of the Government "form a sacred trust of civilization," the accomplishment of which it is the Commission's duty to safeguard, are not in danger of being compromised.

It is, moreover, concerned with the consideration of the question whether the mandatory Power, by reserving the ownership and exclusive exploitation of the resources of this territory to itself, has brought its policy into true harmony with the requirements of the Mandate which, in accordance with the Covenant, it should exercise on behalf of the whole League of Nations (p. 55).

INTERNATIONAL CONTROL OF THE
SEAL TRADE

An interesting case of government control under an agreement to conserve

an international resource is the Convention for the Protection and Preservation of the Fur Seals and Sea Otter, between the United States and Great

Britain, Russia and Japan, signed July 7, 1911, and effective December 15, 1911, continuing for a period of 15 years, and thereafter until terminated by 12 months notice. The Convention has these provisions:

(a) Prohibits subjects of these nations from engaging in pelagic sealing (the killing, capturing or pursuing of fur seals at sea) in north Pacific waters north of 30° N, including seas of Bering, Kamchatka, Okhotsk and Japan.

(b) Closes the ports and territory of these nations to persons and vessels engaged in such operations within the closed area and prohibits importation of unauthenticated seal skins of species common to the closed area.

(c) Excepts certain aborigines with limitations.

(d) Provides for necessary legislation and enforcement including patrol of waters frequented by the fur seal herd and cooperative effort to prevent pelagic sealing.

(e) Of the annual killing of seals on the Pribilof Islands or other islands under United States jurisdiction, the United States agrees to deliver 15 per cent, gross in number and value, to (1) an authorized agent of the Canadian Government; (2) the agent of the Japanese Government.83

(f) Provides certain advance payments ($200,000) to each; an annual payment of $10,000 in years when no killing of seals is permitted; and sets a minimum (1000) as to the number of skins to be delivered in any year in which killing is permitted; subsequent reimbursement for any advances made being provided for.

(g) Similar provisions governing the seal herd breeding upon (1) the Commander Islands of Russia, payments to Japan and

83 This provision has since been modified (1918), Canada and Japan each receiving 15 per cent of the net revenue from the sale of skins received by the United States Government.

Canada; (2) and Robben Island, Japan, payment being made to the United States, Canada and Russia.

(h) The United States is in no way restricted from suspending the taking of seal skins on the seal islands or imposing such restrictions and regulations as it may deem necessary to protect and preserve or increase the seal herd.

Fur seals roam over the north Pacific for very long distances, returning to their rookeries each year to breed. Pelagic sealing is extremely destructive because of the necessary indiscriminate killing of females and "pups" as well as males, escape and subsequent death of wounded animals, etc. On the rookeries, selective killing, counts of the herd and proper conservation measures are possible.

Prior to 1910, the killing was by commercial companies operating under a lease. In the forty years preceding, the herd was depleted from some 2,000,000 animals to 132,279 in 1910, when the direct management was taken over by the Department of Commerce. Under the latter administration, the number increased to approximately 605,000 in 1922. The average net price per skin received by the Government, 1870 to 1889, was $3.15; 1890 to 1909, $9.30, and under the Department, 1910 to 1921, $31.20. Sales of skins in 1921, exceeded $1,000,000. Under the leasing arrangements, the Government received no revenue from the sale of fox skins on the Pribilofs. Since 1910, such sales have netted the Government in excess of $400,000.

Furthermore, the Government has succeeded in having the seal market transferred from London to St. Louis, where the skins are dressed and dyed and sold at public auction. This city is now the largest fur market in the world.

A striking phenomenon of the modern economic world is the integration of capital into corporations, combinations, trusts, holding companies, and kartells which at times rival even governments in power. These large aggregations of wealth have given industrial and financial leaders great power and have created problems for constructive statesmanship both in domestic and in international affairs.

COMBINATIONS DISCOURAGED IN

DOMESTIC TRADE

Combinations of producers for the purpose of controlling the market are common in modern business organization. In the United States not only the state governments but the Federal Government has attempted to limit their power and regulate their activities. The Sherman Anti-Trust Act (1890) and the act of February 12, 1913, provide:

Every contract, combination in the form of trust or otherwise, or conspiracy, in restraint of trade or commerce among the several States, or with foreign nations, is hereby declared to be illegal.

*

Every person who shall monopolize, or attempt to monopolize, or combine or conspire with any other person or persons, to monopolize any part of the trade or commerce among the several States, or with foreign nations, shall be deemed guilty of a misdemeanor,

Every contract, combination in form of trust or otherwise, or conspiracy, in restraint of trade or commerce in any Territory of the United States or of the District of Columbia, or in restraint of trade or commerce between any such Territory and another, or between any such Territory or Territories and any State or States or the

District of Columbia, or with foreign nations, or between the District of Columbia and any State or States or foreign nations, is hereby declared illegal.

The several circuit courts of the United States are hereby invested with jurisdiction to prevent and restrain violations of this act;

That every combination, conspiracy, trust, agreement, or contract is hereby declared to be contrary to public policy, illegal and void when the same is made by or between two or more persons or corporations either of whom, as agent or principal, is engaged in importing any article from any foreign country into the United States, and when such combination, conspiracy, trust, agreement, or contract is intended to operate in restraint of lawful trade, or free competition in lawful trade or commerce, or to increase the market price in any part of the United States of any article or articles imported or intended to be imported into the United States, or of any manufacture into which such imported article enters or is intended to enter.

A large number of decisions have been handed down by the courts in the anti-trust cases. Both restraint of trade voluntarily among competing groups and unfair competition have been held illegal. A further step toward regulation of business practices was taken in 1914 when the Federal Trade Commission Act was enacted. One of the purposes of this Act is to stop unfair methods of competition before they result in the elimination of competitors, i.e., to nip monopoly in the bud, as was claimed. Under this Act a valuable body of commercial law for the regulation of business is developing.