where credits are not opened properly. In such and similar cases of emergency the "association" might feel justified in selling the goods, when actually purchased by others for export, in order to save itself from loss. The burden of proof that an emergency actually existed would rest on the "association."

But the foregoing distinction between regular and emergency sales will not apply to sales of material by associations to domestic manufacturers who would use them in the process of manufacturing goods for export. As Mr. Bissell has pointed out (see "The Webb Act: Its Legal Aspects," page 11), such sales are not "acts in the course of export trade" merely. So far as the seller is concerned, such products or goods are consumed within the United States and come within the express exclusion of selling for consumption in this country.

IMPORTING BY ASSOCIATIONS.

Importing Precluded.

Is it lawful under the Webb-Pomerene Act for export associations to import goods, wares or merchandise? At first glance this question must be answered negatively. Section 1 of the Act clearly authorizes "solely trade or commerce in goods, wares or merchandise exported, or in the course of being exported from the United States or any Territory thereof to any foreign nation." Moreover, Section 2 of the Act exempts from the Sherman Anti-trust Act associations "entered into for the sole purpose of engaging in export trade and actually engaged solely in such export trade." In Section 5 the filing of certain statements with the Federal Trade Commission is required of associations engaged or which thereafter engage solely in export trade. These provisions of the Act seem to preclude importing absolutely. Furthermore, the debates on the Webb-Pomerene Bill in Congress show conclusively that it was the avowed intention of Congress to "accurately confine the Webb Bill to purely export trade."

1See e. g. Senator Kellogg's statement in the Congressional Record, Dec. 11, 1917, p. 165 fol.

Anti-trust Laws Prevent Import Trade Combinations.

In addition to the fact that the Webb-Pomerene Act limits the activities of export associations to export trade, several sections of the Wilson Tariff Act of August 27, 1894, as amended February 12, 1913, declare illegal, with certain restrictions, every combination engaged in importing into the United States. These anti-trust amendments of the Wilson Tariff Act1 have not been modified by the Webb-Pomerene Act and consequently are in force today. They provide as follows:

"Sec. 73. 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. Every person who is or shall hereafter be engaged in the importation of goods or any commodity from any foreign country in violation of this section of this Act, or who shall combine or conspire with another to violate the same, is guilty of a misdemeanor, and on conviction thereof in any court of the United States such person shall be fined in a sum not less than one hundred dollars and not exceeding five thousand dollars, and shall be further punished by imprisonment, in the discretion of the court, for a term not less than three months nor exceeding twelve months.

"Sec. 76. That any property owned under any contract or by any combination, or pursuant to any conspiracy, and being the subject thereof mentioned in section seventy-three of this Act, imported into and being within the United States or being in the course of transportation from one State to another, or to or from a Territory or the District of Columbia, shall be forfeited to the United States and

Exhibit 2, p. 407.

may be seized and condemned by like proceedings as those provided by law for the forfeiture, seizure and condemnation of property imported into the United States contrary to law.

"Sec. 77. That any person who shall be injured in his business or property by any other person or corporation by reason of anything forbidden or declared to be unlawful by this Act may sue therefor in any circuit court of the United States in the district in which the defendant resides or is found, without respect to the amount in controversy, and shall recover threefold the damages by him sustained, and the costs of suit, including a reasonable attorney's fee."

From the foregoing sections of the Wilson Tariff Act it appears, therefore, that an export association operating under the Webb-Pomerene Law would become guilty of a misdemeanor if it were to engage in importing any article from any foreign country into the United States 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 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.

Leading Case Under Wilson Tariff Law.

Under the anti-trust provisions of the Wilson Tariff Law of 1894 a petition was filed May 8, 1912, in the United States District Court, Southern District of New York, against Hermann Sielcken and others in connection with the famous Brazilian coffee valorization scheme. The government claimed that by means of certain contracts between the State of Sao Paulo, Brazil, and a syndicate of bankers and others, the disposition of a large quantity of coffee was placed in the hands of a committee, and competition in the importation into and sale of such coffee in the United States was controlled by such committee, whose operations resulted in doubling the retail price of coffee in the American markets. As Section 76 of the Wilson Tariff Act as it then stood, did not give the right of seizure when the property

owned under any contract, declared unlawful, is in course of being imported into the United States, or if it has been imported into, and is held in one of the States of the United States for the purpose of being employed in effectuating such an unlawful combination-the coffee held by Sielcken and others was not subject to seizure by the government. At the instance of the United States Department of Justice, Section 76 of the Wilson Tariff Act was therefore amended by Congress on February 12, 1913. The proceeding in equity brought by the government against Sielcken and others was dismissed in May, 1913, upon the advice of the State Department that representations had been made by the Brazilian Government that the entire quantity of coffee which was being withheld from the market had been sold to a large number of dealers throughout the United States.1

make

It will be noted that the provisions of the Wilson Tariff Act it unlawful for combinations of importers to increase domestic prices, while the Webb-Pomerene Act forbids intentional and artificial enhancing of domestic prices. On the other hand, we must not lose sight of the fact that the Wilson Tariff Act apparently does not inhibit absolutely all import trade by "combination, conspiracy, trust, agreement or contract," but only such cases which involve intent to restrain trade or to increase domestic prices.

Panama Canal Act Contains Anti-trust Clause.

Another law which contains a provision that may be applied to combinations engaged in importing is the Panama Canal Act of 1912. Under Section 4 of that Act "no vessel permitted to engage in the coastwise or foreign trade of the United States shall be permitted to pass through said canal if such ship is owned, chartered, operated or controlled by any person or company which is doing business in violation of the provisions" of the Sherman Anti-trust Act and of Sections 73 to 77 of the Wilson Tariff Act of 1894 or of ony other supplementary acts

See Annual Report of the Attorney General of the U. S., 1912, p. 19 fol., p. 10; also Sen. Doc. No. 36, 63rd Congress, 1st session. "Valorization of Coffee."

to those laws. The different kinds of traffic passing through the Panama Canal are foreign traffic, coastwise and export and import traffic, but nothing in the above quoted section indicates whether anti-trust laws shall apply to all three kinds of traffic or to any part of them.

Does Intent to Re-export Broaden Association's Rights?

Among the problems that have come up in connection with the question of whether or not export associations may engage in import trade under the Webb-Pomerene Act is the following: Is it lawful for export associations to import materials solely for use by its members and exclusively for the production of articles for export? Although the importation of such materials is not prohibited in so many words, nevertheless the law expressly states that the term "export trade" shall not include production and manufacture of goods, wares and merchandise for export. It follows that if production and manufacture for export is prohibited, the antecedent, importation of materials for use in connection with such production and manufacture, must also be prohibited.1

During the debates on the bill in Congress this subject was discussed as follows:2

"Mr. Cline: Does the bill also provide that these same combinations may establish a purchasing agency for purchasing raw materials in those same foreign markets?

Mr. Webb: No, but it is assumed that they can buy in America what they sell in foreign countries.

Mr. Cline: But they could not establish a joint agency for the purchasing of raw materials abroad?

Mr. Webb: The bill does not provide that. It is confined to 'export,' and 'export' can not mean 'import.' ***This agency could not engage in import business, and hence could not buy for this purpose." *** An association formed under this bill can only engage in export trade, and hence would not be permitted to buy raw ma

1See L. H. Bissell. "The Webb Act: Its Legal Aspects," New York, 1919, p. 9 fol.

2Congressional Record, Aug. 31, 1916, p. 15811 fol.