tions of international trade as a means of avoiding disaster in the shock of the stern and determined competition that will doubtless follow the war."

These declarations and recommendations the Trade Commission supported in December, 1916, with 400 pages summarizing trade conditions abroad and 600 pages further of detailed evidence.

WEBB BILL.

A bill which follows the recommendations of the Trade Commission and accords with the principles advocated by the national chamber has taken the name of the chairman of the House Committee on the Judiciary who introduced it. passed the House on September 2, 1916, by a vote of 199 to 25, and is now before the Senate Committee on Interstate Commerce.

The text of the bill is printed at page 15. The members of the chamber are asked to place their views in writing before the Senators of their States and the Congressmen from their districts.

II.

THE BILL.

Definitions constitute the first section. They indicate the precise effect of the language of the sections that follow. Thus, export trade is defined to mean solely export to foreign countries and to exclude expressly production or manufacture within the United States. Thus, combined production within the United States is prevented and at the same time freedom is left to meet certain conditions and laws abroad, such as laws of some countries which in effect require manufacture of patented articles within their borders.

The form cooperation may take is designated as an "association" and is described as a corporation or combination formed by contract or otherwise among two or more persons, partnerships, or corporations.

EXEMPTION FROM SHERMAN ACT.

Two express exemptions from the Sherman Act are made by the second section:

(1) An association is declared legal on three conditions, which must concur (a) that it is formed for the sole purpose of engaging in export trade, (b) that it actually engages only in the export trade, and (c) that it is not in restraint of trade within the United States.

(2) If an association brings itself within the exemption just described, an agreement made by it in the course of export trade, or an act done by it in the course of export trade, is likewise exempted from the Sherman Act, upon condition that the agreement or the act in question is not in restraint of trade within the United States.

UNFAIR COMPETITION.

In order that such an association as is made expressly legal for export trade may be prevented from interfering with the export trade of other associations and persons, unfair methods of competition in export trade, even through acts done in foreign countries, are forbidden. That this prohibition may be effective the Trade Commission is given power to investigate, either upon its own initiative or upon request of anyone, and to institute a formal inquiry. If it finds that unfair methods of competition have in fact been used, it may order them stopped and obtain the help of the courts to enforce its order.

Information about the operation of associations the Trade Commission will obtain not only through its ordinary powers of inquiry, but also through a special requirement, under penalty of $100 a day for delinquency, that associations for export trade file with it statements of all the essential facts of their organization and copies of all their agreements and contracts bearing upon he conduct of their foreign trade.

AMENDMENTS.

The House so amended the bill as to prevent the exemptions from the Sherman Act taking effect if there is restraint upon the export trade of the United States. As such language nullifies the whole purpose of the legislation and would in fact leave the situation as it is at present, this language should be eliminated. The language in question is printed in italics.

PRECEDENTS.

The principle of the bill has been repeatedly accepted by Congress. The Clayton Act of 1914, a supplement of the Sherman Act, in its sections dealing with discriminations in prices and exclusive-agency contracts does not apply when goods are sold in the United States for export.

National banks are allowed to cooperate in conducting their operations abroad, being permitted by the law of September 7, 1916, to unite in owning stock in a corporation organized for this purpose.

Steamship lines may go still farther, according to another law of September 7, 1916. They are expressly exempted from the Sherman Act in agreeing to fix rates, controlling competition, pooling earnings, etc., unless the Shipping Board finds unjust discriminations or unfairness.

Thus only the manufacturers and merchants of the country lack remedial legislation in the export field. The pending bill is intended to cure the discrimination that will otherwise exist.

PURPOSES OF COOPERATION.

The bill as it stands very properly will permit more than common selling agencies if circumstances require. For export of many staples, like lumber, common selling agencies may very likely meet all the necessities of ordinary cases. A common selling agency for lumber, however, will have to operate shipping lines through ownership or charter. Patented articles which are handled in export trade illustrate the necessity of something more than a common selling agency, since the patents issued by some foreign countries are dependent upon the device being made within the country, thus necessitating manufacturing operations abroad. The tax laws of other countries practically necessitate organization of subsidiary companies under their special laws, as otherwise these countries tax the entire assets of the corporations that do business within their borders. In other instances the cooperation will take the form of acquiring goods in bulk and packing them in special containers, with special labels, devised to meet the customs and the laws of the countries to which shipments are to be made.

SPECIAL ADVANTAGES.

Cooperation in export trade affords special advantages to small concerns which have not great experience abroad. Many of these concerns are now unwittingly doing harm to American commerce abroad. Lacking experience and individually unable to support a special staff for selling abroad, they have so conducted their relations with several parts of Latin America, for example, as to call forth organized protests. If such concerns could enter into associations among themselves and collectively support a common agency that would make the contracts, arrange the credits, see to compliance with sample, superintend the shipping, etc., justifiable complaints on the part of foreign customers would be automatically obviated. Otherwise there may be national detriment in trade relations.

PRESENT LARGE EXPORTERS.

It is alleged the bill will encourage monopolies. On the contrary, in practical operation it will make competition possible where it has frequently been negligible. In 1915 the Federal District Court of New Jersey found as a fact that 90 per cent of the exports of steel were handled by one corporation in 1911 (223 Fed., 55, 97). Several years before the Bureau of Corporations reported that one company controlled upward of 80 per cent of the exports of petroleum products. Within the six months the agents of a group of houses have asserted that they handle at least 50 per cent of exports sent from the United States to Argentina.

Without cooperation concentration of export business is inevitable, because of the capital and experience requisite for success. Heavy investments are required of each concern that separately enters export trade. Recently there

have been reports, which there has been no opportunity to confirm but which illustrate conditions, that a large maker and distributer of medicinal remedies had found a special investment of $2,000,000 would be necessary if it entered Latin American markets.

III.

CONDITIONS ABROAD.

The conditions in foreign trade are daily becoming more pronounced and more adverse. The position of our exporters in having to deal singly with combination is growing more disadvantageous and at the end of the European war may be disastrous.

FOREIGN GOVERNMENTS IN TRADE.

The Governments of belligerent countries after war has ceased will have a paramount interest in promoting export trade, for to this trade they will very largely look for the wealth out of which they will pay their debts-interest and principal. The debts incurred during two and a half years of war aggregate $60,000,000,000; in other words, with the debts that existed already in 1914, the indebtedness of European belligerents is now about $90,000,000,000. Accordingly, at a time when our export trade is assuming national importance, our exporters will have to face foreign competitors that are not only in combinations of one kind and another with the sanction of their home laws and the laws of the countries where they operate, but which are developed through bonuses and even through governmental control. The purposes of foreign Governments may be very proper from their points of view, and may indicate enlightened statesmanship, but unless our exporters are given some degree of freedom to cooperate they will suffer severely from foreign governmental policies in trade.

CURRENT PREPARATION ABROAD.

The plans which are under way in Germany are not clear for want of news. Their nature can be pretty well imagined by our knowledge of combinations which have existed in the past.

Austria-Hungary's intentions can be seen in such combinations as the agree ment made in the autumn of 1916 among four banks with an express view to conditions after the war. In opening up commercial and industrial possibilities in Turkey they will act as an entity.

Because of ease of communication, England's plans are best known to us. It is confidently assumed in England that the Government will definitely encourage industry and that enlarged production and export will be the great source of prosperity.

The British Government, like other belligerents, has organized industry to support war, has undertaken to direct the purchases of its people in sugar, wheat, and other foodstuffs, has promoted construction of zinc smelters by remitting a substantial part of the tax on their "excess profits," has taken control of coal mines and not only supervised exports of coal to France and Italy, but it has served notice upon neutral shipowners that if they sell or time-charter any of their vessels without consent of the British Government they can not expect to get fuel at British coaling stations. As a controller of all import trade, the Government appears to be ready to use the country's purchasing power to affect prices in foreign countries. At any rate, the London Statist, commenting in December upon a recent order preventing the use of copper except for munitions, or its purchase abroad except upon governmental permission, said that the Government was actuated only by a purpose to decrease the price it pays in the United States for copper.

These are only illustrations of governmental action. An official committee on commercial and industrial policy indicated some six months ago that the board of trade had appointed special committees to devise plans for some six industries: Coal trade, iron and steel trades, engineering trades, textile trades, electrical trades, and shipping and shipbuilding trades.

Regarding other industries that might be essential, concerning steps that should be taken to recover home and foreign trade lost during the war, and about new markets that might be won, the British chamber of commerce were asked to express opinions.

That some of these plans are getting well advanced English comment indicates. On November 11, the London Statist, after commenting upon present activities of the Government on behalf of manufacturers and at the expense of merchants, said:

"Probably worse is to follow during the course of the war and after the war is ended. There are sinister rumors as to the establishment of great trusts or combinations in various trades, which are to be backed up by Government action or support. There is a very definite report that one of these enormous combinations is in connection with the steel trade, and there is reason to believe that the scheme in this instance is well prepared, and ready to be launched as soon as peace is declared, the capital running into tens of millions. * * * The developments which are surely coming, unless men of moderate and disinterested views take action, especially imperil the merchants, who have created and upheld this supremacy (in the commercial and industrial world) for the last 300 years."

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Scientific research is to aid industry in England as never before. In December a new government department, for scientific and industrial research, was created. Its permanent offices were to open on January 1, 1917. It is to have a large sum of money placed at its disposal by the Government, and private individuals are encouraged to give it money for special purposes. The purpose is to benefit "the national industries on a cooperative basis." Other parts of the empire, such as Canada and Victoria, are doing likewise.

There are other governmental activities, too. For instance the Government provides information about British steamship services and British forwarding agencies that may be used for shipments to all parts of the world. Various financial arrangements also are encouraged. A pair of Anglo-Italian companies, for example, have been formed in order that British banks could participate in the industrial development of Italy.

The success of enterprises aided by the Government will be tested after the war. Meanwhile, it may be significant that British Dyes (Ltd.), organized two years ago with a capital of $15,000,000 and a loan from the Government of $15,000,000 more on very favorable terms, in its first year of operation increased the floor space it uses by 27 acres, that it has become linked through an interallied company with a similar enterprise supported by the French Government, and that Italy is expected to organize a national dyestuffs works to form a third interest in the interallied company.

British combinations which apparently receive no direct aid are likewise doing well. In a fiscal year ending with August, 1916. a combination of wallpaper manufacturers not only made the greatest net profits since it was organized in 1900, but also arranged to take in nine new concerns.

OTHER SITUATIONS.

Some of our exporters have recently encountered new difficulties. Exporters of flour early in the war encountered obstacles when the Holland Government took over the import of flour as a monopoly of its own. Some of them later complained that England was discriminating, through ocean-freight rates, etc., in favor of wheat, in order that British millers might do the grinding. The latest news is that Japanese flour, through use of Japanese ocean-going facilities, has "nosed" flour from our Pacific coast out of the Hongkong market, where we sold flour valued at $4,500,000 in 1914.

AMERICAN EXPORTERS' SITUATION.

These conditions are merely illustrative of the situation in which American concerns of moderate capital find themselves. They believe that in their export trade as well as in their domestic business they are under a law which places such emphasis upon maintenance of competition among all units that their legal advisers can not assure them they can undertake cooperative effort in exporting. Two plans for export associations in the lumber business-one on the Pacific coast and one in the Southern States-are in abeyance, awaiting such legislation as the Webb bill proposes. At the same time that the American exporter faces prevention of cooperation he finds that his foreign competitors act under laws which emphasize freedom of contract as essential for public welfare, and even sees agents of his combined competitors come into the United States. Last summer French publishers formed an organization and sent a representative to open an office in New York.

[H. R. 17350, Sixty-fourth Congress, first session.]

AN ACT To promote export trade, and for other purposes.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That the words export trade " wherever used in this act mean 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; but the words " export trade" shall not be deemed to include the production, manufacture, trading in, or marketing within the United States or any Territory thereof of such goods, wares, or merchandise, or any act in the course of such production or manufacture.

That the words "trade within the United States" wherever used in this act mean trade or commerce among the several States or in any Territory of the United States, or of the District of Columbia, or between any such Territory and another, or between any such Territory or Territories and any State or States or the District of Columbia, or between the District of Columbia and any State or States.

That the word "association" wherever used in this act means any corporation or combination, by contract or otherwise, of two or more persons, partnerships, or corporations.

SEC. 2. That nothing contained in the act entitled "An act to protect trade and commerce against unlawful restraints and monopolies," approved July second, eighteen hundred and ninety, shall be construed as declaring to be illegal an association entered into for the sole purpose of engaging in export trade and actually engaged solely in such trade, or an agreement made or act done in the course of export trade by such association, provided such association, agreement, or act is not in restraint of trade within the United States, and does not restrain the export trade of the United States.

SEC. 3. That nothing contained in section seven of the act entitled "An act to supplement existing laws against unlawful restraints and monopolies, and for other purposes," approved October fifteenth, nineteen hundred and fourteen, shall be construed to forbid the acquisition or ownership by any corporation of the whole or any part of the stock or other capital of any corporation organized solely for the purpose of engaging in export trade, and actually engaged solely in such export trade, unless the effect of such acquisition or ownership may be to restrain trade or substantially lessen competition within the United States.

SEC. 4. That the prohibition against "unfair methods of competition" and the remedies provided for enforcing said prohibition contained in the act entitled "An act to create a Federal Trade Commission, to define its powers and duties, and for other purposes," approved September twenty-sixth, nineteen hundred and fourteen, shall be construed as extending to unfair methods of competition used in export trade against competitors engaged in export trade. even though the acts constituting such unfair methods are done without the territorial jurisdiction of the United States.

SEC. 5. That every association now engaged solely in export trade, within sixty days after the passage of this act, and every association entered into hereafter which engages solely in export trade, within thirty days after its creation, shall file with the Federal Trade Commission a verified written statement setting forth the location of its offices or places of business and the names and addresses of all its officers and of all its stockholders or members, and if a corporation, a copy of its certificate or articles of incorporation and by-laws, and if unincorporated, a copy of its articles or contract of association, and on the first day of January of each year thereafter it shall make a like statement of the location of its offices or places of business and the names and addresses of all its officers and of all its stockholders or members and of all amendments to and changes in its articles or certificates of incorporation or in its articles or contracts of association and of all contracts, agreements, and understandings had with any foreign or domestic association in regard to the conduct of or practices in foreign trade. Any association which shall fail so to do shall not have the benefit of the provisions of section two and section three of this act, and it shall also forfeit to the United States the sum of $100 for each and every day of the continuance of such failure, which forfeiture shall be payable into the Treasury of the United States and shall be recoverable in a civil suit in the name of the United States brought in the district where the association has its principal office or in any district in which it shall do business. It shall be the duty of the various district attorneys, under the direction of the Attorney