The British Government has since adopted a policy of direct aid to export and import enterprise announced in the following news despatch:

LONDON, August 1.

“The Government will ask Parliament to sanction a State subsidy of $250,000 yearly for a decade to the newly formed British and Italian Trading Corporation. Reginald McKenna, Chancellor of the Exchequer, announced this in the House of Commons. The corporation which has a capital of $5,000,000 subscribed privately by banks, is for the purpose of assisting trade and commerce between Great Britain and Italy.”

The subsidy has since been granted. Italy has likewise encouraged a similar organization.

The Berlin Chamber of Commerce (see London Times. June 13, 1915) has announced that "the supply of raw materials for industry will be the most important after the war and that as much shipping as possible must be kept free for raw materials."

Germany already has a number of highly organized "war material companies" originally formed by order of the war office with the intention of having a central organization for the transaction of the war office's business with the individual manufacturers. With the progress of the war the institution has been very much improved upon and the war material companies are now not only the buyers of raw material, but they also preserve the existing materials. They do not only deal with the war office but also with the manufacturers; in fact they have virtual control of the whole raw material organization of the country.

The leading units are: The War Metal Co., The War Chemical Co., The War Wool Co., The War Leather Co., The War Jute Co., and others.

Behind them stand the total credit and force of the central government. Each material company again is subdivided in different other companies having for their purpose the collection of raw materials, the buying outside Germany, the distribution to manufacturers, etc. To make the work effective, agencies of the different companies are spread throughout Germany and are conducted as a rule by the chamber of commerce or other governmental or semigovernmental bodies.

Each company is governed by a board consisting of leading manufacturers and representatives of the Government.

Further, there was formed in Hamburg, under the direction of the wellknown shipping man, Director Ballin, of the Hamburg-American Line, the Imperial Buying Bureau (Reichs Einkaufsbureau), which, most likely, will act as the head buyer for the German interests after the conclusion of peace.

This whole organization will be put at the disposal of the German industry when peace comes. It is already further augmented by the formation of local export associations. These organizations also stand under the direction of the local chambers of commerce, which in Germany are governmental bodies.

The Russian Ministry of Agriculture is importing agricultural machinery for its subjects, who would be unable individually to overcome the shipping difficulties.

In contrast to this progress toward cooperation on the part of nations with which three-fourths of normal American foreign trade is conducted, American exporters are not even able collectively to help themselves.

COOPERATION VERSUS COMPELLED COMPETITION.

Continuation of the present condition spells European cooperation, industrial and governmental, versus American compelled competition.

This spectacle prompted another speaker at the Third National Foreign Trade Convention to say:

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'Imagine a squad of recruits, responding patriotically to their country's call for foreign service, paying out of their own pockets for their equipment and training; studying in solitude the use of their equipment, with no assistance from the Government except a correspondence course of instruction; and then, without ever having had any company or battalion drill, being sent to the front with the plaudits and best wishes of their grateful country and with the warning that if they ever fight or even drill as a coordinated army or in any way except as unrelated individuals they will be liable, when they return home, to court-martial and public disgrace! That is the situation of our exporters to-day." (Gilbert H. Montague, Third National Foreign Trade Convention, New Orleans, January, 1916.).

CHARACTER OF AMERICAN EXPORTS.

The need of unquestioned right to operate is shared by two main classes of American exports. In the normal year of 1913 the United States exported merchandise valued at $2,448,000,000, which, from the standpoint of the effect of organized foreign competition, may be divided as follows: Raw and partly manufactured products, $1,076,000,000; manufactured products, $772,000,000, or about 68 per cent raw and 32 per cent manufactured.

Since Europe's existence in the industrial world depends upon importation of raw materials and reexportation of a considerable portion of them in far more valuable manufactured form, European cooperation is used as a twoedged sword to cut the prices of raw and partly manufactured products imported from the United States and to undersell or otherwise defeat American export manufacturers. It is significant that of the $772,000,000 of manufactured exports in 1913, $430,000,000, or nearly 60 per cent, are included in the three classifications, agricultural implements," "mineral oil," and "iron and steel," the three lines of industry built up by large corporations based upon the principle of cooperation, and possessing capital, resources, and ability to withstand initial losses, comparable to the cartels and cooperative selling organizations of Europe. But this advantage of organization for foreign trade is not enjoyed by many industries of moderate size whose administration and labor require a foreign outlet.

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The enactment of permissive legislation for cooperation in export trade is urged by this committee for the following nationally necessary purposes:

CONSERVATION OF NATURAL RESOURCES.

1. To conserve natural resources of the United States and prevent their being used to halt American export trade now vital to domestic prosperity.

2. To extend export of manufactured products of American labor and industry. 3. To enable the smaller producer, manufacturer, and merchant more effectively to enter foreign trade.

The United States in 1913 exported $586,000,000 worth of raw cotton, $490,000,000 worth of foodstuffs, agricultural food products and animals, $107,000,000 worth of forest products, and $248,000,000 worth of metals and minerals. These formed the bases of manufactured merchandise sold in competition with the United States in the world's markets.

FOREIGN CONTROL OF COPPER PRICES.

"In 10 years ending 1913 a number of large copper-producing companies of the United States sold through their several selling agents 5,560,000,000 pounds of copper, of which 2,580,000,000 pounds was sold to domestic consumers and 2,980,000,000 pounds to foreign consumers, bringing a total of $821,000,000 in money. The foreign buyers paid an average price of 14.38 cents per pound delivered at foreign ports, the domestic buyers an average price of 15.21 cents per pound delivered at home, or $0.0083 per pound more than the foreigners paid. If other producers sold at about the same average price, the foreign manufacturers who put labor and profit into our copper for the markets they were supplying had a handicap of $50,000,000 in that period as against the American manufacturers, in spite of the fact that producers of raw copper have had no tariff protection or any governmental help to keep domestic prices higher. The handicap is simply the result of the advantage combined foreign buying has had as against competitive selling, and the domestic manufacturer could not take the same advantage because the law of this country was holding him and the foreigner's law was pushing him." (John D. Ryan, president Anaconda Copper Mining Co., First National Foreign Trade Convention, Washington, D. C., 1914.)

FEDERAL TRADE COMMISSION VIEW.

The legislation now pending in Congress results from a process of inquiry begun by Congress when, in 1914, it created the Federal Trade Commission and empowered it to investigate "trade conditions in and with foreign countries where associations, combinations, or practices of manufacturers, merchants, traders, or other conditions may affect the foreign trade of the United States, and to report to Congress thereon with such recommendations as it

deems advisable." A summary of the recommendations of the Federal Trade Commission is published as Appendix A of this report, and the report of the investigation is contained in two volumes, published by the Federal Trade Commission and entitled "Report on cooperation in American export trade." This is a most complete view of the methods of competition and government regulation throughout the world, and should be in the hands of every public official and American citizen interested in foreign trade. Unfortunately, the commission is prevented by law from printing more than 2,500 copies. Congress should be urged by all persons interested, immediately to authorize the publication of at least 20,000 copies.

The commission's recommendations are contained in the concluding paragraph of the summary of its reports:

"By its investigation the commission has established the fact that doubt as to the application of the antitrust laws to export trade generally prevents concerted action by American business men in export trade, even among producers of noncompeting goods. In view of this fact and of the conviction that cooperation should be encouraged in export trade among competitors as well as noncompetitors, the commission respectfully recommends the enactment of declaratory and permissive legislation to remove this doubt. This recommendation is made subject to the condition that the legislation shall be carefully safeguarded and shall make absolutely clear that the combinations for export business are subject to all the rigors of the Sherman law if they are used to restrain trade in the United States."

The following extract from the Federal Trade Commission report graphically presents one necessity:

"In various markets, American manufacturers and producers must deal with highly effective combinations of foreign buyers. Thus, exporters of lumber find such combinations in Australia and the continent of Europe. Cottonseed products are hardled by combinations of buyers in Holland, L'enmark, and Germany. Combinations of British coal brokers fix the contract price for bunkering ships at Newport News, Va. Four London firms known as the Fixing Board daily set the price of silver for the world, and American mining companies must sell their silver for either the English or the great Indian market to one of these four houses.

"Our forests constitute a rich source of timber, our coal measures are among the greatest known, our phosphate rock deposits parallel the potash beds of Germany, our copper mines produce more than half the world's output and are necessary for the world's demands. Other nations take measures to conserve their natural resources."

CHEAP RAW MATERIALS SHARPEN EUROPEAN COMPETITION.

"This country, which is the great storehouse of the natural resources of the world, has practically thrown away its substance, robbed its mines, its forests, and its soil, and sold its natural resources in competition with itself, one forest tract with another, one mine with another, and one farm with another, in the severest and bitterest kind of competition everywhere in the world." (John D. Ryan, president Anaconda Copper Mining Co., to the Federal Trade Commission, June 3, 1915.)

Whenever the export price of American raw materials is forced below the domestic level, the chances are increased for the European manufactured merchandise made from American raw materials to hold neutral markets against similar American merchandise. At best, the exportation of raw materials is less profitable to the Nation than export of finished manufactures in which labor represents a large proportion of value. The disadvantage is compounded if foreign interests can buy our natural resources more cheaply than Americans and utilize the manufactures therefrom fabricated to block the wider outlet which American industrial enterprises and labor require in the world's markets.1

1" It is a daily occurrence to get a cable from our London representative saying that so and so is in the market for 1,000 tons of copper and will give us the business on equal terms with A' who is our competitor and whom the buyer represents as offering 10 shillings under us. Now A's' office is only two blocks from my office, but I don't dare call him on the telephone to ask whether that consumer in England or Germany is telling the truth. I might be violating the law. The chances are 9 in 10 that the foreign consumer is not telling the truth, but is simply stating that somebody is quoting 10 shillings under for the purpose of trying to bring our man down to the basis of the quotation he wants. But we fight one another and the consequence is that the buyer gets the advantage." (John D. Ryan, president Anaconda Copper Mining Co., before the Federal Trade Commission, New York, June 3, 1915.)

AN EXAMPLE OF GERMAN POLICY.

When, several years ago, the formation of a private potash selling association became doubtful, the Prussian minister of commerce publicly declared that the prospective loss to domestic production might reach $5,000,000 annually. "In such a case," he said, "I have to consider whether the flowing off of profit toward foreign countries during the time when there is no syndicate could not be prevented." And he drew up a bill designed to prevent any condition arising in which foreigners would derive a greater benefit from the potash deposits than Germans themselves. Americans were obliged to pay for German potash a price which safeguarded every related German interest, but meanwhile Germany was getting its cotton, wheat, corn, oil, metals, and lumber from us by whatever device it found effective to hammer down American prices. The simple truth is that, under existing conditions, the United States is provisioning and equipping its foreign-trade rivals more cheaply than it provisions and equips itself—is, in fact, subsidizing them against the American people.

COOPERATION NECESSARY TO EXPAND EXPORTS.

"One week of European war did more than 10 years of academic discussion to convince American people that foreign trade is a vital element in domestic prosperity." (James A. Farrell, president Untied States Steel Corporation and chairman of the National Foreign Trade Council.)

The American industries presenting the most unbroken record of prosperity and sustained labor employment are those which regularly market oversea from 10 to 35 per cent of their product.

It is clearly demonstrable that the average cost of manufactured products in Germany, England, France, Japan, and other countries is greatly below that of America. It is equally demonstrable that the average cost of distribution of their manufactured products by foreign countries is much lower than that of American products, due in a large measure to perfect freedom to conduct their foreign trade without the hampering restrictions which lie upon American manufacturers and producers.

REDUCES OVERHEAD.

"With a reduction in the ratable cost of distribution-that is, the overheadit would be possible to reduce the selling price if that were necessary to meet the foreign competition. In many situations, on the other hand, by lessening the destructive competition, selling prices abroad might be raised. Cooperation which obtained for our products maximum prices from the foreign buyer at a minimum expense to our exporters would be an economic advantage to American industries.

"Since export cooperation would lower the cost of distribution and, by the added output, the cost of production as well, the home consumer in consequence would benefit to the extent that the manufacturers were able to reduce their unit costs." (M. A. Oudin, manager foreign department, General Electric Co., Schenectady, N. Y., Third National Foreign Trade Convention, New Orleans, January, 1916.)

Since the American wage scale is the highest in the world and even the inroads of war upon the artisan class are unlikely to raise the European scale to its level, our foreign trade labors under an initial disadvantage which can be offset only by greater efficiency in manufacture and distribution. The legal doubt which retards formation of cooperative foreign selling organizations is a bar to the achievement of the efficiency attained by European rivals.

'Everyone engaged in foreign trade knows that cooperation, concentration and capital are needed to secure a large volume of export trade. *** It takes years of time, volumes of money, and much patience to get established, and when success comes a strong organization must be maintained and a large volume of business done in order to show a profit on the balance sheet. The sooner American merchants realize this the better, for the export trade of the United States is well worth having." (W. L. Saunders, chairman, the Ingersoll-Rand Co., at the Second National Foreign Trade Covnention, St. Louis, January, 1915.)

INDORSED BY NATIONAL REFERENDUM.

The principle of "amending the Sherman Act to allow a greater degree of cooperation in the conduct, and for the protection of the foreign trade" was

approved in a referendum of the Chamber of Commerce of the United States 536 organizations voting in favor of it, and only 67 against.

In February, 1915, a special committee of the Chamber of Commerce of the United States indorsing the principle now embodied in the Webb bill declared that the necessity for this legislation existing before the war "will acquire a far greater significance when the nations now at war, whose foreign trade has been curtailed, again enter into competition for foreign markets. The situation created by the unexpected war in Europe gives ground for urging immediate action."

The committee on the Federal Trade Commission of the Merchants' Association of New York declared:

"The Webb bill promises freedom to American export trade, opportunity to smaller American manufacturers, and stimulus to our entire American com mercial and industrial life; and the prompt passage of the bill by Congress with the modifications above suggested (technical details), is, therefore, strongly urged.".

SPECIFIC ADVANTAGES OF COOPERATION.

In exportation of manufactures, whether competing or noncompeting, cooperation will permit :

Maintenance of highly organized export service at minimum cost to partici pants, employment of American advantages in advertising, technical demonstra tion, and "follow-up" methods.

Improved credit information and financing of foreign sales, more advantageous traffic contracts through greater and regular tonnage, superior facilities for customs brokerage, warehousing, etc.

Assumption, by the cooperative organization, of credit extension which manufacturers, dependent upon a quick turnover of capital, are unable to provide. Survival of initial losses, fatal to an individual company, which are some times incurred before American goods gain a foothold.

Division of foreign business upon an agreed basis adapted to the mutual interest of all participants from the standpoint of sustained labor employment. and ability to produce at a price to meet foreign competition.

COOPERATION AMONG COMPETITORS.

Cooperation among competitors in a given line will permit retention of the highest talent for foreign representation. This is necessary for engineering products, the sale of which is often related to development projects by Governments or large financial interests. The maintenance abroad of repre sentatives with wide technical experience, initiative, and commanding personality is beyond the means of any save the largest corporations and is not justified by the volume of business available to a single company dividing the field with others. Cooperating competitors could reduce the overhead and increase the efficiency of export sales by division of orders so that each com. petitor would fill only those orders he is best fitted to execute in the quickest time at the lowest cost.

American manufacturers in the same line frequently engage in destructive competition for foreign construction contracts. Where elaborate plans must be submitted, the expense spells loss for those who fail and decreases the profit of the successful. Bidders on railway and power projects sometimes spend $100,000 in preparation of bids. Other advantages are improved distribution of comparatively small articles manufactured by different factories, none of which may be in sufficient demand to warrant the establishment of individual selling agencies and all of which must meet with keen foreign competition in one form or another; also improved handling of articles of constant consumption sold at low prices and at small profit on which service and ability to handle promptly and regularly are of prime necessity. Again, orders too large for a single factory promptly to fill can be effectively handled by a cooperative organization representing a number of competitors.

COOPERATION BY NONCOMPETITORS.

Joint effort by manufacturers and merchants in kindred but not competing lines would permit the following economic advantages:

Development of "full lines" as, for instance, axes, hatchets, carpenters' tools, and building hardware or (as has been successfully tried) paper, type,