printing presses, machinery, ink, stationery, other printing supplies. A firstclass salesman can be a specialist in all articles of a kindred line. Arriving, for instance, at Bahia, Brazil, he will discover in a day that no demand exists for printing presses, but can employ time, while waiting for the next ship, in selling paper, type, or ink. Experienced foreign traders attach the greatest importance to the handling of full lines; one article sells another, and salesmen are kept constantly employed, and a more direct representation is obtained by abler selling forces than individual companies can afford.

DOUBT HINDERS GROWTH OF EXPORT TRADE.

It is not within the province of this committee to present a legal discussion of the extent to which the antitrust laws apply to or do not apply to export trade. A condition and not a theory exists. The debates of Congress on the Sherman antitrust laws in 1890 reveal no intention by the framers of these statutes to throttle enterprise, and the foreign trade was specifically exempted from certain provisions of the Clayton Act. This committee's inquiries and the evidence submitted at three national foreign trade conventions support the conclusions of the Federal Trade Commission, namely:

"Doubt as to the application of the antitrust laws to export trade now prevents concerted action by business men in export trade even among producers of noncompeting goods."

And the then chairman of the Federal Trade Commission, Hon. Joseph E. Davies, speaking with the knowledge of the responses to its questionnaire sent to 30,000 corporations, firms, and individuals, told 500 exporters at New Orleans:

"Our investigations disclose that doubt as to the legality of such enterprise amounts in many instances to prohibition of any action in the foreign market. This belief is undoubtedly one of the factors in the situation which hinder the development of foregn trade."

The right of cooperation should be sufficiently unrestricted to permit whatever organization is required in good faith to forward export trade.

National interests, no less than the welfare of certain industries and the labor thereupon dependent, require that the right of cooperation equally extend to competing and noncompeting lines, without regard to extent of operation or capital, and that the organization of cooperative effort possess no compulsory features as to participants not characteristic of the formation of the ordinary corporation, except that for filing essential information with the Federal Trade Commission..

The Federal Trade Commission has pertinently called attention to apprehension that "cooperative export organizations may be used to exploit the home market and they may be used unfairly against individual American exporters in foreign trade.".

This committee agrees with the Federal Trade Commission that the enforcement of the antitrust laws will be sufficient to prevent cooperative export organizations from reacting in an unreasonable restriction of domestic commerce. This safeguard is necessary and right.

FOREIGN CONSUMERS FULLY PROTECTED.

It has been contended that the United States should not, while forbidding combinations among its own people in domestic trade, encourage them to go abroad and "exploit" foreign markets. This idea rests on two fallacies: First, that the Webb bill has no safeguard against avaricious or usurious exploitation; and, second, that foreign peoples are without protection against such exploitation. So far as competitors in the export trade from the United States are concerned, the bill expressly gives such competitors the protection of the prohibition of "unfair methods of competition" contained in the Federal Trade Commission act. And, as far as foreign competitors and consumers are concerned, the world is now almost completely wrapped in a blanket of antitrust law composed of statutes which the people of various countries have devised for their own protection from oppression by commercial or industrial combinations, foreign and domestic.

Antitrust legislation is by no means peculiar to the United States. No subject has so universally occupied the attention of Governments everywhere. The United States Department of Commerce, through its Bureau of Corporations, has issued an exhaustive report, entitled "Trust laws and unfair competition,"

compiled by the Hon. Joseph E. Davies, former Commissioner of Corporations, and now of the Federal Trade Commission. This reprt says: "The laws in foreign countries concerning trusts, or combinations to control the market, present a great variety of governmental policy, extending from prohibition under the criminal law to compulsory obligation to form such combinations in certain sperific cases." Seventy pages of this report are devoted to review of the antitrust laws, both statutes and judicial proceedings, of Great Britain, Canada, Australia, New Zealand, Union of South Africa, British India, Egypt, Germany, Austria, Hungary, France, Italy, Spain, Portugal, Switzerland, Belgium, Netherlands, Sweden, Norway, Denmark, Russia, Roumania, Turkey, Greece, Brazil, Argentina, Colombia, Mexico, Japan, and China. With the countries named is conducted approximately 90 per cent of the total foreign trade of the United States. Americans in foreign trade, no matter where they operate, are therefore seldom beyond the control of the antitrust laws expressly designed to meet the conditions of each market.

It is significant that these laws for the most part go to the effect of combinations or cooperations in business, rather than to their form, and that the trust legislation of no country other than the United States shrouds in debilitating doubt the export enterprise of its citizens by restrictions as to form regardless of the public benefit.

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In its report on Cooperation in American export trade" the Federal Trade Commission says:

"In domestic business, competition, independence, and the play of the individual forces is the settled policy of this country. The law requires that this shall be the condition of business here. Abroad, the legal conditions are different. In many countries combination is permitted and in some is even encouraged. What is equality of opportunity for manufacturers within this country, therefore, becomes inequality and disadvantage for them when they undertake to export to other countries."

NO LIKELIHOOD OF MONOPOLY IN EXPORT TRADE.

No stranger misapprehension exists than the occasionally expressed fear that the Webb bill might promote the monopolization of American export trade by large concerns. Under present conditions, with the law unfavorable to cooperation in export trade, certain avenues of export enterprise are closed to all save those which have capital and other resources to patiently develop markets without immediate profits, to sustain, if need be, initial losses, and to effect economies of sale and distribution inseparable from large volume of business.

The pending legislation is designed to permit business units now lacking this foreign selling power to unite their resources in cooperative foreign selling organizations without losing their identities in domestc commerce. The fact that the bill forbids an export association itself to engage in the manufacture within the United States of the wares it is organized to market abroad is an organic check to the extension of the cooperation to domestic trade.

The ultimate size of cooperative foreign selling companies will naturally vary in different lines. It is economically demonstrable that in every commercial or industrial activity there is a point beyond which increased capital and organization are not attended by proportionate increases in efficiency. Business experience may be relied upon to hold organizations below this point. The conception of a single company, or even a dozen companies, monopolizing the widely diversified export trade of the United States is wholly fanciful. The marketing of American merchandise, especially manufactures, must largely depend upon specialization. It is European experience that specialization in a large number of lines and markets widely separated is not within the practical resources of a single organization.

EXPORT COMMISSION HOUSES SAFE.

Some export trading houses and commission merchants have expressed apprehension that the liberty of cooperation provided in this bill would subject them to the competition of powerful combinations and threaten their independent existence. This is due to misunderstanding of section 3 of the bill, providing that the Clayton Act (approved Oct. 15, 1914) shall not be construed to forbid the acquisition or ownership by any corporation of the whole or any part of the stock or capital of any corporation organized solely for the purpose of engaging

in export trade, unless the effect of ownership may be to restrain trade or substantially lessen competition within the United States. The necessity of section 3 springs from the fact that action by corporations is the most natural method of cooperation in American business, rather than action by individuals. This is necessary to enable a manufacturing company or other industrial organization to own stock in the export association through which he desires to cooperate with others, as the bill encourages him to do. By limiting such exemption from the Clayton Act to corporations organized solely for the export trade and actually engaged solely therein, there can be no possibility of unified control of export commission-house business, for the most of them are corporations with powers much broader than exclusive occupation in export trade and are therefore not within the exemption. The principle of cooperative action in export trade, the better to meet the highly organized competition of foreign rivals and to resist cooperative foreign buying, is favored by many export merchants and commission houses, if the legislation imposes no disadvantage on their class of business, which, in the opinion of this organization, it does not. Probably in no other business is the need of experienced service and specialized knowledge so great, and so long as export merchants and commission houses provide them their business will continue indispensable to many. The cooperation which this legislation is designed to permit is not intended to eliminate, but to supplement, their service. Indeed, there is every reason to believe that it will be as valuable to them as to any other class of business men engaged in foreign trade.

EFFECT ON DOMESTIC PRICES.

The influence of export cooperaton upon domestic prices has been the subject of some discussion. In Appendix C' of this report is given the evidence that one of the largest American industries, controlling about 40 per cent of the total American production in this line, was able to sell during a 10-year period abroad on a scale of steadily increasing prices, while at home its prices decreased. This is the closest approach that can now be cited to the effect of cooperative effort.

The Federal Trade Commission has given particular attention to this point, and finds that the effect of increased export trade upon domestic prices is not likely to be affected one way or the other by the fact that increasing export trade is being done by cooperation or otherwise. The commission's report on · Cooperation in American export trade" says (pp. 376, 377):

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"The question may be raised as to the effect of export combinations on prices in this country. Prices to the domestic consumers are always likely to be affected where changes occur in the volume of export trade, whether such changes are due to the efforts of an export combination or to other causes. For some products, particularly among manufactured articles, there may be some lowering of the domestic price. With the broader market, larger scale manufacture will be possible. The resulting economies may lower the cost of production per unit, and with competition in the domestic market the natural tendency under such conditions of lower cost would be lower prices to the domestic

consumer.

"On the other hand, prices to the domestic consumer may, in some instances, be raised through an increase of exports brought about by encouraging producers to seek a broader market for American products. The rise may be either temporary or permanent, according to the particular circumstance under which the commodity is produced; but in either instance it will be the result simply of increased exports. The domestic price for certain manufactured goods might be temporarily raised, but be followed by an increase of productive capacity, which would augment the supply and bring down the price. Should, however, the commodity be a raw material of the kind that increases in cost per unit as the quantity is increased, or a manufactured article in which such raw materials are the principal factors of cost, then there is likely to be not only temporary but also a permanent rise in both the domestic and export prices. This would happen regardless of whether the increased exports were due to export combinations or to other causes.

"When competitive forces are given free play price adjustments of this character have been the rule in the past and will continue to be in the future. They are a consequence of the broadening of a local market for a commodity into a national and eventually into a world market. An increase in facilities for

1 Not printed.

developing the export trade will merely accelerate the period of transition in the same general manner as would result from an increase in facilities of transportation in any region of supply by furnishing a link between demand and supply, and thereby giving the supply an increased value.

"The foregoing discussion relates solely to commodities in which the prices are fixed by competition. Any increase in the domestic price due to actions in restraint of trade to which American firms might be parties, including any accomplished through participation in so-called international agreements between themselves and foreign firms, can and must be dealt with, as already stated, under the provisions of the antitrust laws."

THE WEBB BILL.

The bill as passed by the House and now awaiting the Senate's action is as follows. The two House amendments, the elimination of which the council recommends, are indicated in italic:

[H. R. 17350. 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 of 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. association" wherever used in this act means any corporation or combination, by contract or otherwise, of two or more persons, partnerships, or corporations.

That the word

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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 export 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 with 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 monopoly, 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 thereafter 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 General of the United States, to prosecute for the recovery of the forfeiture. The costs and expenses of such prosecution shall be paid out of the appropriation for the expenses of the courts of the United States.

Passed by the House of Representatives, September 2, 1916.

ELIMINATION OF AMENDMENTS NECESSARY.

The effect of the House amendment, providing that "export trade" shall not be deemed to include "trading in or marketing" within the United States, might be to prevent an export association, such as this bill is intended to encourage, from buying the very goods it is organized to export. Of course the export association is not expected to trade in or market goods in domestic trade further than their purchase may be considered “ trading in." One of the advantages of combinations among producers and manufacturers for export trade is the relief of the manufacturer or producer from the cares and responsibilities of financing the export shipment. This necessitates the actual sale of the goods to the export association which, upon its own capital and credit, would then finance the over-sea sale, the manufacturer's capital not being tied up in foreign credits, but remaining available for the constant turnover necessary to manufacturing success. But if "trading in or marketing" are prohibited to the exporting association it would, seemingly, have to await the delivery to it, as an agent, of the goods it is to export. It is evident from the debate that the amendment was not designed to prevent anything but the control of the domestic market for cotton, grain, and other natural products in the United States, and that its authors scarcely contemplated the denial of supply to the export associations which the Webb bill authorizes. Undue restraint of the domestic market is forbidden by the antitrust laws, which remain in undiminished effect as to domestic trade.

On this point the Federal Trade Commission says (annual report, p. 36. 37): "In order to permit cooperation with respect to foreign trade, the term 'export trade' was originally carefully defined to exclude the production or manufacture of goods within the United States, but the amendment made it also exclude 'trading in or marketing' such goods within the United States. Obviously a successful cooperative export organization would, in most cases, be obliged to purchase goods in the United States and therefore to trade in them.” Another amendment contradictory of the purpose of the bill is that which provides that the export associations, agreements, etc., to be exempted from the antitrust laws must not "restrain the export trade of the United States.” Such associations technically do "restrain the export trade of the United States," and the purpose of the bill is to permit them legally so to do because they are in the public interest. The protection of their competitors is provided. in extension of the unfair competition prohibitions to export trade. Again the Federal Trade Commission says:

"The second amendment referred to is found in the second section. This: originally granted the right of cooperative association for export trade, pro-vided such association did not involve restraint of trade within the United States.' But the amendment added a further proviso, namely, and does not restrain the export trade of the United States.'

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