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It was not within the purview of this act that the operations of a WebbPomerene association should become a device for betterment of a domestic market. Its sole purpose was the lessening of competition between domestic exporters in the foreign markets. It is exceedingly difficult to distinguish between a betterment of the domestic market expressed in a rising domestic price which is the result of the proper coordination of export to domestic consumption and a similar movement directed to the domestic market in which this result is directly and primarily intended through an adjustment of competitive relations in a foreign market. The law prohibits monopolistic effort of interference with competition by concerted action in the guise of a production of benefit to the public. It has been repeatedly stated that a beneficent purpose will not legalize conduct otherwise unlawful. The mere fact that there was a rising price in the domestic market would not be a controlling element. It is perfectly apparent that the proper adjustment of distribution may result in an increase in price in a glutted market and a decrease in price in one which is insufficiently supplied. Manifestly the arrangement must be devoid of any concerted curtailment of production or withdrawal from the domestic market of any part of its normal supply. It is well understood that an incidental or inconsequential effect upon domestic prices is not unlawful. If a merely consequential rise in price should bar American exporters from using this statute, the statute might become a nullity. The statute provides for a lawful course of procedure, and if this procedure is followed and the statute complied with, merely indirect or consequential results cannot be held to be against the law. It is well settled, under the Sherman Act, that a contract which "only incidentally or indirectly restricts competition is not denounced by the act." By direction of the Commission:

Mr. C. F. KELLEY,

Silver Producers' Committee,

VERNON W. VAN FLEET,

Room 1801, 25 Broadway, New York City.

Acting Chairman.

In 1924 a bill was introduced in the Senate that would have permitted the formation of import combines to engage in cooperative purchasing of "raw commodities which are produced principally in foreign countries." The Webb-Pomerene law was not mentioned, but administration was to be given to the Federal Trade Commission. The same bill was introduced by Senator Capper in 1925. In December 1925 a House resolution introduced by Congressman Tilson 5 recommended an investigation by the House Committee on Interstate and Foreign Commerce, as to the "means and methods of the control of production and exportation of crude rubber, coffee, silk, nitrates, potash, quinine, iodine, tin, sisal, quicksilver, and other important raw materials;" this was favorably recommended by the House Committee on Rules. Hearings on the resolution were conducted by the House Committee on Interstate and Foreign Commerce in January 1926. The committee's preliminary report was issued in March 1926.8

As a result of this inquiry, two bills were introduced in Congress in 1928, which would have amended the Webb-Pomerene law to permit

3 S. 2843, 68th Cong., 1st sess., introduced by Senator Capper on March 14, 1924, and referred to the Committee on Commerce. S. 1799, 69th Cong., 1st sess., introduced by Senator Capper on December 17, 1925, and referred to the Committee on Commerce.

5 H. Res. 58, 69th Cong., 1st sess., introduced by Congressman Tilson, December 18, 1925, referred to the Committee on Rules.

7

Rept. No. 24, House of Representatives, 69th Cong., 1st sess., December 19, 1925, 1 p. Hearings before the Committee on Interstate and Foreign Commerce, House of Representatives, 69th Cong., 1st sess., on H. Res. 59, January 6, 7, 8, 11, 12, 13, 14, 15, 18, 19, and 22, 1926, published in 1926, 373 pp.

Rept. No. 555, House of Representatives, 69th Cong., 1st sess., March 13, 1926. 23 pp. 9 S. 2312, 70th Cong., 1st sess., introduced by Senator Jones, January 9, 1928, and referred to the Senate Committee on Commerce; and H. R. 8927, 70th Cong., 1st sess., introduced by Congressman Newton on the same date, referred to the House Committee on the Judiciary.

combines for importation of crude rubber, potash, sisal, or "other raw materials, or products of nature in a crude or unfinished state which are certified by the Secretary of Commerce to be of a character not made, produced, or grown in substantial quantities within the United States, or to be controlled by any foreign government, combination, or monopoly." Such import combines would have been required to file papers with the Federal Trade Commission and to operate under the Commission's supervision on terms similar to those in effect for export combines. The Export Trade Act was completely redrafted in the bill, to include the new provisions. Hearings were held on H. R. 8927 by the House Committee on the Judiciary in January 1928.10 The committee submitted a report in February 1928 11 to the effect

that the bill do not pass at this time. The sponsors of the bill should give the problem further study so as to write into the law the conditions of resale of such material, specifying such factors and charges which may properly be added to the original cost of the raw material involved.

An amended bill was then submitted by Congressman Newton, still numbered H. R. 8927, and in March 1928 a House resolution 12 brought the bill up for debate. The Committee on Rules approved the resolution.13 The bill was debated in the House in April 1928.14 On April 4, however, the day before the debates began, the British Prime Minister stated in the House of Commons that the British rubber restrictions would be removed on November 1 of that year. This eliminated one of the principal reasons for passage of the bill, since without restriction the price of crude rubber would be lowered. The bill was therefore rejected by the House on April 6, 1928; it was not acted upon in the Senate.

1927-40-THE EXPORT TRADE SECTION-FOREIGN TRADE SERIES NO. 2, 1935PACIFIC FOREST INDUSTRIES, RECOMMENDATIONS, 1940

On July 1, 1927, the Export Trade Division became the Export Trade Section under the chief counsel's office of the Commission.15

In October 1935 the Commission issued a 23-page pamphlet entitled "Foreign Trade Series No. 2-Practice and Procedure Under the Export Trade Act (Webb-Pomerene law)" 16 which discussed purpose of the law, provisions of the act, filing of papers with the Commission, Webb law organization and operation, advantages obtained by Webb law groups, products exported, and a list of associations formed during the period 1918-35. This pamphlet is still in active use by associations organizing and operating under the law; the text is available, and need not be repeated here.

On January 27, 1940, the Commission issued recommendations for the readjustment of the business of Pacific Forest Industries, an export trade association, under section 5 of the act. A hearing was held on this case on September 12, 1939, investigation was made, briefs

19 Hearings before the Committee on the Judiciary, House of Representatives, 70th Cong., 1st sess., on H. R. 8927. January 19, 1928, serial 3, published in 1928.

11 Rept. No. 689, House of Representatives, 70th Cong., 1st sess., presented by Congressman Dyer from the Committee on the Judiciary, February 15, 1928, 9 pp.

13 H. Res. 140, 70th Cong., 1st sess., introduced by Congressman Michener, March 17, 1928.

13 Rept. No. 1058, House of Representatives, 70th Cong., 1st sess., March 27, 1928.

14 Congressional Record, debates on April 5 and 6. 1928, the bill rejected on April 6, and further speeches and data presented with the issues of April 9, 12, and 19, 1928. 15 News release issued by the Federal Trade Commission, May 31, 1927.

10 See exhibit 7 herewith.

and other data were filed. This was the first formal action taken under section 5 of the law. Text of the recommendation follows:

UNITED STATES OF AMERICA BEFORE FEDERAL TRADE COMMISSION At a regular session of the Federal Trade Commission, held at its office in the city of Washington, D. C., on the 27th day of January, A. D. 1940

COMMISSIONERS: Ewin L. Davis, Chairman; Garland S. Ferguson; Charles h. March; William A. Ayres; Robert E. Freer. Ap. 1 13889

RECOMMENDATIONS FOR THE READJUSTMENT OF THE BUSINESS OF PACIFIC FOREST INDUSTRIES, AN EXPORT TRADE ASSOCIATION

To: Pacific Forest Industries, a cooperative association organized under the laws of the State of Washington, with principal office and place of business at Tacoma, Wash., and its several members:

The Federal Trade Commission, having reason to believe that Pacific Forest Industries, an association engaged in export trade (as "association” and “export trade" are defined in the act of Congress known as the Export Trade Act, approved April 10, 1918), and certain of its agreements and acts were in restraint of the export trade of domestic competitors of said association, summoned said association, its officers and agents, to appear before it on the 12th day of September 1939 as provided by section 5 of said Export Trade Act. Said association having duly appeared before the Commission pursuant to said summons and a hearing and investigation into the alleged violations of law having been conducted by the Commission, and oral and written statements and arguments and briefs having been presented by said association, and the Commission having concluded upon such investigation that the antitrust laws have been violated by said association in that said association and certain agreements made and acts done by it have been and are in restraint of the export trade of its domestic competitors, to wit, other American exporters engaged in purchasing, transporting, and selling Douglas fir plywood in export trade,

NOW, THEREFORE, pursuant to the provisions of said Export Trade Act and by virtue of the authority conferred upon it by said act, the Federal Trade Commission hereby makes to said Pacific Forest Industries and its several members the following recommendations for the readjustment of its business in order that it may hereafter maintain its organization and management and conduct its business in accordance with law:

*

1. That Pacific Forest Industries shall not, by its bylaws, contracts with members or associate members, or otherwise, prohibit its members or associate members from selling plywood directly to American exporters. 2. Section XVI of the present bylaws of Pacific Forest Industries provides that "the several members agree to * turn over to the association, as and when received, all future orders for export; * * *. The members agree not to accept any future export orders, but to transmit and turn the same over to the association." Contracts between Pacific Forest Industries and associate member plywood mills provide that the associate member "will not sell or offer for sale directly or indirectly any plywood for export, except through said association." Said bylaws and contracts, and any other existing bylaws, contracts, or agreements to the same effect, should be rescinded or amended so as to permit members and associate members of said association to accept and fill orders for plywood for export received by them, respectively, from American exporters without reference to or approval by the association.

3. That Pacific Forest Industries shall not impose any penalties, forfeitures, or charges upon sales of plywood by its members or associate members to American exporters, or fix or prescribe prices, terms, or conditions of sales to or by American exporters of plywood produced by its members, or take any other action designed to prevent or restrict such sales. 4. That Pacific Forest Industries cease and desist from advertising in foreign countries that it is the sole export representative of the plywood mills in the United States Pacific Northwest and from making any similar advertising claims to the effect that United States Douglas fir plywood can be purchased in foreign countries only through Pacific Forest Industries or its agents.

The term "American exporter" is defined, for the purpose of these recommendations, as a citizen of the United States, a partnership in which the partner or partners owning the principal beneficial interest is or are citizens of the United States, or a corporation domiciled in the United States the majority of the stock of which is owned by citizens of the United States, desiring to purchase plywood for his, their, or its own account for resale in export trade.

By the Commission. [SEAL]

A. N. Ross, Acting Secretary.

ANNUAL REPORTS OF THE COMMISSION, 1916-39-PUBLICITY STATEMENTS ISSUED BY THE COMMISSION CONCERNING THE LAW

The Commission's annual reports have given, each year, a statement of Webb law activities during that period, beginning in 1915 with a report on the foreign-trade inquiry instituted in May of that year, and in 1916 a report on the bill at that time before Congress, continuing after the law was passed with a summary each year of current information.

These reports give the volume of business by the groups, a list of associations at that time filing papers, and a discussion of current trade conditions, advantages obtained and obstacles met by the Webb law associations. Excerpts from the annual reports, 1937 to 1939, are herewith transmitted as exhibits.17 When a new association is formed, the Commission issues a brief statement announcing the filing of papers. Other publicity statements have been issued from time to time, and several articles have been prepared for publication in Commerce Reports published by the Department of Commerce.

17 See exhibits 8, 9, and 10 herewith, excerpts from the Commission's reports for 1937, 1938, and 1939.

257769-40—No. 6- -10

PROCEDURE UNDER THE ACT

The Commission's procedure under the act has been simple. Organization papers are received and acted upon by the full Commission. These papers include the first report, for which blanks are supplied by the Commission, the certificate of incorporation, if it is incorporated, bylaws, membership agreement, contract forms, working rules or regulations, or any other documents covering the organization plan.

Annual reports filed in January of each year 2 keep the organization material to date. Other information is required from time to time, and field calls are made at the association offices. In case of an inquiry, a more extended search is made of the association records and operation. As a rule inquiries have resulted in informal advice to the association in question. The only formal summons and recommendation was issued in the case of the Pacific Forest Industries, hereinbefore quoted.

1 See exhibit 4 herewith, first report form.
2 See exhibit 5 herewith, annual report form.

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