EXHIBIT 6 [Federal Trade Commission, Foreign Trade Series No. 1] DISCUSSION OF AND PRACTICE AND PROCEDURE UNDER THE EXPORT TRADE ACT (WEBB-POMERENE LAW), 1919 1. Practice and Procedure. 2. Discussion of the Export Trade Act. 3. An Act to Promote Export Trade (Webb Law; Public, 126, 65th Cong.). 4. Sections 73, 76, and 77, Wilson Tariff Act (approved August 27, 1894, amended February 12, 1913). 5. Section 6 (h) Federal Trade Commission Act (foreign investigations). PRACTICE AND PROCEDURE The very numerous requests for copies of the Export Trade Act (Webb-Pomerene law) and the large number of inquiries about it call for the publication of a separate pamphlet by this Commission for the information of those desiring to cooperate in the development of our foreign trade through associations formed under that act. In several instances suggestions have been made as to modifications of proposed articles of incorporation, already filed, in order that these associations may clearly come within the provisions of the act. The Commission is authorized by this law to make recommendations as to how export associations may conform their business to the law, and, within its powers, it proposes to advance step by step in aid of the export needs of the country. It desires to constantly work in cooperation with those who form export associations and also with those who may consider themselves or the public in any way injuriously affected by the methods and practices of such associations. Where doubt exists as to whether a given method or practice is proper or not, it would seem advisable that the matter be voluntarily presented to the Commission in the early stages, without awaiting its later discovery and possible correction. The second paragraph of section 5 of the Webb Act describes the few formalities as to such procedure. The Commission has prepared blanks, available on request, for making the first and 1919 annual report which enables an easier compliance with section 5 of the Webb Act. Should it become necessary for an export association, or for others engaged in the export trade, to seek the enforcement of the Commission's power to prevent unfair methods of competition under section 4 of the Webb Act, the rules of practice do not require formalities in the filing of information or the lodging of complaints, but it is worth. remembering that the fuller and more exact the information and references as to proof thereof, the speedier the results before the Commission. This is especially true where the charges come from foreign countries where the time necessary for transmission might render the case academic through the sheer lapse of time. Where allegations come from abroad the procedure of the Commission can be more quickly set in motion if the papers are in such condition as to give the Commission "reason to believe" that alleged facts exist. Copies of letters, advertisements, exhibits, and affidavits are extremely helpful, as also the names of witnesses and sources of information both in this country and abroad. As the Commission can proceed on its own initiative, it is immaterial from what source its information is derived, but it is desirable, wherever possible, that for its confidential use the informant be known. The Commission's investigation of foreign conditions, practices, and combinations in foreign countries and its recommendations to Congress thereon will be greatly facilitated by American exporters keeping the Commission informed of their experiences and instances where their export business is restrained or injuriously affected by any matter or in any manner. The Commission must depend largely for information and facts upon those who are interested in having the Commission correct any tendencies of export associations to artificially enhance or depress prices within the United States or otherwise burden the American public or restrain the commerce of independent competitors. All mail for the Export Division should be addressed to the Federal Trade Commission, Washington, D. C., and marked "Export Division." DISCUSSION OF THE EXPORT TRADE ACT Summary of the law.-Under the Export Trade Act, approved April 10, 1918, the Federal Trade Commission is authorized to receive, and "associations" now, or hereafter, solely engaged in export trade are required to file statements in the form specified by the act. The Commission is given authority to investigate all instances where it has reason to believe that an export trade "association" has committed an act, or made an agreement, which is in restraint of trade within the United States, or which is in restraint of the export trade of any domestic competitor of such "association." This applies also where such an "association" has entered into any agreement, understanding, conspiracy, or done any act in the United States or elsewhere, which artificially enhances or depresses prices within the United States of commodities exported by such association, or where the same substantially lessens competition within the United States, or otherwise restrains trade therein. In such event the offending "association," its officers, and agents may be summoned before the Commission, and it is thereupon required to conduct an investigation into the alleged violation of law. If upon investigation the Commission concludes that the law has been violated it may recommend to the "association" readjustment of its business in order that it may thereafter maintain its organization, management, and the conduct of its business in accordance with the law. Where an association fails to comply with the recommendation of the Commission, the Commission is required to refer its findings and recommendations to the Attorney General of the United States for such action thereon as he may deem proper. By section 4 of the Export Trade Act the prohibition in the Federal Trade Commission Act against unfair methods of competition, and the remedies provided for enforcing said prohibition, are directed to be construed as extending to unfair methods of competition used in export trade against competitors engaged in such trade, even though the acts constituting such unfair methods are done without the territorial jurisdiction of the United States. The act defines the term "export trade" wherever used in the act as follows: 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, or selling for consumption or for resale, within the United States or any Territory thereof, of such goods, wares, or merchandise, or any act in the course of such production, manufacture, or selling for consumption or for resale. The words "trade within the United States" wherever used in the act are defined to mean trade or commerce among the several States or in any Territory of the United States, or in 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. The word "association" wherever used in the act is defined to mean: Any corporation or combination, by contract or otherwise, of two or more persons, partnerships, or corporations. Under section 5 of the act a penalty is imposed upon any association which shall fail to make the statement and furnish the statements required to be filed, and also furnish the Commission with such information as it may require, as to the organization, business, conduct, practices, management, and relation to other associations, corporations, partnerships, and individuals of such associations. The penalty imposed for failure to comply with section 5 of this act is that the association shall not have the benefit of the provisions of sections 2 and 3 of the act, and shall forfeit to the United States $100 per day during the continuance of such failure to comply with its terms. This forfeiture is payable into the Treasury of the United States and is recoverable in a civil suit in the name of the United States, in the district where the association has its principal office, or in any district in which it shall do business, by the district attorney under the direction of the Attorney General of the United States, and the costs and expenses of such prosecutions are payable out of the appropriation for the expense of the courts of the United States. Under section 2 of the Export Trade Act, the provisions of the Sherman law, approved July 2, 1890, are directed to be construed in such a way that nothing therein contained shall declare to be illegal "associations" entered into for the sole purpose of engaging in export trade and actually engaged solely in such export trade, nor any agreement made, or act done in the course of such export trade by such an association, provided such agreement or act is not in restraint of trade within the United States, and is not in restraint of the export trade of any domestic competitor of such an association; provided, however, that such association does not, either in the United States or elsewhere, enter into any agreement, understanding, or conspiracy, or do any act which artificially or intentionally enhances or depresses prices within the United States of commodities of the class exported by such association, or which substantially lessens competition within the United States or otherwise restrains trade therein. By section 3 of the act it is directed that section 7 of the Clayton Act, approved October 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 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. Form of statement.-For the convenience of those who desire to file the statement required by section 5 of the act there have been prepared and printed forms of statement, which are available upon application. Applications for construction of the act.-Numerous requests have been received by the Commission for rulings upon the construction of the Export Trade Act. It has been deemed inadvisable to attempt at this time to officially construe any of the provisions of the law upon informal applications. This is especially true, as the penalty for the violation of section 5 of the act is enforcible by the district attorneys of the United States under the direction of the Attorney General, and not by the Federal Trade Commission, and the enforcement of the Sherman law is a duty of the Federal courts upon proceedings instituted by the Department of Justice. It is exceedingly important that export associations in process of formation should give careful consideration to the wording of sections 2 and 3 of the Export Trade Act. As to the statements which have been filed with the Export Trade Division under section 5 of this act, it has been noted that practically every corporation formed has been organized for the transaction of some business other than that of solely engaging in exporting from the United States to foreign nations as defined in the act. Most of the articles of association filed have also contemplated the transaction of business other than that of exporting to foreign nations. It is apparent under the law that the provisions of the Sherman law and section 7 of the Clayton law remain applicable as to all combinations which are not organized solely for the business of exporting to foreign nations. The business of exporting to the Philippine Islands, to Puerto Rico, or to Hawaii seems clearly to be domestic and not foreign trade, and the provisions of the Sherman law and section 7 of the Clayton law seem to continue in force as to any association or export corporation which engages in such business. One of the difficulties which exporting houses seem to find with the law is that export companies usually both export and import, while the law provides that its protection is given to associations entered into for the sole purpose of engaging in export trade and actually engaged solely in such export trade. Due to the facts that the business of the country is devoting its thought to war production and that there is a lack of shipping facilities, general plans for cooperation in export trade are probably now in 257769-40-No. 6--17 suspense or only in a formative state. This is indicated by the very small number of association papers which have been filed with theCommission since the passage of the act on April 10, 1918. Statements filed.-Below is a list of all organizations that have filed papers purporting to be under section 5 of the Export Trade Act (April 10, 1918, to June 30, 1918, inclusive). In listing them the Commission does not indicate that those who have filed these papers are qualified under the act, or entitled to the benefits of sections 2 and 3 of the law. Undoubtedly many export houses have felt it was necessary to file statements to avoid any question as to the penalty imposed by section 5 for failure so to do. It is also probable that other export houses considered, without a thorough consideration of the law, that they could obtain some advantage thereby. The list follows: Allied Sugar Machinery Corporation, 120 Broadway, New York, N. Y. American Steel Export Co.'s Brazilian Corporation, Woolworth Building, New- American Webbing Manufacturing Export Corporation, care Clark McKercher, Esq., New York, N. Y. Automotive Products Corporation, Woolworth Building, New York, N. Y. Cosmo Trading Co., 133 West Washington Street, Chicago, Ill. Cranz (Inc.), F., 2 Stone Street, New York, N. Y. Cranz Importing Co., F. E., 2 Stone Street, New York, N. Y. Deco Co., 51-53 White Street, New York, N. Y. Deister Miners Supply Co., Fort Wayne, Ind. De Lima, Carrea & Cortissoz (Inc.), 8-10 Bridge Street, New York, N. Y. Dodge & Seymour (China, Ltd.), 12 Hudson Place, Hoboken, N. J., a subsid-iary company. Douglas Fir Exploitation & Export Co., 260 California Street, San Francisco, Dunnellon Phosphate Co. (The), 106 East Bay Street, Savannah, Ga. Harper & Co., Locke T., Mills Building, San Francisco, Calif. Herzberg & Son, B., 1119 Fillmore Street, San Francisco, Calif. Holsam Co. (Inc.), 18 Broadway, New York, N. Y. International Clearing House of New York (Inc.), 748 Broadway, New York, N. Y. Levy Co. (Inc.), A. A., 45 East Nineteenth Street, New York, N. Y. M. P. Trading Co. (Inc.), 60 Wall Street, New York, N. Y. Manufacturers Agents Co. (Inc.), Virginia Railway & Power Building, Rich-mond, Va. Markt & Hammacher Co., 193 West Street, New York, N. Y. Markt & Schafer Co., 193 West Street, New York, N. Y. Mexican Importing & Exporting Corporation, 29 Broadway, New York, N. Y. |