per exports) to the lowest figure of $20,250,000 in 1935. The total in 1937 was $93,958,850; and in 1938, $67,000,000. 2. Exporters of products of mines and wells, including phosphate rock, sulfur, carbon black, and potash. At one time this group included petroleum companies, since dissolved. In the 5 associations now operating, 24 companies are represented. Exports under this classification have varied from a high point of $315,000,000 in 1930 (including petroleum exports) to a low point of $5,556,000 in 1921. Their exports in 1937 totaled $32,580,219; and in 1938, $20,920,491. 3. Exporters of lumber and wood products-pine, fir, redwood, hardwood, walnut, plywood, barrel and box shooks, tool handles, and naval stores. There are now 9 associations representing 140 mills, scattered from coast to coast. Exports of lumber and wood products in 1925 totaled $38,000,000; this dropped to $8,000,000 in 1932. The total in 1937 was $7,456,922; and in 1938, $5,881,028. Some of this decrease has been due to depletion of pine forests in the Southern States. 4. Exporters of food products. Associations now operating export meat products, canned milk, fruit, rice, and sugar. The 9 associations represent 101 companies. Exports of foodstuffs by Webb-law groups have varied from a high point of $80,400,000 in 1928 to a low point of $5,839,000 in 1921. The total for 1937 was $19,921,343, and in 1938, $21,487,274. 5. Exporters of miscellaneous manufactures, such as paper, textiles, rubber products, abrasives, chemicals, and glass. The 10 associations in this group now represent 93 companies producing these goods for export trade. Total exports under this classification have run from $2,334,000 in 1921 to $90,000,000 in 1929, $43,958,498 in 1937, and $45,956,027 in 1938. The Webb law association lists show some changes each year. The number of associations has varied from 43 in 1920 to a high point of 57 from 1929 to 1931. It dropped during the depression years to 43 in 1935, 45 in 1936 and 1937, 44 in 1938, and again 43 in 1939. There are four associations that have been in operation since 1918, the first year that the law was passed. These are the American Paper Exports, Douglas Fir Export Co., Redwood Export Co., and the Walnut Export Sales Co. Seven associations have been in operation since 1919, just 20 years: The American Provisions Export Co., American Soda Pulp Export Association, Florida Hard Rock Phosphate Export Association, General Milk Co. (at first called the American Milk Products Corporation), Phosphate Export Association, Pipe Fittings & Valve Export Association, and the U. S. Alkali Export Association. The first steel association operated from 1919 to 1923; the second steel group, Steel Export Association of America, has been in operation since 1928. The first copper group was also formed in 1919 and operated until 1933. The second copper group, Copper Exporters, Inc., was formed in 1926 and is still filing papers, although not in active operation. The rubber and sulfur groups were formed in 1922, the petroleum associations in 1929, the textile group in 1930, and the electrical association in 1931. Other groups have been organized, some each year, as listed in the Commission's annual reports. The following associations were formed during the fiscal year ended June 30, 1939: Potash Export Association, Inc., comprising the American Potash & Chemical Corporation, U. S. Potash Co., and Potash Co. of America, with headquarters in New York; and the International Wood Naval Stores Export Corporation, comprising the Chemical Products Co., Continental Turpentine & Rosin Corporation, Phoenix Naval Stores Co., Dixie Pine Products Co., Crosby Naval Stores, Inc., Southern Naval Stores Co., Alabama Naval Stores Co., and Mackie Pine Products Co., with headquarters at Gulfport, Miss. 43 EXPORT ASSOCIATIONS ON FILE JUNE 30, 1939 At the close of the fiscal year, June 30, 1939, 43 export associations were on file with the Federal Trade Commission under the Export Trade Act, representing 425 mills, mines, factories, and producers scattered throughout the United States, from coast to coast, shipping American products to all corners of the globe: American Box Shook Export Associa- American Provisions Export Co., 80 American Tire Manufacturers Export California Alkali Export Association, Cement Export Co., Inc., The, 150 Copper Exporters, Inc., 50 Broadway, Douglas Fir Export Co., Henry Build- Durex Abrasives Corporation, 63 Wall Electrical Apparatus Export Associa- Florida Hard Rock Phosphate Export Goodyear Tire & Rubber Export Co., Grapefruit Distributors, Inc., Daven- International Wood Naval Stores Ex- Northwest Dried Fruit Export Associa- Pacific Forest Industries, Tacoma Pacific Fresh Fruit Export Association, Pipe Fittings and Valve Export Asso- Plate Glass Export Corporation, Grant Potash Export Association, Inc., 21 19 Rice Export Association, Queen and Signal Export Association, 420 Lex- Steel Export Association of America, Sulphur Export Corporation, 420 Lex- United States Alkali Export Associa- Walnut Export Sales Co., Inc., Twelfth SERVICES RENDERED BY THE ASSOCIATIONS Each Webb-law association is formed to meet the needs of the particular industry to be served. There is, therefore, considerable variance in the functions adopted. Most of the groups have become incorporated for their own convenience, although the law does not require it. Most of them operate on an expense basis, the profits accruing to the individual members. Some associations purchase the members' products for the purpose of selling them to foreign buyers at terms agreed upon by the members. Others serve as central selling agents for the members taking orders, negotiating sales, and handling the shipment of the goods. In some cases, the member companies negotiate the sales under direction of the association. Offices are maintained and agents employed in this country and abroad. Special agents are appointed to exploit the members' products in new markets. Joint advertising and joint trade-marks are used, or the members' brands and patented goods promoted. The members may agree upon price, terms, and sales policies solely for export shipment, adopting uniform contracts. In some cases a minimum price is agreed upon; in others members are free to quote price but agree to report to the association any change in price. More often the price is finally determined by the foreign agent of the association, varying in different markets to meet the local conditions. In this connection, it may be of interest to quote from a report recently received from a well-established association which has been in active operation for a number of years: The establishment of prices is a distinct function of the association. It has to be under our form of operation. Prices are established and maintained by responsible foreign agents over whom supervision is exercised by an association official who travels abroad. Prices must depend upon economic conditions in each market versus maximum consuming power of that market under normal conditions. In other words, purchasing power is an important factor to be considered with respect to maximum sales. Another factor is competition; still another is quality and a study of the needs of important consumers in accordance with their processes of manufacturing. Prices necessarily fluctuate in different parts of the world, being controlled by innumerable conditions, both political and economic. In some instances the return exceeds domestic levels here; in others it is about the same; and in others it will occasionally dip lower. Consequently we work on a final average annual price for export, which in turn is tributed equitably in proportion to each factory's shipments. Credits range according to market practices and the standing of customers. Exchange is a chapter in itself. There is the problem of covering future exchange, spot exchange, and operating with no exchange whatsoever.. We have a free movement of exchange, semiembargoes and complete embargoes. This involves much in the way of difficult financing. In one country we have operated at a maximum of 1 year without securing $1 of exchange, allowing our funds to accumulate and eventually liquidating them through an easement in exchange regulations over a period of a year thereafter. These adversities cause much in the loss of interest, and at times much more in depreciated exchange, when available, as compared to the rate when sales were made. Where possible we cover exchange futures as far in advance as 6 months; in other cases local trends indicate spot coverage over different periods; again customers have been permitted to hedge exchange and provide necessary guaranties against loss in our acceptance of local currency. Sales are made in sterling to markets with a different standard of currency. Constant changes in foreign tariffs come to us telegraphically and in ample time for us to adopt necessary safeguards by advance shipments in order to save large sums of money. At the very least, a maintained price level can return from 20 to 30 percent less than circumstances seem to warrant, and even reach a point where exports are blocked completely over certain periods. This involves heavy stocking of warehouses abroad in advance, increased expenses, and uncertainty regarding even an approximated price return. This fact alone illustrates the tremendous advantage of associated activity in contrast to individual effort. Some associations divide their export business among the members in predetermined proportions, or quotas, agreed upon by the members. For this purpose, the capital-stock holdings of the members may serve as a basis, or the volume of export business over some past period, or perhaps periodical reports by the members as to amounts available for export. Some quota systems are more complicated, including consideration of quality as well as quantity, shipping and loading facilities, and other export factors. Provision is usually made for readjustment of quotas to meet changing conditions. Other functions that have been adopted by the export associations include standardizing products for export and improving the quality of the goods; maintaining inspection service, employing claims agents, and settling disputes over export sales; establishing rules and regulations for packing and shipping the goods; arranging for freight rates, cargo space, and shipping dates; consolidating the shipments of the members; taking out insurance and shipping documents; providing for storage during transit and warehousing abroad; collecting and disseminating trade information as to market conditions abroad, foreign credits, stocks available for export, exchange problems, tariff requirements, shipping rules and regulations, foreign laws that affect our foreign trade, and other data of value to American exporters. ADVANTAGES OBTAINED BY THE EXPORT ASSOCIATIONS The more functions the association adopts, the greater economy may be effected through cooperative action. The central selling agency for all members operates with much less overhead than if each member company were selling independently. The expense of exploitation or development of new markets can be divided among all the members with benefit to each. The association may fill large orders by drawing on the resources of the members; and by pooling the shipments may obtain better cargo space and more reasonable transportation rates. Agreement upon trade practices has eliminated abuses, improved relations with foreign buyers, and reduced claims for unsatisfactory shipments.. The association is in a position to obtain for its members information concerning credits and market conditions abroad, which may be changing frequently; no one member could obtain this information as quickly or with as little expense. The experience of the associations, in actual operation, may best be shown by a few quotations from their reports to this office: One of the first lumber groups to be formed reports that— The association has effected orderly merchandising of lumber exports, eliminating unnecessary competition, and providing by united action financial support for trade development. Standard contracts are agreed upon with uniform terms and conditions of sale. Brands are standardized; shipments consolidated; cargo space arranged; insurance handled; all shipping documents prepared; effecting savings in export. Market reports are received from foreign correspondents, credits checked through reliable sources, exchange abroad and tariffs closely watched; sample shipments are sent abroad in the development of business. Another lumber group reports: The outstanding advantage of operation under the association plan lies in the ability to supply the foreign markets promptly and satisfactorily by drawing upon the entire group of mills through a central organization rather than depending upon each unit, the most of which under normal conditions would not be able to furnish a full cargo of export lumber at one loading. As it is, what one mill cannot supply is readily procured from another and the export markets are supplied promptly and uniformly. An association formed to ship heavy-cargo material reports the following advantages obtained through cooperative action: Stabilized export prices at profitable levels, uniform sales terms, standardization of grades, reduction in selling expenses, saving on ocean freight, saving on insurance, reduction of credit losses, elimination of unfair claims from buyers, better ability to meet foreign competition in the export field, and better ability to meet centralized buying by centralized selling. Only by combination under the Webb law and acting as a unit can the American producers in this industry successfully meet the competition of foreign producers. There is little doubt, we think, that if the American producers had not been able or had neglected to take full advantage of the provisions of the Webb-Pomerene law to combine and make a joint effort, this American product would have been driven out of foreign markets many years ago. A group organized to ship specialized metal products reports that: Success of this company as a Webb-Pomerene organization is due chiefly to the fact that we have gone into the business of foreign trade in what we feel is an intelligent manner and have followed a consistent policy year in and year out, in good times and in poor times, of maintaining a foreign field organization. Through such organization we have been enabled to build up and maintain a recognition of the quality of our brand. This quality reputation, together with the goodwill created by the maintenance of a continued foreign sales force, has enabled us to continue to secure business even in the face of foreign price competition of a very serious type. An association comprising mills scattered through several States of the Middle West gathers its members' products together for exportation, and reports that: By combining the resources of stocks, experience, etc., of the several mills, we at one time reduce the costs of exporting as compared with individual operation (cost of the association operation is estimated as about one-fourth of the previous costs to the members); increase the ability to supply practically all items in our line, enjoy the effects of greater prestige in the foreign markets, and control in a greater measure the standards of measurement and quality. An association organized in 1933 and successful even in the depression years, reports: Formed to meet chaos in prices, terms, and conditions of sale in all foreign markets when business was dull, and uneven stability when business was good, the association is now the exclusive distributor for the member producers in export trade. It sells on a uniform contract agreed upon and guarantees to each producer a fixed quota of the association's total export business, also agreed upon. Sales are made to distributors, delivered at foreign ports; it is, therefore, able to effect economies in consolidating shipments, arranging freight rates, cargo space, and shipping dates, consolidating insurance, and preparing shipping papers. An association shipping food products since 1925 reports that: Uniform sales terms and sound trade customs continue to be outstanding advantages of association operation. The association was formed primarily to correct chaotic conditions which had arisen in this industry as a result of activities of both organized and unorganized buying factors in Europe. The association facilities include the development of uniform contracts and terms of sale, the definition of trade custom, provision for inspection of goods shipped and certification thereof, arbitration, and promulgation of rules, regulations, and policies relating to the conduct of export trade, including the elimination of abuses. |