Export Trade Combinations 
 Under the Webb Law 
 
 Guaranty Trust Company 
 of New York 
 
Export Trade Combinations 
 
 Permitted by the Webb Law, 
 Approved April 10, 1918 
 
 Guaranty Trust Company of New York 
 
 140 Broadway 
 
 FIFTH AVENUE OFFICE L O N D O N O F FI C ES 
 
 Fifth Avenue and 43rd Street 32 Lombard Street, E. C. 
 
 5 Lower Grosvenor PI., S.W. 
 
 MADISON AVENUE OFFICE PARIS OFFICE 
 
 MadisonAvenue and 60th Street Rue des ItaUens, 1 and 3 
 

 30 -^ / 
 
 ^1 
 
 COPYRIGHT, 1918 
 BY GUARANTY TRUST COMPANY OF NEW YORK 
 
Foreword 
 
 THIS booklet contains a statement of the 
 purpose of the Webb Law, (approved 
 April 10, 1918), which permits associations and 
 combinations in export trade, and suggestions 
 as to how different types of combinations 
 organized for foreign trade may avail them- 
 selves of its provisions. The full text of the 
 law is also given. 
 
 The reader will see clearly that the essential 
 object of this law is to give American expor- 
 ters a fair chance to compete with the expor- 
 ters of other countries by enabling them to 
 reduce the expenses of marketing, thus per- 
 mitting the quotation of such prices in for- 
 eign countries as will make American prod- 
 ucts attractive to the consumer. Unfair 
 methods in competition with rivals of other 
 countries or with other American exporters 
 are alike forbidden. 
 
 Our Foreign Trade Bureau will be glad to 
 discuss with inquirers the details of these sug- 
 gestions, and other applications of the law. 
 Executives of Trade Associations, merchants, 
 and manufacturers desirous of taking advan- 
 tage of these new opportunities are invited to 
 consult us. 
 
 Guaranty Trust Company of New York 
 
Digitized by tiie Internet Archive 
 
 in 2008 witii funding from 
 
 IVIicrosoft Corporation 
 
 littp://www.arcliive.org/details/exporttradecombiOOguarricli 
 
Export Trade Combinations 
 
 THE Webb Law, permitting combinations 
 in export trade, which was approved 
 April 10, 1918, is an important and necessary 
 step in enabling manufacturers and producers 
 to prepare to meet the post-bellum demands 
 of foreign commerce. Althougli this country 
 has built up an export trade of considerable 
 magnitude, our manufacturers and producers 
 have been at a disadvantage because of the 
 uncertainty of the application of the Sherman 
 and the Clayton Anti-Trust Acts to combina- 
 tions and associations of exporters. Coopera- 
 tion is necessary in order that they may 
 participate in foreign trade on an even basis 
 with foreign competitors, and at the same 
 time, not be compelled to compete with each 
 other. The Act as passed, would seem to 
 allow to exporters the freedom of contract 
 necessary for their protection and necessary 
 to meet the competition of foreign combina- 
 tions and agencies, at the same time placing 
 ample check on unfair methods and abuse. 
 
 [5] 
 
To Compete on Equal Terms 
 
 The remarkable increase in the value of 
 American exports during the last four years 
 has been due to abnormal conditions occa- 
 sioned by the war. Such conditions, of course, 
 cannot be expected to continue. When trade 
 again assumes its normal trend, the extraor- 
 dinary demands of foreign countries for the 
 products of this country will naturally be 
 lessened. Foreign countries which have been 
 engaged in the war, will again meet our manu- 
 facturers and producers in competition in the 
 world's markets. To meet that competition, 
 it is essential that American exporters be 
 placed on equal terms with their competitors. 
 The Webb Law gives them privileges of asso- 
 ciation which they have never before enjoyed, 
 because of the uncertainty of the prohibitions 
 of the law. 
 
 Combinations in other Countries 
 
 The purpose and intent of the law is to give 
 to American exporters the privileges and ad- 
 vantages of dealing through combinations, 
 associations, or agencies similar to those which 
 
 [6] 
 
have so long existed in foreign countries. 
 Nearly every country with which we compete 
 permits and encourages manufacturers and 
 producers to organize combinations to ad- 
 vance its foreign trade. In Great Britain 
 manufacturers and producers are permitted 
 to consolidate through the medium of an 
 export company. In fact, most of the leading 
 products are exported under lawfully author- 
 ized agreements, syndicates, and combina- 
 tions. Similar cooperation is authorized or 
 permitted also in France, Italy, Switzerland, 
 Holland, Japan, and other countries, and the 
 trade covers practically every article or prod- 
 uct which we manufacture or produce for 
 export. 
 
 Types of American Organizations 
 
 Mr. Gilbert H. Montague, of the New York 
 Bar, who was counsel to the special committee 
 of the American Manufacturers Export Asso- 
 ciation in support of the Webb-Pomerene Bill, 
 has made a study of the several types of 
 selling organizations which may be formed 
 under the Webb Law and the manner in which 
 
 [7] 
 
existing types may be affected by the law 
 under various circumstances. Among these 
 types are the branch house, the export house, 
 the local dealer, the traveller, and the joint 
 selling organization. A summary of Mr. 
 Montague's findings is presented herewith. 
 
 The Branch House 
 
 A familiar type of selling organization 
 which has been developed in export trade is 
 the branch house, which is an export branch, 
 or export department, or export subsidiary 
 company, of a single parent concern, which 
 this parent concern wholly controls. The 
 branch house has many advantages which no 
 other type of selling organization possesses. 
 All these advantages may be retained, with- 
 out that loss of individuality and independ- 
 ence which a single joint selling organization 
 might involve, and to these advantages may 
 be added the legal power to agree with any 
 competing concern regarding allotment of ex- 
 port orders, or prices to foreign buyers, or 
 terms of e^qport sales, or credits to foreign 
 customers, or grades of export products, alio- 
 
 [8] 
 
cation of foreign markets, or pooling of foreign 
 business, or apportionment of output for ex- 
 port, or division of sales territory abroad, or 
 the like, if the branch house and the com- 
 peting concern qualify themselves, either as 
 an Export Association, or as separate Export 
 Associations, under the terms of the Webb 
 Law. 
 
 To Retain Individuality 
 
 Another method by which the branch 
 house, and any competing concern with which 
 it may desire to make an arrangement of the 
 character above described, can qualify as Ex- 
 port Associations without merging their in- 
 dividuality and independence in a single joint 
 selling organization, requires that each should 
 amend its articles of incorporation, and re- 
 strict its business operations, so that they 
 should include "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," and not include "the production, 
 manufacture, or selling for consumption or 
 for resale, within the United States or any 
 [91 
 
Territory thereof, of such goods, wares, or 
 merchandise, or any act in the course of such 
 production, manufacture, or selHng for con- 
 sumption or for resale." 
 
 Separate Incorporation Desirable 
 
 For the branch house and any competing 
 concern that are not incorporated, but are 
 simply export branches or export departments 
 of parent organizations, this requires, as a 
 matter of practical convenience, that these 
 respective export branches, or export depart- 
 ments, be separately incorporated as Export 
 Associations. They would then be qualified 
 to enter into the arrangements for promoting 
 foreign trade which are authorized under the 
 new law. 
 
 Advantages of the Export House 
 
 The export house, by which is meant a 
 self-organized, independent organization sell- 
 ing in foreign markets goods that it has 
 bought outright, or that it has been com- 
 missioned by foreign customers to buy for 
 [10] 
 
their account, or that it has undertaken to 
 sell, or the sales of which it has undertaken 
 to finance, or the deliveries of which it has 
 undertaken to effect, on commission, or on 
 some other basis, for different concerns which 
 have contracted with it for this service, has 
 many advantages that assure its permanence 
 as a type of selling organization, and the 
 Webb-Pomerene Law has greatly expanded 
 its field of opportunity. 
 
 Among concerns that hitherto have stayed 
 out of export trade, because of lack of re- 
 sources, fear of competition, and inability to 
 combine, the export house, with its knowledge 
 of foreign markets, has unrivaled facilities for 
 developing a satisfactory volume of export 
 business upon a basis satisfactory to itself and 
 to concerns at home whose accounts it can 
 bring together and handle through its own 
 organization. 
 
 Combination of Competing Concerns 
 
 Solicitation of non-competing accounts has 
 hitherto been the custom of the export house. 
 With the passage of the Webb-Pomerene Law, 
 
 [11] 
 
however, the combination of competing con- 
 cerns, and the organization of entire indus- 
 tries, into big, single, export accounts has be- 
 come a very attractive possibiHty. To groups 
 of competing concerns, combined into Export 
 Associations of one type or another, the ex- 
 port house can offer seUing, financing, and 
 shipping facihties in many foreign markets, 
 which such groups might otherwise never at- 
 tain. Even though such groups contract to 
 ally themselves for only a few years with the 
 export house, the latter, during the life of the 
 arrangement, might have the entire export 
 business of substantial fractions of whole in- 
 dustries, which might yield not only satis- 
 factory present profits, but also possibilities 
 of future business well worth having. In the 
 promotion of various types of Export Asso- 
 ciations, therefore, the aggressive export mer- 
 chant house may come to find one of its most 
 profitable fields of activity. 
 
 The Jobber and the Traveller 
 
 The local dealer^ by which is meant a job- 
 bing or retailing concern, located in a particu- 
 
 [12] 
 
lar foreign market, and selling goods that it 
 has bought outright, or that it has undertaken 
 to sell, on commission, or consignment, or 
 some other basis, for a concern which has 
 contracted with it for this selling service, and 
 the traveller, by whom is meant one employed 
 by a single concern to sell its goods in particu- 
 lar foreign markets, and whom this concern 
 wholly controls, are types of selling organiza- 
 tions that stand less, perhaps, than any other 
 in need of agreements between competing 
 concerns. Concerns employing these types of 
 selling organization may, however, obtain 
 legal power to make such agreements with 
 competing concerns if they, and the compet- 
 ing concern with which they desire to enter 
 into an agreement, each qualify themselves 
 either as an Export Association, or as separate 
 Export Associations. 
 
 Joint Selling Organizations 
 
 Since the passage of the Webb Law much 
 attention has been given to the matter of its 
 application to and the benefits to be derived 
 from it by the joint selling organization, by 
 
 [13 1 
 
which is meant an organization that may 
 have a greater or less degree of autonomy, 
 but whose distinguishing characteristic is that 
 it pools, in a single organization, the export 
 activities of a number of previously compet- 
 ing parent concerns. Already in various lines 
 of industry groups of competing concerns are 
 giving thought to various plans for single 
 joint selling organizations. How to obtain 
 the necessary centralization with the least 
 loss of individuality and independence on the 
 part of the parent concerns, is a problem 
 which each industry and each group must 
 solve in its own way. In his analysis Mr. 
 Montague gives a number of examples of 
 what has been done by various concerns to 
 meet the peculiar conditions which confronted 
 them. He says: 
 
 An Industrial Example 
 
 " Such export trade as there was, in a certain 
 American industry, had been confined to 
 several large concerns represented abroad by 
 branch houses or export houses. 
 
 "Upon the return of normal conditions, it 
 seemed certain that general over-production 
 [14] 
 
would exist through the industry at home, 
 while abroad an active and constant demand 
 would, in all probability, be resumed in vari- 
 ous markets at prices and for grades on which 
 many concerns in the industry would then be 
 glad to quote. The handful of concerns al- 
 ready selling abroad were as yet unwilling to 
 alter their existing relations with branch 
 houses and export houses. They would, how- 
 ever, make with any joint selling organiza- 
 tion comprising the rest of the industry, satis- 
 factory arrangements regarding prices to for- 
 eign buyers, or terms of export sales, or credits 
 to foreign customers, or grades of export 
 products, or other subjects of common inter- 
 est. A man experienced in the industry, and 
 acquainted with conditions in foreign 
 markets, could be engaged for a reasonable 
 salary and a fair bonus arrangement as gen- 
 eral manager of a joint selling organization. 
 With him, and with one or two banks familiar 
 with conditions in foreign markets, plans had 
 been worked out for financing the sales 
 abroad, and for financing the purchases at 
 home, and for a schedule of credits for sales 
 fl5l 
 
abroad and for purchases at home, and for 
 opening sales branches beginning sales pro- 
 motion in several selected foreign markets. 
 From this, and from an estimate of prospec- 
 tive operating expenses, a budget had been 
 worked out of the probable financial require- 
 ments of a joint selling organization. With 
 the banking accommodation that seemed 
 reasonably assured, and with an ample mar- 
 gin for safety, an initial investment of $200,- 
 000 seemed sufficient to start the organiza- 
 tion. 
 
 Organization of the Corporation 
 
 **A corporation was finally determined upon 
 to be organized under the laws of one of the 
 eastern States, with its purposes carefully 
 limited to those permitted by the Webb- 
 Pomerene Law, and with capital stock con- 
 sisting of 5,000 preferred shares and 5,000 
 common shares, the preferred shares to be 
 eight per centum per annum, cumulative, par 
 value $100 each, to be all issued at organiza- 
 tion, on which $40 per share was to be paid 
 up and $60 per share was to be subject to call, 
 [16] 
 
the common shares to be without nominal or 
 par value, to be issued only as bonus, share 
 for share, with subscriptions for preferred 
 shares, and only to concerns actually par- 
 ticipating in the joint selling arrangement- 
 No participating concern was to have more 
 than one vote, and each was to be represented 
 upon the Board of Directors, whose powers, 
 when not in session, were to be vested in a 
 small Executive Committee. 
 
 The Agency Agreement 
 
 " Each participating concern was to execute 
 an agreement with the corporation, consti- 
 tuting the latter exclusive agent of the former, 
 for the sale of the former's entire export product 
 during the life of the agreement. This export 
 product was to amount to a specified per- 
 centage of the participating concern's output, 
 consisting of specified grades and quantities. 
 The corporation was to fix the prices at which 
 it should sell the export product, and bill and 
 collect therefor in its own name. The par-\ 
 ticipating concern was to standardize, label, 
 mark, pack, and ship its export product as di- 
 fl7l 
 
rected by the corporation, and was to protect 
 the latter in respect of all claims by pur- 
 chasers. The participating concern was to 
 bear all freight and other charges to the sea- 
 board, but the corporation was to bear all 
 freight and other charges beyond the sea- 
 board, and all selling expenses of the corpora- 
 tion. For export products which the partici- 
 pating concern furnished the corporation, the 
 participating concern was to be credited upon 
 the basis of prices arrived at by one of a 
 variety of ways. Thus, the corporation might 
 take from each participating concern an op- 
 tion for a specified period, upon specified 
 grades and quantities at specified prices. 
 Again, whenever the corporation desired to 
 quote upon a prospective order, it might 
 communicate with each participating con- 
 cern, and fill the order from whichever par- 
 ticipating concern named the lowest price. 
 As compensation for its services, the corpora- 
 tion was to receive and retain the excess of 
 the export price at which it should sell such 
 product over and above the price at which it 
 purchased from the participating concern. 
 The corporation was to settle with the par- 
 
 [18 1 
 
ticipating concern for each shipment within 
 thirty days, less two per cent, discount in ten 
 days. Out of the aggregate profits reahzed 
 on the operations of the corporation, the cor- 
 poration was to retain an amount sufficient 
 to pay cumulative dividends at the rate of 
 eight per centum per annum on its preferred 
 shares, and also such amount as the Board of 
 Directors should deem proper for reserves. 
 Out of any balance remaining, the corpora- 
 tion was to grant to each participating con- 
 cern then in good standing a rebate in the 
 proportion which the amount of export prod- 
 uct guaranteed by each participating concern 
 bore to the aggregate of similar export prod- 
 ucts guaranteed by all the participating con- 
 cerns. 
 
 Another Example of Cooperation 
 
 **Most of the concerns, in another American 
 industry, had had some experience in export 
 trade, and had suffered greatly from one an- 
 other's competition in foreign markets. 
 
 Upon the return of normal conditions, it 
 seemed certain that export trade would be 
 [19] 
 
resumed with a recurrence of the former un- 
 satisfactory conditions, in which foreign 
 buyers, as formerly, would combine to pre- 
 sent a united front against each American 
 exporter, and by playing one against another 
 would force each to underbid the other until 
 as so often had occurred in the past, the com- 
 bined foreign buyers would obtain the prod- 
 uct below a fair and reasonable price. Most 
 of the concerns in the industry had suffered 
 so much in the past from these conditions, 
 and were so fully convinced of the wastes 
 involved in their competition with one an- 
 other in foreign markets, that they were ready 
 to cooperate in any reasonable form of single 
 joint selling organization. A man who had 
 made his mark as foreign sales manager 
 for one of the concerns, and whose integrity 
 and impartiality were approved by all, could 
 be engaged as general manager. Desirable 
 locations in a number of foreign markets 
 could be secured simply by taking over 
 branches already maintained there by one or 
 another of the participating concerns. There 
 was abundant past experience from which to 
 [20] 
 
plan the oflSce management and sales organ- 
 ization, to work out the details of selling, 
 credits, financing, shipping, and traflSc, and 
 to draw up a budget of probable financial re- 
 quirements for a joint selling organization. 
 
 Form of Incorporation 
 
 "A corporation of $150,000 capitalization, 
 entirely of paid-up common stock, was finally 
 determined upon, to be organized under the 
 laws of one of the western States, with its 
 purposes carefully limited to those permitted 
 by the Webb-Pomerene Law. Only concerns 
 which should agree to sell their entire export 
 output through the corporation were eligible 
 to become stockholders; and no concern was 
 to be entitled to more than one vote, regard- 
 less of the number of shares it might own ; and 
 no concern, or group of concerns, was ever to 
 obtain a majority interest or dominating 
 control of the corporation. To carry out 
 these provisions, every share of stock, except- 
 ing the qualifying shares, was to be endorsed 
 in blank by the stockholder and deposited in 
 [211 
 
trust with stock trustees. Upon this stock 
 the corporation was to have a first Hen as 
 security for the faithful observance and per- 
 formance by the stockholders of the corporate 
 by-laws and resolutions and of any agree- 
 ments entered into or obligations incurred by 
 the stockholder with respect to the corpora- 
 tion. In event of the stockholder's default 
 in this regard, the Board of Directors could 
 tender to the stockholder the book value, not 
 exceeding the par value, of his stock, less any 
 indebtedness owing by the stockholder to the 
 corporation, and could then cancel his stock, 
 and reissue it to the stock trustees, who in 
 turn might sell it to concerns eligible to be- 
 come stockholders. According to the by-laws, 
 specified geographical groups of stockholders 
 were always to be entitled to specified num- 
 bers of directors in the Board of Directors and 
 in the Executive Committee. Dividends were 
 to be limited to seven per centum per annum, 
 and surplus earnings were to be retained for 
 reserves, or expended in sales promotion in 
 export trade, according as the Board of Di- 
 rectors might determine. 
 [22] 
 
Agreements with Participating Concerns 
 
 "Each participating concern was to execute 
 an agreement with the corporation, consti- 
 tuting the latter the exclusive agent of the 
 former, for the sale of the former's entire ex- 
 port product during the life of the agreement. 
 This export product was to consist of a speci- 
 fied quota determined from time to time by 
 the Board of Directors of the corporation. 
 The corporation was to sell the export prod- 
 uct at such prices as the corporation should 
 be able to obtain, and was to allot its orders 
 fairly and impartially among the participat- 
 ing concerns, as nearly as possible in accord- 
 ance with quotas determined from time to 
 time by the Board of Directors of the corpora- 
 tion. Each participating concern was to 
 accept and execute such orders as the cor- 
 poration should assign to it. The corporation 
 was to guarantee all accounts that it should 
 sell, and was to settle with each participating 
 concern for each shipment within thirty days, 
 and was to retain for its services a commission 
 of two and one-half per centum. The agree- 
 ment between the corporation and the par- 
 [23 1 
 
ticipating concern was to provide for no 
 rebate upon this commission, and the only 
 refund of any kind to which the participating 
 concern was to be entitled was in the form of 
 dividends upon such stock as the participat- 
 ing concern might own in the corporation. 
 
 Another Typical Case 
 
 "Most of the concerns, in another American 
 industry, had for years been selling a substan- 
 tial part of their output in export trade, and 
 had suffered greatly, in the manner above de- 
 scribed, from combinations of foreign buyers. 
 
 **Much as the industry had suffered from 
 this cause, however, certain concerns, whose 
 cooperation was deemed to be essential, 
 were known to be adverse to become full 
 members of any single joint selling organiza- 
 tion. Every concern, on the other hand, had 
 for years been accustomed to sell its export 
 product through one or another agent, whom 
 it had paidj on a commission basis, for selling, 
 financing, and effecting deliveries abroad. 
 
 "A well qualified general manager, and suit- 
 able foreign representatives, were readily 
 
available for a joint selling organization. The 
 financial requirements of such an organiza- 
 tion, also, were ascertainable with reasonable 
 accuracy, and were easily within the ability 
 of the industry to provide. A corporation was 
 accordingly determined upon, to be organized 
 under the laws of one of the eastern States 
 with its purposes carefully limited to those 
 permitted by the Webb-Pomerene Law, and 
 with a cash capital of $100,000 to be obtained 
 by the issue of partly paid common stock, the 
 balance to be subject to call in event of any 
 unexpected increase in the financial require- 
 ments of the corporation. Only concerns that 
 should agree to sell their entire export prod- 
 uct through the corporation over a specified 
 number of years were to be eligible to become 
 stockholders. 
 
 Method of Sales Distribution 
 
 "Each participating concern was to execute 
 an agreement with the corporation, constitut- 
 ing the latter the exclusive agent of the 
 former, for the sale of the former's entire ex- 
 port product during the life of the agreement. 
 [25 1 
 
This export product was to amount to a speci- 
 fied proportion of the participating concern's 
 output. The corporation was to sell the ex- 
 port product at the best prices that it could 
 obtain, and was to allot orders among the 
 participating concerns as nearly as possible 
 in proportion to the amount of export prod- 
 uct which each had guaranteed to the cor- 
 poration. The participating concern was to 
 standardize, label, mark, pack, and ship its^ 
 export product as directed by the corporation, 
 and was to protect the latter in respect of all 
 claims by purchasers. The participating con- 
 cern was to bear all freight and other charges 
 to the seaboard, but the corporation was to 
 bear all freight and other charges beyond the 
 seaboard, and all expenses of the corporation. 
 For such products as the participating con- 
 cern furnished the corporation, the partici- 
 pating concern was to be credited upon the 
 basis of prices specified in a schedule attached 
 to the agreement. As compensation for its 
 services, the corporation was to receive a 
 commission of three and one-half per cen- 
 tum, and to retain the excess of the export 
 [26] 
 
price at which it should sell such product 
 over and above the price at which it pur- 
 chased from the participating concern. The 
 corporation was to settle with the participat- 
 ing concern for each shipment within ten days 
 after delivery of shipment at the seaboard, 
 less two per cent, discount for cash against 
 bills of lading to the seaboard. Out of the 
 aggregate commissions received by the cor- 
 poration, the corporation was to retain an 
 amount suflScient to pay dividends at the 
 rate of seven per centum per annum on its 
 capital stock, and also such amount as the 
 Board of Directors should deem proper for 
 reserves. Out of any balance remaining, the 
 corporation was to grant to each participating 
 concern, then in good standing, a rebate in 
 the proportion which the amount of export 
 product guaranteed by each participating 
 concern bore to the aggregate of similar export 
 products guaranteed by all the participating 
 concerns. 
 
 ^'Traveling in Double Harness'* 
 
 "This agreement was to be the basis upon 
 which the corporation would sell the export 
 [27 1 
 
product of concerns participating as stock- 
 holders in the joint selling organization. But 
 some concerns, as already has been stated, 
 were known to be adverse to becoming full 
 members of any single joint selling organiza- 
 tion. Each of these concerns, however, had 
 for years been accustomed to sell its export 
 product through one or another agent, whom 
 it had paid on a commission basis, for selling, 
 financing, and effecting deliveries abroad. 
 Each of these concerns, accordingly, was to 
 be invited to make an agency agreement with 
 the corporation, similar in all substantial 
 respects to the agency agreements which it 
 had been accustomed to make with its 
 former agents. These agreements were to 
 contain provisions for their termination, by 
 either party, upon fairly short notice, so that 
 each party would have a prompt way of 
 escape if these agreements should prove un- 
 satisfactory. During the life of these agree- 
 ments, however, the concerns entering into 
 them could try out the experiment of travel- 
 ling in double harness with the rest of the 
 industry, and if they found the experiment 
 [28] 
 
satisfactory, they could then all combine, 
 upon a more enduring basis, as stockholders 
 and full participating members, in a joint 
 selling organization. 
 
 The Joint Type of Organization 
 
 "In the examples of joint selling organiza- 
 tions above described, it was the organization 
 itself that undertook the work of selling 
 abroad. This, however, is not an essential 
 characteristic of the joint selling type of organi- 
 zation. A joint selling organization, having 
 contracted with its members for their entire 
 export product, may find it the part of wisdom 
 to contract then with an export house for the 
 disposal of its export product, on commission, 
 or on some other satisfactory basis. The 
 export house, as shown above, may undertake 
 for the joint selling organization the actual 
 work of selling, financing, and effecting de- 
 liveries of the export product controlled by 
 the joint selling organization. For the export 
 house, this arrangement might be attractive 
 because it would result in the consolidation 
 of a number of separate small, indifferent 
 [29 1 
 
accounts into a single, substantial, desirable 
 account. For the participating concerns com- 
 bining in the joint selling organization, the 
 arrangement might be attractive, because it 
 would promise profit with the minimum of 
 risk and overhead expense, and would assure 
 better terms, from the export house than each 
 of the participating concerns could possibly 
 expect. Again, a joint selling organization, 
 desiring itself to undertake the work of selling 
 abroad, but not on so ambitious a scale as in 
 the examples above described, might decide 
 to sell through local dealers, or through a 
 traveller, in the mode characteristic of those 
 types of selling organization. Thus it might 
 save all the wastes of competition, and all the 
 economies of combination, which savings and 
 economies the joint type of organization 
 makes possible, and at the same time might 
 obtain all the advantages which other types 
 of selling organization afford in many foreign 
 markets. 
 
 Wide Choice of Methods 
 "A joint selling organization, having con- 
 tracted for the entire export product of its 
 [30] 
 
participating concerns, is therefore unfettered 
 in its choice of methods for selling in export 
 trade, and is in position to market abroad 
 through branch houses, or export houses, or 
 local dealers, or travellers, through any type 
 of selling organization whatsoever. 
 
 Combination of Joint Selling Organizations 
 
 "Nor should it be forgotten that joint selling 
 organizations, like all other types of Export 
 Associations, may combine with one another 
 into larger, and more comprehensive joint 
 selling organizations, whenever greater econ- 
 omies, or more efficiency, or any other ad- 
 vantages, to themselves and to the concern 
 participating in them, appear to lie in that 
 direction. And should combination of this 
 character appear desirable, but obstacles be 
 presented in the loss of individuality and 
 independence which a larger joint selling 
 organization might involve, it should not be 
 forgotten that single joint selling organiza- 
 tions, instead of combining into a larger sell- 
 ing organization, may simply enter into agree- 
 ments with one another regarding allotment 
 [31] 
 
of export orders, or prices to foreign buyers, 
 or terms of export sales, or credits to foreign 
 customers, or grades of export products, or 
 allocation of foreign markets, or pooling of 
 foreign business, or apportionment of output 
 for export or division of sales territory 
 abroad, or common selling agencies for export, 
 or joint representation in export trade, or the 
 like. Nor, finally, should it be forgotten that 
 the humblest American exporter, whether he 
 sells through an export house, or local dealers, 
 or a traveller, or only by mail order, may 
 nevertheless deal at arm's length with the 
 largest joint selling organization, or may come 
 to terms with it, if the terms are satisfactory 
 to both parties, upon any agreement of the 
 character above described, or, if he prefer, 
 may go his own gait in export trade, with 
 absolute assurance that the Federal Trade 
 Commission will protect him against any act 
 of his big competitor that constitutes unfair 
 competition or restraint upon his export 
 trade." 
 
 32 
 
Provisions of the Law 
 
 Export Trade Defined 
 
 The term "export trade, "as used in the law, 
 means 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. The words "export trade" are deemed 
 to exclude the production, manufacture, or sell- 
 ing for consumption or for resale, within the 
 United States or any territory thereof, of 
 goods, wares, or merchandise, or any act in 
 the course of such production, manufacture, 
 or selling for consumption or resale. 
 
 Trade Within the United States Defined 
 
 The words "trade within the United States" 
 as used in the Act, 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 
 [33] 
 
territories and any State or States or the 
 District of Columbia, or between the District 
 of Columbia and any State or States. 
 
 Association Defined 
 "Association," as used in the law, means any 
 corporation or combination, by contract or 
 otherwise, of two or more persons, partner- 
 ships or corporations. 
 
 Restrictions of Anti-Trust Laws Removed 
 
 Section 2 of the Act exempts export com- 
 binations or associations from the operation 
 of the Sherman Anti-Trust Act, providing 
 such combination or association is not in 
 restraint of trade within the United States 
 and is not in restraint of the export trade of 
 any domestic competitor. It is expressly pro- 
 vided, however, that any such association 
 may not, either in the United States or else- 
 where, enter into any agreement, or under- 
 standing, or conspiracy, or do any act which 
 artificially or intentionally enhances or de- 
 presses prices within the United States of 
 commodities of the class exported by such 
 associations, or which substantially lessens 
 [34] 
 
competition within the United States, or 
 otherwise restrains trade therein. 
 
 Section 3 of the Act permits 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 pur- 
 pose of engaging in export trade and actually 
 engaged solely in such export trade, notwith- 
 standing the provisions of Section 7 of the 
 Clayton Anti-Trust Law. It is specifically 
 provided, however, that such acquisition or 
 ownership will not be permitted if its effect 
 may be to restrain trade or substantially 
 lessen competition within the United States. 
 
 Unfair Competition Prohibited 
 
 Although permitting cooperation and associa- 
 tion as above provided, Section 4 of the 
 Act expressly state^^ that the prohibitions 
 against unfair methods of competition and 
 the remedies provided for enforcing such 
 prohibitions contained in the Act approved 
 September 26, 1914, creating the Federal 
 Trade Commission, are extended to unfair 
 methods of competition used in export trade 
 [35 1 
 
against competitors engaged in export trade, 
 even though the acts constituting such unfair 
 methods are done without the territorial 
 jurisdiction of the United States. 
 
 Reports to Federal Trade Commission 
 
 Associations now engaged solely in export 
 trade are required to file with the Federal 
 Trade Commission, within sixty days after 
 the enactment of the law, a verified, written 
 statement setting forth : 
 
 (1) The location of its offices or places of 
 business. 
 
 (2) The names and addresses of all its 
 officers and of all its stockholders or members. 
 
 (3) If a corporation, a copy of its certificate 
 or articles of incorporation and by-laws. 
 
 (4) If unincorporated, a copy of its articles 
 or contract of association. 
 
 Every association entered into after the 
 passage of the law is required to file a similar 
 statement within thirty days after its crea- 
 tion. 
 
 After the filing of the first statement as 
 above, an annual statement shall be filed on 
 [36] 
 
the first day of January of each year showing 
 the location of its oflSces or places of business 
 and the names and addresses of all its oflScers 
 and of all its stockholders or members, show- 
 ing all amendments to and changes in its 
 articles or certificate of incorporation or in 
 its articles or contract of association. Asso- 
 ciations must also furnish such information 
 as the commission may require as to their 
 organization, business, conduct, practices, 
 management, and relation to other associa- 
 tions, corporations, partnerships, and in- 
 dividuals. 
 
 Failure to file repjorts_as above required 
 shall prohibit any association from enjoying 
 the benefits provided by the law. Such 
 association shall also forfeit to the United 
 States, the sum of $100.00 for each day of its 
 continuance of such failure, which forfeiture 
 shall be recoverable by civil suit in the name 
 of the United States under the direction of 
 the Attorney-General of the United States. 
 
 Investigation by Federal Trade Commission 
 Whenever the Federal Trade Commission 
 has reason to believe 
 
 [37 1 
 
(1) that an association is in restraint of 
 trade within the United States or in restraint 
 of the export trade of any domestic com- 
 petitor of such association; or 
 
 (2) that an association either in the United 
 States or elsewhere has entered into any 
 agreement, understanding, or conspiracy or 
 done any act which artificially or intention- 
 ally enhances or depresses prices within the 
 United States of commodities of the class 
 exported by such association, or which sub- 
 stantially lessens competition within the 
 United States or otherwise restrains trade 
 therein, 
 
 it is authorized to summon the officers or 
 agents of such association and conduct an 
 investigation into the alleged violations of 
 the law. If the Commission finds that the 
 association investigated has violated the law, 
 it may make recommendations to the associa- 
 tion for the readjustment of its business in 
 order that it may thereafter maintain its 
 organization and management, and conduct 
 its business in accordance with the law. If 
 the association fails to comply with the 
 [38 1 
 
recommendations made by the Federal Trade 
 Commission, such recommendations shall be 
 referred to the Attorney-General of the 
 United States for such action thereon as he 
 may deem proper. 
 
 Enforcement of Law 
 
 For the purpose of enforcing the provisions 
 of this law, the Federal Trade Commission 
 is given all the powers, so far as applicable, 
 conferred upon it by the Act entitled "An 
 Act to create a Federal Trade Commission, 
 to define its powers and duties, and for other 
 purposes." 
 
 39 
 
Text of Webb Law 
 
 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 Amer- 
 ica 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, manu- 
 facture, or selling for consumption or for re- 
 sale, within the United States or any Terri- 
 tory thereof, of such goods, wares, or mer- 
 chandise, or any act in the course of such 
 production, manufacture, or selling for con- 
 sumption or resale. 
 
 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 
 
 [40 1 
 
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. 
 
 That the word "association" wherever 
 used in this Act means any corporation or 
 combination, by contract or otherwise, of 
 two or more persons, partnerships, or cor- 
 porations. 
 
 Sec. 2. That nothing contained in the Act 
 entitled "An Act to protect trade and com- 
 merce against unlawful restraints and mon- 
 opoHes," 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, agree- 
 ment, 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 
 [41] 
 
of such association: And provided further. 
 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 sub- 
 stantially lessens competition within the 
 United States or otherwise restrains trade 
 therein. 
 
 Sec. 3. That nothing contained in section 
 seven of the Act entitled "An Act to supple- 
 ment existing laws against unlawful restraints 
 and monopolies, and for other purposes," 
 approved October fifteenth, nineteen hundred 
 and fourteen, shall be construed to forbid 
 the acquisition or ownership by any corpo- 
 ration 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 acquisi- 
 tion or ownership may be to restrain trade 
 or substantially lessen competition within the 
 United States. 
 
 [42 1 
 
Sec. 4. That the prohibition against "un- 
 fair methods of competition" and the rem- 
 edies 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 pur- 
 poses," approved September twenty-sixth, 
 nineteen hundred and fourteen, shall be con- 
 strued 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 en- 
 gaged solely in export trade, within sixty 
 days after the passage of this Act, and every 
 association entered into hereafter which en- 
 gages 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 
 ofl&ces or places of business, and the names 
 and addresses of all its oflScers and of all its 
 stockholders or members, and if a corpo- 
 [43 1 
 
ration, a copy of its certificate or articles of 
 incorporation and by-laws, and if unincor- 
 porated, a copy of its articles or contract 
 of association, and on the first day of Jan- 
 uary of each year thereafter it shall make a 
 like statement of the location of its oflBces or 
 places of business and the names and ad- 
 dresses of all its oflScers and of all its stock- 
 holders or members and of all amendments 
 to and changes in its articles or certificate of 
 incorporation or in its articles or contract 
 of association. It shall also fumish to the 
 commission such information as the com- 
 mission may require as to its organization, 
 business, conduct, practices, management, 
 and relation to other associations, corpora- 
 tions, partnerships, and individuals. 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 con- 
 tinuance of such failure, which forfeiture shall 
 be payable into the Treasury of the United 
 States, and shall be recoverable in a civil 
 [44 1 
 
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. 
 
 Whenever the Federal Trade Commission 
 shall have reason to believe that an associa- 
 tion or any agreement made or act done by 
 such association is in restraint of trade within 
 the United States or in restraint of the export 
 trade of any domestic competitor of such 
 association, or that an association either in 
 the United States or elsewhere has entered 
 into any agreement, understanding, or con- 
 spiracy, or done any act which artificially 
 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 
 [45] 
 
or otherwise lessens trade therein, it shall 
 summon such association, its officers, and 
 agents to appear before it, and thereafter 
 conduct an investigation into the alleged 
 violations of law. Upon investigation, if it 
 shall conclude that the law has been violated, 
 it may make to such association recommenda- 
 tions for the readjustment of its business, in 
 order that it may thereafter maintain its 
 organization and management and conduct 
 its business in accordance with law. If such 
 association fails to comply with the recom- 
 mendations of the Federal Trade Commis- 
 sion, said commission shall refer its findings 
 and recommendations to the Attorney-Gen- 
 eral of the United States for such action 
 thereon as he may deem proper. 
 
 For the purpose of enforcing these provi- 
 sions the Federal Trade Commission shall 
 have all the powers, so far as applicable, 
 given it in "An Act to create a Federal Trade 
 Commission, to define its powers and duties, 
 and for other purposes." 
 
 Approved April 10, 1918. 
 
 [46 1 
 
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