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 UNIVERSITY OF CALIFORNIA LIBRARY, BERKELEY THIS BOOK IS DUE ON THE LAST DATE STAMPED BELOW Books not returned on time are subject to a fine of 50c per volume after the third day overdue, increasing to $1.00 per volume after the sixth day. Books not in demand may be renewed if application is made before expiration of loan period. trr 271922 *v^^«-* JIWt9'954LU j^asfeSi FEB?. ^955 m ^ ^"^^ JAN2 6'i9b CT 29 1" '"WV :. , i / ■ ! , -. ■ * / 20m- / Gaylord Bros. Makers Syracuse. N. Y. PAT. J AH. 21, 1908 390739 UNIVERSITY OF CALIFORNIA LIBRARY