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no such right of way shall be so located as to interfere with the proper occupation by the Government of any such reservation, and all maps of location shall be subject to the approval of the department of the Government having jurisdiction of such reservation, and the privilege herein granted shall not be construed to interfere with the control of water for irrigation and other purposes under authority of the respective States or Territories."

The same stricture, in a measure, applies to the proposed amendment of section 2 of the act of May 11, 1898, supra. I suggest that this section be amended so as to

read:

"That rights of way for ditches, canals, or reservoirs heretofore or hereafter approved under the provisions of sections eighteen, nineteen, twenty, and twenty-one of the act entitled 'An act to repeal timber-culture laws, and for other purposes,' approved March third, eighteen hundred and ninety-one, may be used for purposes of a public nature; and said rights of way may be used for purposes of water transportation, for domestic purposes, or for the development of power, as subsidiary to the main purpose of irrigation or drainage."

Cordially, yours,

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64TH CONGRESS,

2d Session.

SENATE.

EXPORT TRADE.

REPORT No. 1056.

FEBRUARY 14 (calendar day, FEBRUARY 15), 1917.-Ordered to be printed.

Mr. POMERENE, from the Committee on Interstate Commerce, submitted the following

REPORT.

[To accompany H. R. 17350.]

The Committee on Interstate Commerce, to whom was referred the bill (H. R. 17350) to promote export trade, and for other purposes, reports it back with sundry amendments, and with such amendments recommends that it pass..

The Federal Trade Commission, in a summary of a report made May 2, 1916, points out the liberality with which foreign, and particularly European nations permit organizations or combinations with respect to their foreign trade. This is the common practice in Germany, England, France, Italy, Austria-Hungary, Switzerland, Holland, Sweden, and Belgium, as well as in Japan. In Germany alone prior to the beginning of the European war there were 600 important cartels or combinations embracing nearly every manufacturing and commercial industry in the Empire. Many of these organizations devoted themselves largely to the export trade, and they "carried on vigorous campaigns to extend their foreign business, to prevent competition among German producers in foreign markets and to secure profitable prices."

Since the beginning of the European war, the allies have even organized buying agencies for the benefit of their Governments and their people. Our merchants and manufacturers must meet this situation. Very few of them can compete single-handed with these great combinations. Our belief is that it is necessary to permit our business men to form similar organizations or associations so as to enable them to meet foreign competitors on a more equal footing. In this way they will be able to reduce the selling cost and keep in closer touch with the demands of the foreign markets.

But while the purpose of these associations is to improve and extend our foreign trade, their business ought to be so conducted as

to harmonize with the requirements of our laws respecting domestic trade and without injuring any domestic competitor in the foreign trade or unduly thereby enhancing prices to domestic consumers.

The amendments suggested will be considered in the following order:

First. We suggest striking out on page 1, line 8, the words "trading in or marketing," and insert in lieu thereof "or selling for consumption."

The purpose of the bill is to promote export trade. It defines the words "export trade" as "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 bill then further limits this definition by saying "export trade shall not include the production, manufacture, trading in or marketing within the United States," etc. All seem to agree that export trade should not include production and manufacture. The words "trading in or marketing" would permit these associations to compete in the home markets where combinations in restraint of trade. are forbidden. We substitute for this phrase the words "selling for consumption," so that this part of the text will read "The words 'export trade' shall not be deemed to include the production, manufacture or selling for consumption within the United States," etc. We desire, of course, to authorize associations for the sole purpose of selling abroad. In order to do this, they must have the right to acquire or buy within the United States and the right to sell within the United States for the foreign market, but in view of the settled domestic policy of the United States under the Sherman law, clearly these associations should not be permitted to organize for the purpose of making sales abroad and use their organizations to sell for consumption within the United States.

Second. In section 2 of the bill as it passed the House, we recommend striking out at the end of the section the words "and does not restrain the export trade of the United States," and inserting in lieu thereof the following: "And is not in restraint of the export trade of any domestic competitor 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, nor do any act, which artificially or intentionally and unduly enhances prices within the United States of commodities of the class exported by such association."

As presented to us, this section provides that the Sherman Law shall not be construed so as to make illegal an association entered into for the sole purpose of engaging in export trade, and actively engaged solely in export trade or any agreement made or act done in the course of export trade by such association. This section then provides that "these associations or agents shall not be in restraint of trade within the United States, and shall not restrain the export trade of the United States." Of course, we do not want to restrain trade within the United States as the first clause of the language quoted provides.

Reduced to its final analysis, this section attempts to give the right to enter into associations, make agreements, and do acts in restraint of export trade, while the second clause quoted takes away this right. To avoid the effect of the last clause, and at the same time to secure

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the purpose of this act in the interest of our foreign trade, the committee suggests the striking out of the last clause and inserting after the words " 'United States on line 19, page 2, the amendment as written above. By this change the committee aims to place three limitations upon these associations, their acts and agreements:

(a) The authority hereby conferred should not result in the restraint of trade within the United States which is clearly prohibited by the Sherman law.

(b) While the purpose of the bill is to increase our foreign trade, it should not result in destroying the business of other companies, associations, or individuals who may be engaged in the foreign trade. The purpose is to increase and improve this trade, not to injure it.

(c) While we realize that any sales in foreign commerce may incidentally and temporarily result in the increase in prices of the same articles to home consumers, these associations ought not to be permitted to so conduct their affairs as to artificially or intentionally and unduly enhance prices of the commodities in which they are dealing to the home consumer.

To illustrate: While the large packers, in order to get their full share of the foreign trade ought to be permitted to form associations for the purpose of buying meat products and selling them abroad, they ought not to be allowed to so conduct this branch of their business as to increase the prices at home more than would naturally result from the export trade. They ought not to be permitted to buy ostensibly for this trade and then use their stock for the purpose of depressing prices to the point of ruining home competitors, and then raise the prices to all consumers, and thereby secure a monopoly. Hence this last restriction.

Third. The committee recommends that section 5, on page 4, lines 9 to 12, inclusive, be amended by striking out the following: "And of all contracts, agreements, and understandings had with any foreign or domestic association in regard to the conduct of, or practices in foreign trade," and to insert in lieu thereof the following: "It shall also furnish to the commission such information as the commission may require as to the organization, business, conduct, practices, management, and relation of other associations, corporations, partnerships, and individuals." As originally drawn, the information called for by the language stricken out is required to be furnished as a matter of law. By the words inserted the associations are only required to furnish this information as the commission may require. Fourth. Section 4 of the bill aims to prevent "unfair methods of competition" in the foreign trade and extends the jurisdiction which the Federal Trade Commission now has over this subject in domestic commerce to unfair methods of competition in the foreign trade.

Associations, when formed, may enter into agreements or conspiracies or perform acts beyond the territorial limits of the United States which may result in the destroying, seriously injuring, or affecting our commerce, foreign and domestic, by means other than by unfair methods of competition. It seems advisable, therefore, to the majority of the committee that the Federal Trade Commission should be clothed with full power to investigate, so that they may determine whether and to what extent the laws have been violated.

For this reason the committee suggests the amendment at the close of section 5, which reads as follows:

Wherever the Federal Trade Commission shall have reason to believe that an association 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 conspiracy, or done any act which artificially or intentionally and unduly enhances prices within the United States of commodities of the class exported by such association, 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 recommendations 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 fail to comply with the recommendations of the Federal Trade Commission, said commission shall refer its findings and recommendations to the Attorney General of the United States for such action thereon as he may deem proper.

For the purpose of enforcing these provisions 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."

This amendment confers upon the Federal Trade Commission full power to investigate and the right to make recommendations to the associations for the readjustment of their business if any law has been violated so that they may thereafter maintain their organization and management and conduct their business in accordance with the law. If the association fails to do so, then the commission is directed to refer its findings and recommendations to the Attorney General for such action as he may deem proper.

The committee believes that as amended this bill will give to those interested in our foreign trade the full power to organize with respect to that trade so as to enable them to meet our foreign competitors and at the same time will not result in any substantial injury to our domestic commerce.

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