1

assortment of goods, and the exchange of ideas among the members of the association. While there is some reason to believe that an association of competing concerns to share the expenses of a foreign selling agency was not in fact prohibited by the anti-trust laws, provided it did not embrace too large a percentage of the trade, nevertheless the uncertainty as to the legal status of such an arrangement had deterred many concerns that were anxious to coöperate from making the venture. The Commission after a study of the legal aspects of the problem was unable to assure manufacturers that common selling agencies were lawful; and accordingly it recommended the passage of an act that would place this right beyond dispute. This recommendation was made, however, subject to the condition that ample precautions be taken to prevent the export associations from being used to restrain trade in the United States in violation of the Sherman Law.2

The campaign to legalize export associations was launched at the first convention of the National Foreign Trade Council, held in Washington, D. C., toward the close of May, 1914. There was thus no connection between the initiation of this movement and the European war. However, the outbreak of the war on August 1, 1914, followed as it was by a short period of depression in this country, presented conditions favorable for an agitation to legalize combinations for the export trade,—it being alleged that foreign business was necessary to "keep the home fires burning" and to provide employment for labor. In May, 1915, the Federal Trade Commission, organized only two months previously, began an investigation of the foreign trade with particular reference to the advisability of permitting coöperation. A summary of its findings, made public in May, 1916, strongly recommended the enactment of permissive legislation.3 At the

1 Some such associations, believed to be legal, had been organized prior to the passage of the Webb Act. See Official Report of the Fourth National Foreign Trade Convention, 1917, p. 187.

2 Report on Cooperation in American Export Trade, I, p. 10.

3

The full report, in two volumes, though dated June 30, 1916, was not published until December, 1916.

date of this report a vast foreign trade was being carried on, and there was no immediate occasion for concern on this score. The campaign cry was thus modified to meet the new situation. Attention was now directed to the tremendous struggle for foreign trade that would manifest itself upon the conclusion of hostilities, and the country was urged by the interested parties to have its loins girded for the fray when it arrived.

The Webb bill was first introduced in the House by Representative Webb of North Carolina on August 8, 1916, some three months after the publication of the summary of the report of the Federal Trade Commission. It was referred to the Committee on the Judiciary, of which Mr. Webb, who had so skilfully and tactfully piloted the Clayton Act through the House two years previously, was chairman. After being amended in important particulars, the significance of which will be noted later,' it passed the House on September 2 by a vote of 199-25.2 Six days later the Senate adjourned; and the Webb bill was permitted to slumber in committee.

President Wilson in his address to the next Congress on December 5, 1916, urged the prompt passage of the Webb bill. He presented no argument on behalf of the bill, but merely pointed out that a great opportunity in foreign trade had presented itself, and that this opportunity might escape us if we hesitated or delayed to remove the legal obstacles that stood in the way.

Notwithstanding the recommendation of the President the Webb bill made practically no progress during the short session from December 4, 1916, to March 4, 1917. The Senate Committee on Interstate Commerce, of which Senator Pomerene was chairman, reported out the bill on February 16, 1917, with amendments, but the measure was not discussed in either the Senate or the House.

During the next session (April 2, 1917-October 6, 1917) the bill in amended form passed the House for the second time, but did not come to a vote in the Senate. The bill as reported out by the House Committee on the Judiciary on May 11, 1917, was 1 See p. 382. 2 Cong. Record, September 2, 1916, p. 13732.

revised in several important particulars to conform to the suggestions of the Senate Committee on Interstate Commerce. As revised by the House Committee, but without any further changes, it passed the House on June 13 by a vote of 242-29, having been debated on only one day, the day of its passage.1 The measure was briefly debated in the Senate on three separate days, but it was not put to a vote, Senator Pomerene having concluded after an investigation that it was impossible to secure action during the current session.

With the convening of the second session of the 65th Congress President Wilson on December 4, 1917, again called the attention of Congress to the Webb bill, saying it "ought by all means to be completed at this session." On this occasion the Senate was prompt indeed. It debated the measure for four days, and on December 12 accepted it, slightly amended, by a vote of 51-11.3 The House objected to the Senate amendments, and conferees were therefore appointed. The report of the conference committee was presented on April 2, 1918; and was accepted by both the Senate and the House on April 6. The bill was signed by the President on April 10.

The act is divided into five sections. Section one is devoted to a definition of certain terms used in the act. The word "association" is defined as "any corporation or combination, by contract or otherwise, of two or more persons, partnerships, or corporations." [The words "export trade" 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 . . . shall not be deemed to include the production, manufacture, or selling for consumption or for resale, within the United States or any Territory thereof, of such goods, wares, or merchandise, or any act in the course of such production, manufacture, or selling for consumption or for resale." 4

1 Cong. Record, June 13, 1917, p. 3584.

2 Ibid., December 4, 1917, p. 20.

3 Ibid., December 12, 1917, p. 186.

In the opinion of the Federal Trade Commission, trade with the Philip

The bill as it had passed the House on September 2, 1916, instead of providing that "export trade" should not be deemed to include the production, manufacture, or selling for consumption or for resale within the United States of exported goods, had provided that it should not be deemed to include the production, manufacture, trading in, or marketing within the United States of such goods. In this form obviously the measure was highly unsatisfactory to those desiring to form export associations; for unless an export association could either produce or trade in, that is, buy, the articles to be exported, its activities would be limited to handling goods on a commission or agency basis, if indeed that was permissible. If it was deemed advisable to allow export associations there was no virtue in unduly hampering them; and accordingly the Senate struck out the words "trading in, or marketing," and substituted the words "or selling for consumption or for resale." By these changes, concurred in by the House, an export association was permitted to purchase goods in this country for export purposes, but it might not produce them itself nor sell them in this country.

Section two provides that nothing in the Sherman Act of 1890 "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, agreement, or act is not in restraint of trade within the United States, and is not in restraint of the export trade of any domestic competitor of such 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

pine Islands, Porto Rico, and Hawaii is not export trade. Annual Report, 1918, p. 40.

1 See text of bill in Annual Report of the Federal Trade Commission, 1916, pp. 60-61.

association, or which substantially lessens competition within the United States or otherwise restrains trade therein."

Section two of the act as above quoted is identical with the bill as it first passed the House down to the words "in restraint of trade within the United States;" but differs vitally from that point on. The House bill had legalized export associations provided they were not in restraint of trade within the United States, and provided they did not restrain the export trade of the United States.1 The Senate Committee on Interstate Commerce pointed out that this second proviso took away a right granted elsewhere in the bill to enter into associations and make agreements in restraint of export trade; and it accordingly modified the proviso so that it merely forbade a restraint of the export trade of any domestic competitor of such association. This change was accepted by the Senate and the House. Having removed, however, the prohibition against the restraint of the export trade of the United States, it became necessary to provide in some way against the use of such associations to influence prices improperly in this country. Accordingly the Senate Committee added the last proviso dealing with prices in the United States. The bill as it became law is identical with the amendment of the Senate Committee except in three particulars: (1) the Senate inserted the words "or depresses" after "enhances" in order to prevent export associations from beating down the prices of goods purchased by them; 3 (2) the Senate struck out the words "and unduly" enhances prices, from an uncertainty as to the meaning of "undue" enhancement; and (3) the conference committee added the words at the close of section two reading "or which substantially lessens competition within the United States or otherwise restrains trade therein."

4

1 This second proviso was not in the bill as originally introduced in the House by Mr. Webb, but he agreed to the change. See Cong. Record, September 2, 1916, p. 13725.

2 See Senate Report no. 1056, 64th Cong., 2nd Sess.

3

Cong. Record, May 23, 1917, p. 2787; and September 22, 1917, p. 7325. 4 Ibid., December 12, 1917, p. 184.