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PART FOUR

THE WEBB-POMERENE LAW

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CHAPTER XI.

Summary of the Webb-Pomerene Law.1

Analysis of Statute.

According to its title, this law was enacted "to promote export trade and for other purposes." As defined in Section 1, "export trade" means commerce carried on exclusively with foreign nations; "trade within the United States," means domestic trade within and between the States and Territories and the District of Columbia; while the word "association" means any corporation or combination, by contract or otherwise, of two or more persons, partnerships or corporations."

Section 2 relieves export trade associations from the rigors of the anti-trust laws in so far as they relate to combinations, provided the associations do not seek to carry on "trade within the United States," as above defined, and also refrain from practices that tend to monopolize domestic commerce.

Section 3 permits one corporation to acquire the whole or any part of the stock of another incorporated body, provided the latter is organized and engaged solely in export trade and there is no restraint or other interference with domestic trade. In order to clear the way for combinations of this description and to make our manufacturers and traders feel at ease when thus engaging in foreign commerce, export trade is expressly exempted from the provisions of Section 7 of the Clayton Law, prohibiting ownership of stock in competing corporations.

Section 4 extends the powers and duties of the Federal Trade Commission to include the right to suppress unfair methods of competition used in export trade against competitors engaged in export trade, even though such unfair methods are done outside the territorial jurisdiction of the United States.

In conclusion, Section 5 requires every association now en

1See Exhibit No. VI, p. 438.

gaged or hereafter engaging in export trade to file with the Federal Trade Commission a verified written statement of the location of its offices, the names and addresses of its officers, and a copy of the papers showing how it is organized, together with a list of the stockholders or other persons interested in the enterprise. Reports to the Commission must be made as and when required, under penalty of a $100 per day fine.

Summary Trial of Trade Offenders.

Where an apparent infraction of the Act is shown or charged, the association may be summoned before the Commission; and, in way of promoting a reform in its policy and management, a readjustment of its affairs will be recommended. Disobedience of the Commission's requirements entitle that body to prepare and transmit its findings and recommendations to the Federal Attorney General, for the purpose of consideration thereof prior to instituting proceedings against the association under the provisions of the anti-trust laws. On this point the Act is not mandatory; the Attorney General possesses discretionary powers. Doubtless such prosecutions, when convictions ensue, will carry with them cancellation of the privilege of doing foreign business under the Act, although the statute itself is silent upon that point.

There are a number of provisions of the Act which must be brought before the courts and construed before their exact meaning and scope can be known. Others again may be clarified and applied to specific cases by rulings of the Federal Trade Commission. In the detailed discussion of the various provisions of the Act in Chapters XII, XVII attention is called to a number of problems which surround the practical operation and application of the Act.

Export Trade Act Proceeds Along Original Lines.

The Webb-Pomerene Act is a pioneer in commercial legislation rather than the finished product of legislative thought, for that element is something that only experience can produce.

Export and import trade conditions, and the innumerable factors and elements that surround international trade and commerce are in a constant state of flux. It is not always good policy to lay down hard and fast rules regarding them. What appears sound and correct today, may, as a result of changed economic conditions, prove undesirable or unworkable a year hence. With this in mind, the unique methods provided by Congress for enforcement of the Webb-Pomerene Act appear particularly commendable. We recognize in them a spirit of guidance and helpfulness rather than a repressive attitude toward business, an effort on the part of the government to aid American business men engaged in foreign trade to correct and adjust their machinery in accordance with the standards of good morals.

Foreign Conditions Prompted Enactment.

An examination of the facts which prompted Congress to enact the Webb-Pomerene Law (see page 147), shows that the statute was intended partly as a defensive trade measure. In the words of President Wilson, co-operation in export trade was to make it possible for American exporters "to manage their export business at an advantage instead of a disadvantage as compared with foreign rivals." The combination movement in international trade which challenged attention prior to the passage of the Act, has grown in leaps and bounds since that time (see page 129). Where before the war there was a limited number of export combinations, chiefly in Germany, we now find them. in large numbers in all leading countries of the world.

Looking at competitive conditions, then, as they exist in world trade today, the fact cannot be disregarded that organized groups have replaced very largely the individual enterpriser, and that future development apparently tends in the same direction. There is this marked difference, however, that whereas, in the absence of any government control, more or less secrecy enclouds the organization and operation of foreign export combines, American export associations operating under the WebbPomerene Act must comply with specific legal regulations. They

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