First, such delinquent association "shall not have the benefit of the provisions of Sections 2 and 3 of the Act," and second, "it shall also forfeit to the United States the sum of $100 for each and every day of the continuance of such failure, which forfeiture shall be payable into the Treasury of the United States."

FILING OF PAPERS BY "SIMPLE" CORPORATION
(NOT A COMBINATION).

Applicability of Provision to Individual Corporation.

Is a "simple" corporation (not a combination), which happens to be engaged solely in export trade, required to file its certificate or articles of incorporation and by-laws with the Federal Trade Commission under Section 5 of the Webb-Pomerene Act?

The following case may arise: The Pan-Caribbean Trading Corporation, a "simple" corporation, with charter powers to do a general import and export business, happens to be engaging or for a long time past to have been engaged solely in export trade. Must this corporation file papers under Section 5 of the WebbPomerene Act? It would seem that under the terms "every association which engages solely in export trade"-"and if a corporation," the Pan-Caribbean Trading Corporation would be obliged to file papers provided the words "and if a corporation" include a "simple" corporation. At the same time, however, the anomalous situation would arise that while said corporation would come under Section 5 it would not qualify nor benefit under Section 2 and 3 of the Act, because it is not under its charter organized solely for export trade. In Sections 2 and 3 the benefits of the Webb-Pomerene Act are extended to an association "entered into for the sole purpose of engaging in export trade and actually engaged solely in such export trade" (Section 2), and to "any corporation organized solely for the purpose of engaging in export trade" (Section 3). Therefore, the situation would be this, that the above-mentioned Pan-Caribbean Trading Corporation, with its charter powers authorizing it to engage in a general import and export business, would have

to file papers with the Federal Trade Commission and yet be not entitled to whatever benefits might accrue to it under Sections 2 and 3 of the Webb-Pomerene Act. A way out of the difficulty would be for that corporation to change its charter and to limit it solely to export trade. Presumably it would then qualify under Sections 2 and 3 of the Act, always on the supposition, of course, that the terms "association" and "corporation" in Section 5 contemplate "simple" corporations as well as combinations. In numerous instances formations of an ancillary corporation to operate solely in export business, may offer a simple plan.

On further analysis of the context of Section 5, however, it appears that the words "and if a corporation" form the first alternative kind of "association," as that term is used in Section 5. The second kind of "association" is mentioned immediately following with the words "and if unincorporated." In other words that part of Section 5 under discussion has in mind the twofold possible forms of organizations of an association, viz.: (1) the incorporated, (2) the unincorporated. Instead, however, of using an adjective in the first case (to-wit, "incorporated"), the words "if a corporation" are used, while in the second eventuality the adjective "unincorporated" is used. The grammatical context of the whole section, therefore, leads us to assume that the words "and if a corporation" in Section 5 do not contemplate a "simple" corporation, and that the term. "association" is used in Section 5 just as in Section 1 of the Act as embracing a combination, a coming together of two or more separate (competing) entities.

Filing Papers by Individual Corporation Advisable.

In view of the fact that doubt seems to exist in the minds of some regarding the whole question, and as the Act provides a penalty of $100 a day for failure to comply with the provisions of Section 5, and in the absence of any authoritative official ruling or construction of the points involved, it would seem advisable that concerns to which the above-mentioned circumstances apply should file papers with the Federal Trade Commission for their own protection until the whole matter is clarified.

POWER OF COMMISSION TO REJECT APPLICATION.

No Preliminary Approval Before Filing.

The question of whether the Federal Trade Commission under the terms of the Act has power to negative an application by an export association to operate under the law came up in the course of the debate in the House of Representatives on June 13, 1917.1 Representative Morgan urged that the bill should be amended so that before associations could be formed and do business they would have to make an application to the Federal Trade Commission which would have the authority to grant that permission or refuse to grant it. The proposed amendment reads as follows:

"Provided, that before any association shall engage in business under this Act it shall secure from the Federal Trade Commission a permit to engage in such business, and the said Commission is authorized to issue such permits and may, in its discretion, refuse a permit to any association, and may, after hearing, cancel any permit issued."

Mr. Morgan contended that as the bill read, without the proposed amendment, companies would have absolute authority to unite, there being no authority vested in any agency of the government to refuse a permit to any export combine.

The proposed amendment was objected to chiefly on the grounds that such autocratic power, as would be provided for under its terms, should not be vested in any commission of the Government; that a commission might be prejudiced against some line of industry and prevent it from doing what others were permitted to do; and that no commission should have the power to determine who shall do business in the export trade.

In answer to the statement that under the provisions of the bill an association could not be prevented from filing its agreements, etc., and that once an objectionable association had registered there was no effective means of weeding it out-Representative Webb,2 the author of the bill, called attention to the provision of Section 5 which requires that an association shall furnish

1Congressional Record, June 13, 1917, p. 3853, fol. 21. c. p. 3854.

to the Federal Trade Commission such information as the Commission may require as to its organization, business, conduct, practices, management and relation to other associations, corporations, partnerships and individuals and that in case of failure to do so, an association shall forfeit the benefits of Sections 2 and 3 of the Act, and become liable both under the Federal Trade Commission Law and the Sherman Anti-trust Law.

The proposed amendment was voted down by a vote of 131

to II.

CHAPTER XV.

Methods of Forming Export Associations.

The problem of putting together an export association that may be serviceable and workable in export trade, that shall meet the requirements of the law and shall constitute a smooth functioning central agency for co-operation by its participating members, is not a simple matter by any means. It involves, in the first place, a careful study of the possibilities, needs and prospects of the domestic and the foreign market situation of the particular industry, and of competitive conditions in international trade. Special legal and economic problems must be solved in order to reach an agreement upon contractual relations that will be mutually profitable as well as strictly enforceable. To meet these prerequisites several types of association have been worked out in this country and abroad. The details of organization, of course, show an almost infinite variety of schemes and agreements corresponding to the requirements of each individual case. At the Fourth National Foreign Trade Convention of the National Foreign Trade Council, held at Pittsburg in January, 1917, a special committee, composed of practical business men, submitted a report on "Suggested Methods of Co-operation in Foreign Trade."

Valuable Trade Council Report.

So many valuable suggestions are contained in that report that we reprint the same herewith in full, pages 255 to 279. The reader should note, however, that a number of propositions outlined in the report are not in agreement with some of the provisions of the Webb-Pomerene Act, as interpreted by the authors of this book in Chapters XII-XIV. It appears doubtful whether several of the suggestions made in the report if followed in a