THE WEBB LAW, ITS SCOPE AND OPERATION

In connection with the lively interest displayed by American business men in the new situations which have developed in international trade as a result of the world-war, the so-called Webb law is receiving a noticeable share of attention.

Excluding all merely temporary, war-time legislation, it is the most important piece of legislation enacted by Congress during the war for the promotion of American export trade. Together with the Federal Reserve Act, and the act authorizing the War Finance Corporation to furnish credits to finance foreign trade, the Webb law represents a noteworthy forward step in the consummation of an American foreign-trade policy. Already a literature of considerable volume has grown up on the Webb Act, and one of our large law schools has included a study of this law in one of the courses of its curriculum.

Moreover, interest in the Webb law is not confined exclusively to this country. The provisions of the Act and its operation have been the subject of numerous articles in foreign publications. With one or two exceptions, which will be noted further on, the comments on the law which have appeared in the foreign press have not voiced any unfavorable criticism. On the contrary, the Act has been pointed to as a model statute.

Attention has been called particularly to the fact that the Webb Act represents the first effort involving compulsory registration of trade combinations and a certain degree of control of the activities of such combinations by a government agency under a special law. A similar plan for government control of cartels and syndicates was advocated at different times in Germany and also in Austria, in connection with official cartel enquêtes in the years 1902 to 1908. In Great Britain this method has apparently strong support in the British Board of Trade. The Committee on Commercial and Industrial Policy After the War, in its final report' recommended that

it should be a legislative requirement that all international combinations or agreements to which British companies or firms are parties, made for the regulation of the prices of goods or services, or for the delimitation of markets, should be registered at the Board of Trade by the British persons, firms or companies concerned, with a statement of the names of all the parties thereto, and of the general nature and object of the combination or agreement; and that all modifications of such agreements and all adhesions and withdrawals should also be notified.

As to combinations or agreements between British firms, the Committee recommended that it should be optional for the parties to register at the Board of Trade, but that any price or other marketing arrangements or agreements registered should be enforceable at law as between the parties thereto. Lastly, the Committee recommended that the Board of Trade should have power to call upon individual consolidations or combines to furnish such information as it may require.2

The newly created Canadian Trade Commission apparently favors new legislation along similar lines regarding the future treatment of combines in Canada, "which shall proceed upon the broad principle that there is an aspect of such movements which requires encouragement, while other aspects require repressive

Both in this country and abroad the Webb law has attracted attention by reason of still another fact. The laws of a number of 'London, 1918, pp. 62 and 63.

See also "Report of Committee on Trusts," Ministry of Reconstruction, London, 1919.

countries, including Great Britain, Canada, France, Austria, Australia, and others approach the problem of trade combinations with the evident purpose of repressing the excrescences of syndication. They plainly indicate a tendency to restrict the free formation as well as the free operation of syndicates or combines. The Webb law represents a departure from this policy. It is looked upon by many, and this was brought out clearly in the debates and hearings on the Webb bill in Congress, as an indication of a change in our traditional policy concerning trade combinations and their economic utility. A similar shifting in governmental attitude toward combinations took place several years ago in connection with the German potash law, followed somewhat later by similar laws elsewhere. The whole movement has received a strong impetus during the war, particularly in the countries economically most highly developed.

NUMBER AND KIND OF ASSOCIATIONS FORMED UNDER THE WEBB LAW

Most of the discussions of the Webb law at meetings of trade associations, and of various commercial organizations, as well as in the press, confined themselves either to certain legal problems or to the numerous advantages expected to result from use of the powers provided by that Act. It is now over a year since the Webb Act was placed on the statute books of the United States, having been approved April 10, 1918. This is, of course, too short a time to permit of any final conclusions as to its operation. Nevertheless, a survey of the general working of the Act during the past fifteen months, from a legal as well as an economic point of view, may show in how far the expectations of those who advocated the enactment of this law have been realized up to the present time. In addition to this, certain trends of development can be readily observed which open up a number of interesting new phases in the history of trade combinations, and in a wider sense of international trade. Then, too, an analysis of the form of organization, and of the agreements of export associations purporting to operate under the Webb Act, will prove of interest in several ways.

Under Section 5 of the Webb Act every association which at the time when the law was enacted was engaged solely in export trade,

as well as every association formed after the passage of the Act, shall, under penalty of fine for failure to do so within a prescribed time, file certain statements with the Federal Trade Commission. These verified written statements shall set forth the places of business, officers, stockholders, or members, and shall include in the case of a corporation a copy of its articles of incorporation and by-laws, and if the association is unincorporated, a copy of its contract of association. Special forms for making this first report are provided by the Federal Trade Commission.

Up to the present time 91 concerns, with 807 stockholders or members, have filed statements with the Federal Trade Commission. It appears,' however, that among these associations there are a number whose articles of association contemplate the transaction of business other than that of solely exporting to foreign nations, whereas Section 2 of the Act exempts from the Sherman Law such associations only which are entered into for the sole purpose of engaging in export trade.

Twenty-five of the associations which purport to be engaged solely in export trade under the Webb law comprise 320 stockholders or members. Among the latter, however, are several trade associations, each with a large membership of its own, so that the actual underlying number of individual concerns which appear to be entitled to the benefits of the Act easily aggregates a thousand. The plants operated by the member concerns of these twenty-five associations number 318, and are distributed over 39 states of the Union.

The diversity of industries in which these export associations have been formed is illustrated by the following list of products which the associations purpose to export to foreign nations: bunker coal, canned fruit, carbonate of magnesia, chemicals, clothespins, condensed milk, copper, doors, elastic and non-elastic webbing, fertilizers, flax, hardware, hides, iron and steel products, laths, locomotives and spare parts thereof, lumber, meats, metal accessories, moldings, office equipment, pharmaceutical blocks of carbonate of magnesia, phosphate rock, pickets, plaster, shingles, skins, silk, soap, staves, tallow, vegetable oils, wool.

'Federal Trade Commission, Foreign Trade Series No. 1 (1919), p. 6.

AMERICAN COMBINATIONS VERSUS FOREIGN COMBINATIONS

In how far have developments subsequent to the passage of the Webb law justified the argument that co-operative selling agencies or associations among American exporters are needed in order that the latter may meet foreign rivals on foreign soil on equal terms? The Federal Trade Commission called attention to foreign combinations competing with American exporters in a special report.' Therein it recommended properly safeguarded declaratory legislation, permitting concerted action by American business men in export trade. President Wilson on several occasions emphasized the need of making it possible and legal for our exporters to combine, allowing them "to manage their export business at an advantage instead of a disadvantage as compared with foreign rivals." Likewise, the Committee on Interstate Commerce of the U.S. Senate (64th Congress, 2d Session, February 14, 1917) in its report recommending an amended form of the Webb law for passage stated as its belief that "it is necessary to permit our business men to form organizations or associations so as to enable them to meet foreign competitors on a more equal footing."

While it is a well-known fact that export combinations existed to a limited extent prior to the war in various foreign countries, nevertheless it must be said that their number and strength has been frequently exaggerated by over-enthusiastic writers and speakers. As a result of this the importance of foreign-export cartels and combinations as competitive factors in international trade before the war came to be somewhat over-estimated in the minds of many, both here and abroad. However, in the world-wide drive for export markets which set in during the war, co-operation in export trade has been advocated and put into actual operation with an ardor and on a scale which easily outdistanced all previous efforts of this kind. The universal tendency toward consolidation, so characteristic of commerce and industry during the war, crystallized itself to a marked extent in the form of combinations for the control of prices and production in the domestic market and 'Report on Co-operation in American Export Trade, Washington, 1916.

2 See "Cartels during the War," Journal of Political Economy, January, 1919,

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