There is hardly a line in Germany which is not in a similar fashion controlled by cartels or similar com binations. The report of the Federal Trade Com mission on cooperation in American export trade says: Half of the $150,000,000 worth of coal and coke exported annually was sold by one central selling agency, maintained by the great Rheinisch-Westfalische coal syndicate, of which some of the Prussian Government mines are members, and which control the bulk of all the coal and coke produced in the Empire. Practically all the rapidly increasing iron and steel export business was handled respectively by the single selling agencies of the Roheisen-Verband and the Stahlwerks-Verband, the aggressive and closely connected unions of German iron and steel manufacturers. The coal and iron and steel combinations have fostered foreign busi ness thru export bounties and other means.
12. Position of American exporter.—The Ameri can business man entering a foreign market faces, therefore, powerful groups of foreign concerns, backed by groups of banks, aided by railway and ship concerns, and supported in many cases by the various governments. Until recently it was impossible for American business to meet this kind of competition on anything like an equal footing. Combination, with consent of the government, in many cases fos tered by the government, had to be met by American business men forced to battle alone, as individuals. 'rho anxious to combine, they were forbidden to do so by the laws of this country which made any combina tion aiming to partition the market or to fix a sales price illegal.
The Sherman Anti-Trust Law of 1890 was based on this principle of enforced competition. Section 1 of this law reads: Every contract, combination in the form of trust or other wise, or conspiracy, in restraint of trade or commerce among the several states, or with foreign nations, is hereby declared to be illegal.
The Wilson Tariff Act of 1894 also declared all combinations which aimed to control the import trade contrary to public policy, illegal and void.
The application of the Sherman Act to foreign trade was somewhat doubtful. In the case of the American Banana Company vs. the United Fruit Company it was held that the law did not extend be yond our own boundaries, but business men hesitated to combine for export trade for fear of exposing them selves to suspicion of illegal practices at home. The Clayton Anti-Trust Law of 1914 made no mention of foreign trade. The position of the exporter was,
therefore, left in doubt.
13. The Webb-Pomerene Law.—The question was finally settled by the passage by Congress of the Webb-Pomerene Pill. n pril 10, bill "to pro mote trade and for other purposes." This act declares first of all that nothing in the Sherman Act "shall be construed as declaring to be illegal an association entered into for the sole purpose of en gaging in export trade." The export association is thereby declared legal, but the same section continues to explain that such associations must not in any way enhance or depress intentionally the domestic prices. The administration of the act is placed in the hands of the Federal Trade Commission, the powers of which are enlarged, enabling it to take such legal action as shall be necessary to prevent the use of unfair methods of competition.
Every association organized for export trade must file with the Federal Trade Commission within thirty days after its creation, a written statement of the lo cation of its offices, a copy of the articles of incor poration, and the names and business of its officers and stockholders. A yearly report containing the same information must be submitted, while the Fed eral Trade Commission is given the power to require further information.
This act received the warm support of every one who has an interest in the future of American foreign trade.
14. The effect of the cooperation for export trade is now legalized, over a hundred organizations have taken the opportunity to form export associations. Even before this American firms had combined in their selling campaigns abroad, but in a half-hearted fashion, in some cases secretly and in all cases haunted by a fear of offending the dread Sherman Act. Practically all these efforts were restricted to dealers in non-competing lines, where cooperation could hardly have been considered "in restraint of trade." American hardware dealers for years have sold in the Australian market thru a selling combination which handled non-competing lines at a low cost.
The Phoenix Horse Shoe Company of Chicago in combination with other concerns in related industries, such as nail-manufacturers and manufacturers of tools of various kinds, sent a representative to South America. Similar cooperative work was found in the cotton goods, boots and shoes, the leather goods and the electrical business.