tion plan. This involved agreements between the Brazilian State of Sao Paulo and a syndicate of bankers and others, whereby the disposition of a large quantity of coffee was placed in the hands of a committee, and competition in the importation into and sale of such coffee in the United States was controlled by that committee. The plan resulted in doubling the retail price of coffee in the American markets. Upon the advice of the State Department that representations had been made by the Brazilian Government that the entire quantity of coffee which was being withheld from the market had been sold to a large number of dealers throughout the United States, the suit was dismissed in May, 1913.

Panama Act Contains Anti-trust Provision.

The Panama Canal Act of 1913, provides that no vessel may engage in the coastwise or foreign trade of the United States or pass through the Panama Canal if it is owned or controlled by any person or company doing business in violation of the Sherman Anti-trust Act or Sections 73 to 77 of the Wilson Tariff Act of 1894. Jurisdiction in respect to this last provision is conferred upon the Federal courts.

Shipping Act Provides Supervising Board.

The Shipping Act of September 7, 1916, contains several provisions which are applicable to agreements, understandings and conferences in ocean transportation. They probably will serve as a basis for action in case of complaints against international shipping combines in the future. Under Section 14 of that Act the giving of deferred rebates, the use of "fighting ships" and retaliatory or discriminatory contracts and methods on the part of common carriers by water is prohibited. Section 15 provides that common carriers by water or other persons subject to the Act shall file agreements fixing or regulating rates or fares; controlling competition; pooling or apportioning earnings, losses or traffic; allotting ports; limiting freight or passenger traffic; or providing in any manner for an exclusive, preferential or co

operative working arrangement. The Shipping Board may disapprove, cancel or modify agreements that are unjustly discriminatory or unfair or which operate to the detriment of the commerce of the United States. Agreements approved by the Board shall be lawful and shall be exempt from the Sherman Anti-trust Act and Sections 73 to 77 of the Wilson Tariff Act. Section 17 deals with common carriers by water in foreign commerce, and prohibits them from charging discriminatory rates or rates that are prejudicial to exporters of the United States as compared with their foreign competitors. (See also page 13.)

Law Permits Combination in Export Trade.

The Export Trade Act (page 438) (Webb-Pomerene Law) of April 10, 1918, represents our most recent legislation relating to combinations. It allows the formation of associations or combinations of two or more individuals, partnerships or corporations to engage solely in export trade. Such export associations are exempt from the Sherman Law, provided they do not restrain trade, enhance or depress prices within the United States, or commit an act of unfair competition against an American competitor. It should be noted that the Act does not license combinations to injure foreign competitors. It requires them to file certain statements, including copies of their agreements, with the Federal Trade Commission and gives to that governmental agency certain powers of supervision.

Authority of Trade Commission is Extraterritorial.

A distinct feature of the Act consists in Section 4, which gives extraterritorial jurisdiction1 to the Federal Trade Commission in cases of unfair competition against American competitors engaged in export trade, even when done outside the United States. This jurisdiction applies not only to combinations operating under the Webb-Pomerene Act, but also to individual American ex

1See Chapter XIV on "Extraterritorial Jurisdiction," p. 221.

porters. It remedies the defect in the Sherman Law which made itself felt in the case of American Banana Co. v. United Fruit Co., which is discussed above (page 376).

American Anti-trust Principle Permeates Webb Statute.

The Webb-Pomerene Act represents the first concrete effort on the part of any country to establish a definite policy toward export trade combinations. While it makes possible numerous advantages of co-operation and co-ordination of efforts, it contains at the same time certain safeguards calculated to prevent monopolistic abuses. Various features of the Act, particularly the requirements as to registration, have been recognized by foreign parliamentary committees as warranting them to recommend similar legislation.

Anti-trust Laws Invalidate International Cartels.

Just what bearing the Act will have on international agreements remains to be seen. This much seems certain, that an international agreement or combination which tends to restrain trade unreasonably, involves unfair competition against other American exporters, or artificially and intentionally enhances or depresses prices within the United States would be unlawful under the Sherman Law as well as under the provisions of the Webb-Pomerene Law.

Generally speaking, therefore, international cartel agreements may be assumed to be invalid in those countries where cartel agreements are prohibited by civil or criminal law, in so far as the courts of these respective countries would be called upon to deal with cartel matters coming within their jurisdiction.

Methods Employed to Circumvent Anti-trust Law.

In order to get around this legal insecurity of international combinations, various expedients have been employed. They are partly of a juristic, partly of an administrative character.

A

rather common method consists in locating the central or main office of an international combine in a country whose laws are liberal or where the courts follow a liberal policy towards combinations. Another expedient consists in having each member of the cartel deposit securities, as a bond for faithful compliance with the terms of the contract, in a country that is friendly to combinations. An arrangement is made that the securities thus deposited become automatically forfeited in case of failure on the part of a member to abide by his obligations under the cartel agreement.

Successful Evasion Compels Joint Governmental Action.

The fact that international combinations have grown in number and strength, notwithstanding the enactment of anti-trust laws in most countries, and the apparent success with which such combinations have circumvented efforts made by individual states to supervise, control or suppress them', have at various times given. rise to plans for joint action by all states concerned. It was felt that a satisfactory solution of the problem was possible through co-operation among the different governments interested and through international law rather than through national laws.

Brussels Convention Remedies Sugar Situation.

The Brussels Sugar Convention represents the first successful attempt by a group of nations to wrestle with the problem of combinations. It was formed on March 5, 1902, and subsequently renewed several times, the last time in 1912, for a period of five years. The purpose of this convention was to arrest the practice of dumping sugar into foreign markets, which had been carried on by the sugar cartels of several European countries. These cartels were enabled to export sugar below the domestic market prices by reason of the fact that they were receiving sugar export bounties from their own governments. The treaty was

1Report of Committee on Trusts, London, 1919, p. 33.

signed by Austria-Hungary, Belgium, France, Germany, Great Britain, Italy, the Netherlands, Spain and Sweden, and was joined later by Luxemburg, Peru, Russia and Switzerland. Article 1 of the treaty provides that the parties to the agreement shall suppress direct or indirect bounties which would benefit the production or exportation of sugar and shall not establish such bounties during the term of the treaty. In article 4 it is provided that the signatories shall levy a special import tax on sugar imported from countries which allow bounties on the production or exportation of sugar, the amount of the tax to be equal to the value of the bounty.

War Disrupts European Administration of Sugar.

One of the economic effects of the world war was the disruption of the Brussels Convention. France withdrew on September 1, 1917, and other members followed later. The rearrangement of the world's map and the changed conditions arising therefrom as relating to the leading sugar producing countries will add a number of new problems to future efforts at international regulation of sugar exports. Russia's position is totally altered. The Ukraine alone produces more than eighty per cent. of the former Russian production, and most of the remaining part goes to Poland. A large part of France's sugar-beet area came within the war zone. England's interests, first as a buyer and consumer, and second on account of her sugar-cane producing colonies, have also been changed to a certain extent, while still other changes affecting Germany and Austria must be taken into account in case a new international sugar convention is to be formed. The sugar producers the world over have been well-organized in the past along national lines. War-time food-control measures resulted in still greater coordination. It is not at all improbable that in the future various national units in the sugar industry will establish some form of co-operation relative to the export trade which will again. necessitate interference by the former members of the Brussels Convention.