The Other Side

Should U.S. firms be permitted to join international cartels in order to expand foreign trade? The Justice Department's Antitrust Division has invariably answered this prime postwar question with a definite "no." Last week a top U.S. businessman answered with a qualified "yes." Up before a Senate subcommittee stepped grey, urbane Ralph W. Gallagher, 63, president of Standard Oil of New Jersey. He had asked to be heard on the bill sponsored by Wyoming's Senator Joseph O'Mahoney, requiring registration of international cartel agreements. Said President Gallagher: Standard Oil agrees "in principle" with the bill. Standard Oil also believes in "free competition." But Mr. Gallagher reminded the Senators that free competition no longer exists in many nations. In its stead is "control of production, markets and price."

He admitted candidly that in prewar days Standard had been obliged to enter restrictive agreements. The alternative: "Stop doing business in those countries."

Oilman Gallagher pointed out that many of the 16,000 U.S. companies selling abroad must sign foreign restrictive agreements, which laid them open to possible antitrust prosecution, or not do business.

The antitrust laws have long forbidden the formation in the U.S. of business associations which restrain trade. But the Webb-Pomerene Law, 1918, permitted the formation of export associations provided they do not restrain trade in the U.S.

Although legally the two laws are not in conflict, their practical effects are, since, in effect, a U.S. businessman may do abroad what he may not do at home.

Standard's Gallagher told the Committee that this practical conflict must be ended.

As a way out, he recommended: 1) all foreign-trade agreements of U.S. companies which restrict production or allocate markets should be filed with the Government; 2) the Government should have power to nullify specific agreements. To ward off the threat of antitrust prosecution, he would have the antitrust acts tempered so that criminal action could be taken in the case of foreign agreements only if the company failed to register, or failed to terminate the agreement after a federal order.

Said Standard's Gallagher: "We should find means consistent with the welfare of our own country which will enable American business legally to compete abroad. American businessmen want to obey the law and they want to increase foreign trade. The only way they can do both is to assure them that when they obey the laws of other lands, they are not breaking the laws of the U.S."

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