whom they had confidence and who they felt would be perfectly impartial.

More frequent meetings were held. The oftener they met the more they found there was to do. One of the first things they wanted was, of course, to discuss and if possible determine the prices at which they were to sell their commodities. They had a hazy notion, however, of certain restrictions imposed by the federal laws, and feared lest they might inadvertently render themselves liable to indictment. To make sure of that point they retained a lawyer, who advised them at all their meetings just what they could and what they could not legally do.

An Information Service

Eventually their association worked round to the salient principle that if its members were properly informed regarding exact market conditions there was little likelihood that any of them would make a serious mistake in the sale of his product. They learned at once that they could not determine a uniform sales price. But they recognized that the tendency to cut prices and sell below cost usually arose from ignorance of exact market conditions, and that frequently such ignorance could be attributed to information received from unreliable sources.

In order that they might know as definitely as possible what the supply and demand of the market would be they decided to have their secretary compile, at regular intervals, statistics that would show exactly how the market stood. The members severally agreed to furnish to the secretary confidentially the information about production, orders, and shipments that was necessary in order to compose these reports. The secretary was not to make public the private information received from members, but was to issue all statistics in summaries.

Furthermore, in order that the members might give correct information, it was found essential that each one should know definitely what it cost him to manufacture his product. At first a few who had good cost systems showed some of their competitors the principles and proper practice of cost accounting; for they rightly assumed that a competitor who knows his costs is less to be feared than one who runs his business by rule-of-thumb methods. Gradually the industry approached a basis of reasonably uniform costs.

We must not think, however, that all this work of establishing sources of information, a uniform cost system, etc., was accomplished in a few months. Much time was consumed and much talk and urging was required before certain members would consent to give the secretary the desired information. It was not until several years had passed that all the manufacturers of the industry were convinced that they should be members of the association, and not until some time later that all were willing to furnish information or to consider a uniform cost system.

The Record of a Trying Year

The records show clearly what this association, by being correctly informed, did for the industry it represents in one particular year. In many American industries 1915 was a very trying year and it was especially so for the industry in question. But while orders and production fluctuated considerably throughout that year, prices remained uniform. Towards the latter part of the year, as the cost of raw material increased, prices advanced proportionately.

This result was directly traceable to the association, since every member knew exactly when he received his weekly report that he was getting his share of business. Reports of the prices that obtained in raw materials were also carefully observed. Business was indeed poor, but each manu

facturer knew that he was no worse off than his competitor. He did not fear, as he might have done previously, that someone else was getting his business away from him; therefore he had no inclination to send his salesmen out to sell his product at a lower figure than his competitors. Prices did not decline.

In this case there was no collusion, agreement, meeting of minds, or anything of the kind. Each manufacturer was simply informed as to the exact market conditions and used his own individual and independent judgment. The results as shown by statistics were that, whereas under much less trying circumstances the aggregate industry would probably have lost many hundreds of thousands of dollars through undercutting of prices and ruinous competition, the intelligent co-operation of these manufacturers had saved them between $5,000,000 and $6,000,000. No hard feelings had been engendered and both manufacturers and customers were well satisfied. A year that otherwise might have proved disastrous had ended with a fair degree of success, viewed from the standpoint of harmony, satisfaction, and profits. Nor should it be forgotten that where prices are cut recklessly and where every man tries to undersell the other, the disastrous result is not merely temporary since the industry requires several years to recover from the effects of such conditions.

The association whose experience has been narrated is now one of the many strong trade associations in the United States. Its members are doing many other things of a cooperative nature, such as working together on freight rates, insurance, credits, trade abuses, etc. One result of such co-operation is seen in the fact that not long ago, when a part of the industry was affected by a local strike situation, the competitors in that particular district got together, gave one of their members power of attorney, and appointed him

to handle the labor difficulty for them all, which he did successfully.

What has been accomplished is further shown by a remark of one of these manufacturers. He said: "I used to think that Jones was one of the meanest and most contemptible men that ever drew the breath of life, but since I have come to know him at our meetings and have visited him at his mill, I have found him to be one of the finest men whom I have ever had the honor to know." Men who several years ago would not trust one another even in the smallest matter are now working together, and are not only making larger profits but are working more happily than they ever thought possible under former conditions.

Importance of Trade Associations

There are at present about 1,000 trade associations in this country. They are the result of an economic evolution whose beginnings date from far back in the past. In the last decade their value has been more and more recognized. Their activity, however, as a part of American enterprise in business has only begun. Their development in the next ten years will be one of the most prominent features of our economic growth.

CHAPTER II

HISTORICAL EVOLUTION

The Beginning of the Trade Association

The idea that underlies the trade association is extremely old; the tendency to form such organizations has existed since almost the beginning of the commercial life of man.

The Bible contains allusions to organizations of goldsmiths, apothecaries, and spice merchants. From the tendency of certain trades to congregate in one locality, indicated by references in Jeremiah to "the bakers' street," and in Josephus' "Wars of the Jews" to "cheese-makers' valley," we might infer that then as later the need of meeting common problems led to organization.

In Greece and Rome there were associations of merchants for trade both by land and by sea and a beginning of the organization of artisans into what were known as guilds was made. The romantic pages of medieval history, moreover, are full of illustrations of mercantile and industrial associations in countries as widely separated as England, Siberia, Burma, and China.

Medieval Guild and the Modern Trade Association

In many ways the development of our trade associations has followed practically the same lines as the early growth of the guilds of medieval Europe-those of England, for example. While, however, the same motives prompted the formations of the earliest of both of these types of associations, their later growth is distinctly divergent. The spirit of good-fellowship is common to both, which shows that the importance of holding together the co-operative interest of