As a matter of reciprocity the reports should be mailed only to those members who participate and should be treated by them as absolutely confidential. Under no conditions should they be copied in full or in part, or made public property, without the permission of the member sending in the report.

Averaging Prices Not Allowable

No comment should ever be made on a report by the secretary or by any officer of the association, and no participant or member of the association should feel in the least bound by any quotation that appears in the report.

A case in point came up in the Missouri courts against the Yellow Pine Manufacturers Association several years ago. The secretary had received price reports from the members and from them had selected arbitrarily certain reports from which he averaged the rates and sent this average on a current price sheet to all the members.

This practice the Supreme Court of Missouri condemned as a "price-boosting" device. Had the secretary simply published the prices and allowed the members to draw their own conclusions this action would have been legal; but when he averaged the prices for the various items he began to dictate or suggest what the prices should be.

Therefore, if the current prices of the different members are merely published without comment, they constitute nothing more or less than a market report such as is daily seen in the newspapers.

Composite Reports

The forms in which the association may send out this past price information, however, can be improved and simplified to suit the case. In a large association where there are seventy or eighty members that exchange information as to their prices.

every fortnight, it is a difficult task for each member, upon receiving seventy or eighty different price lists, to analyze them so as to show the comparative values in the market. In such a case the association can prepare a large composite sheet of prices, on which a list of the members is given in the lefthand column and the prices are graded across the sheet, somewhat as in Form 33.

Discussing Prices at Meetings

The uninitiated often feel that the discussion of prices constitutes one of the main activities of an association. It has been long the opinion of members of the most successful organizations in the country that price discussions, although not illegal, are of little value. They feel that the development of a complete system of statistical reports from which the members can keep track of the economic fundamentals of the industry together with current conditions of the market, is the most important aid to them in the proper conduct of their business.

While the discussion of prices or quotations at meetings is not illegal if properly done, the border line is so close and the speakers are so apt to overstep their bounds that it is necessary for all discussions on this subject to be carefully watched. When the discussion becomes in the least questionable, it should be shut off and the member reminded that the association desires above all to keep within the letter and spirit of the law.

The shutting off of such discussions must, of course, be made by one who is thoroughly familiar with the law. Some associations have their counsel present at all meetings and he naturally would be in the best position to give advice along this line. In other associations the chairman or the secretary stops any improper discussions.

It should always be the purpose of the association to con

duct its business openly and frankly. To avoid any suspicion at any future date when the activities of the association might be questioned, a stenographic report of everything that is said at the meeting should be made and kept on file. The report itself is an aid toward developing the work of the association along the right lines because it compels the members to be careful of what they say.

Three Methods Summarized

It should be acknowledged, therefore, that fair prices cannot result from blind, destructive competition, nor yet from secret monopolistic agreements. They can result only from individual judgment and intelligent co-operation, from a knowledge of costs, and from constructive competition. A trade association is the means, and the only means, to this legitimate end. It aids in regulating and stabilizing the industry, resulting in better quality, better service, and fair prices to the public.

CHAPTER XIX

THE LAW AND THE ASSOCIATION

The Sherman Anti-Trust Law

The Anti-Trust Law, commonly called the Sherman Law, has been on the statute books for thirty years, and yet while all business men, particularly manufacturers, have heard of the law, have feared its effects, and have spoken of and about it with bated breath, many of them have never read it or heard it read, and have little knowledge of what it really forbids. Practically all that most men know about the Sherman Law is that by its terms they are forbidden to enter into an agreement with another in order to fix the same prices for their product; and accordingly they seem to think that by reason of such prohibition their profits have been impaired.

The Sherman Law and Trade Associations

The Sherman Law really has only two sections relevant to the activities of trade associations, which clearly state how far co-operation may be carried. The first section stipulates that trade between the several states may not be restrained by contract or combination. The second section states that no person or group of persons shall combine or conspire to monopolize any trade. The law fixes a definite punishment for such violations.

When viewed in the proper light, the law is neither new nor such a dire incubus upon business as some people seem to believe. Certain laws like certain individuals have to be known to be appreciated. The two important sections of the law, as suggested above, are as follows: