OPEN PRICE ASSOCIATIONS BY MILTON NELS NELSON A. B., University of Illinois, 1915 A. M., University of Illinois, 1917 THESIS Submitted in Partial Fulfillment of the Requirements for the Degree of DOCTOR OF PHILOSOPHY IN ECONOMICS IN THE GRADUATE SCHOOL OF THE UNIVERSITY OF ILLINOIS 1921 LA! '.nr 3*' ' 'SiC^vjat YTiajigiviwa " }‘: \ - . 400 HS» 3T AUa AHfl aHT'- "X ' ij; '(? 1 r r 1^: K' l:^», • »t' vJ .1 . /■' " '""’fi/, kauwi 1* V^in' ^ t j .j .'_^ ... .V ^ mm ^ , .. _ ' ' I M ' ,i I ■w >■”. «ri 7 j ,i _ f &j Li.’i .'•S' li^ 'i'’ ’y^ 1^ * ' *' ■ J^ :.^<«r ^ mm 'i^ ;. '}■.. V ;. ;.„ i-.iay^*c fV ’>*£.' •■•? .yfy*'>-,v\v. , ■ wi. ‘''y^ rl.-i :^r . "■ ■ ’-■^...i^t i w* SK. .■-'+ -rw^-r t. • ‘'*'P ''^»>' wO, ■' >W«lt*r)im«?4 i^;.. , Hmm s£:A :, ^ ^ ■ irf&fj.C yjfvTi' ‘ bi, Ay'^^t V w * A I. ' W y, #2 PEEIFACE The dissertation which follows mast he looked upon as an introductory study of the open price movement rather than an exhaustive one. The movement being of comparatively recent origin, the accnimilated data, based on obser/ation and experience, necessarily inconclusive on many points. In consequence it has been fonnd necessary in many instances to base conclusions mainly on theoret- ical considerations. There remains for future investigators the obvious task of testing out these conclusions in the light of a more adequate fund of data. The writer desires to express his obligation to officers of open price associations, too numerous to mention by name, for their cooperation in furnishing data. Special acknowledgements are due to Professor Llaurice H. Robinson of the University of Illinois who suggested the tox^ic and under whose super/ision the work has been brought to completion. Appreciation is also ex- pressed to members of the Economic Seminar (1920-1921) of the University of Illinois for permission to read and offer for their criticism certain chapters of the dissertation. ■ Vijr t ^? w : <\ •■ • T h-' .-^v- 1 % •;r ite^id^r > ' rifjic; ir'CfXo-'i *i. I4 r r.-,i ;»:^~ - ’ iruf^vaei • " v’iia ter . j »:. !r?. 'i -\-;AKcg ~a ,;a' 54 «ir ft -Tj . 2 |> 4 V C- ,t:l . - c -fo • ^tei,''J?'nt}fic.i \;^t S{S^ pi' f¥'- ■’ ■ ^ ■“' > ■ . ' ' - v' •‘. '■'j' '^*' . *^ 'V'v^^ '-^ -JB' ' :s>J iurtiJlio T TiQ'; .■_ ■•- •' ' ' / ■' 'il* ■ ' " '' ^ -5ii^A»- ^ -■ .ri^ ;.ff iT^6-r;’^'flHrr-^^ ’ i I* -i ♦ .,^ Oiliak.’ ’.•>ai>‘lc»’i'; '-:>;k •'- -ijj* ■f*.ci>i«''- ■ - . ■ ir ' ;* ;.■, > - ^ ,i’ .V26te4 TABLE OF CONTE'TTS Page Clia[3ter I— TEMIIIOLOGY, DEFINITION, PPEVALEI^'TCE, PUEPOSES, AITD HISTOEIC OEIGIN 1 Cl^aracter of terms in use to designate open price activity 2 Open price associations and ordinary trade associations com- pared 2 Prevalence in the various Industries 3-11 Di strihution among manufacturers, wholesalers and retailers 12. y Objects of Eddy and other associations 13-18 “Historic origin 19-23 Eecant developments 24 Chapter II— DESCEIPTION OF THE COUTBINATION AND ASSOCIATION DEVED- 0?I£KNT IN THE I EON AND STEEL IITDUSTEY AND COI.PAEISON ?JITH THE OPEl^ PEICE ASSOCIATION 25 ^ Eeporting system of combinations and open price associa- tions compared 25-27 ‘ Objects of combinations and open price associations compared 27-3S Eesemblances between statistical associations and open price associations 29 ^ Statistical associations succeeded by the Gary dinner system 30-37 The Gary dinner system succeeded by the open price system 37-39 Chapter III— THE EDDY THEOEY AND PLAN OF NEV/ COLIFETITION 40 Theory in support of the open price plan 40 Eddy's arraignment of present competitive conditions 40-42 Eddy' 3 exposition of "true competition" 43 Criticism of the Eddy statement of theory 44 Digitized by the Internet Archive in 2016 https://archive.org/details/openpriceassociaOOnels Knowledge, the essence of con^petition 44 Competitive conditions on the Exchanges 45 Vindication of coirpetiticn as conceived hy the economist 46 The v/orth of Eddy' s work estimated 46 Criticism of the Eddy open price plan 47-49 Chapter IV— STRICTUML FEATURES OE THE O'^EN PRICE ASSOCIATION 50 Voluntary and incorporated types coaqpared 50-53 I.femb e r ship 54 _ 59 - Officers - 60-65 The Central Office 55 Meetings 66-70 Chapter V— THE REPORTING PLAN 71 ' Reporting among manufacturers who maice goods to specification 71 The Eddy Plan 71 ^ Deviations from the Eddy Plan 72-73 Method of reporting among typical Eddy associations 73-74 Deviations from methods in use oy Eddy associations 74-75 Reporting among manuiacturers who sell to jobhers and retail- ers 7 S Standardization 75 Differences in the amount of information interchanged 78 Filing of price lists 79-81 Filing reports of actual sales transactions 81-35 Trade statistics, costs, etc. 86-96 Chapter VI— THE ADVANTAGES AND DISADVANTAGES CONNECTED Y/ITH OPEfT PRICE WORK 97 Advantages 97-113 Development of the spirit of cooperation 97-100 9 ■t i A I t i ( 1 « 1 t < <&■ Relative "benefits to the small and large manufacturer 100-103 ‘^"Preventing pixrchasers from overreaching manufacturers 103-106 •^Benefits to the Government 106-107 / "Uses made of statistics 107-113 Disadvantages 113-127 Handicaps to the installation of aii open price system 113-119 Negligence in the performance of obligations 119-123 Deficiencies in the reporting system 123-126 Probable success or failure of open price v/ork 126-127 Chapter VII— OPEN PPJCE ACTIVITY IN TEE LOI/IBER HDUSTEY 128 Prevalence 128-12° Comparison with the Eddy type of open px’ice activity 129-131 The Yellow Pine Association 132-137 The American Hardwood lihnufacturers * Association 137-148 Public and economic aspects of open price activity 143-155 Chapter VII I- -REGULATORY ASPECTS OP OPSI PRICE ACTIVITY 157 Importance of the case of the United States vs. American Column and Lumber Co. et al 157-160 Decisions ai^plicable to the open price system 161-166 Expositions of the law relating to the open price plan 166-175 Illegal activities and suggested remedies 175-188 Attitude of the Federal Government 188-193 Chapter IX— SOI.IE CONSIDERATIONS IF\T0LVED IN A STUDY OF THE INFLU- ENCE OF OPEJJ PPJCE ACTIVITY ON PRICES 1S4 Difficulty of ascertaining effect on prices 194 ivlathod of ascertaining influence on prices 195-199 llie need of exercising care in choosing data for stxxdy 200 roi -^ 0 / # F » ^ -Jsl 'f '■-"<■■: . T 5 X 1 ? fc 3 er -? c : .- s . x-wtr fp ^ x-Kt ra’ti7^*fea^7Uii» ivTfcf bsu jCiUw3 '-ii’ *tiVi£ro:jn \e &iuLltt iC • slJfiKrr ' i '® Si or^*j sr h : ?^'$ i ?’; ar^«-iiv ^~?iVf ‘r>4i ff-:!»<( r'|0 ‘id (KJX? -‘iii •Xl(^5:to r.*«li^OdM«A mi'i: ^oXi«T ui£T H a%itpl^9ik 2 ruvro^ '-qi^-.:: 4>x -'' ':rrr?r;i t^2^.-xrr3?--ii*' ^iti(Kfi9'r •1 Sf ■I ’'AdXjii X . W ? io : a«iMj -”43 Xq • ■ .1 ^ X» i'fr. 4r=^ rtdirXo’ft i ■' <. j .- > j “1 ■ ' T - c^i^^s-kaHij-x.rqp iiXrf <> | JrHif-rym B6.ttl'fit:pt Ze^^JS't ^ Jlfl 3 t "'^ -5 - ' * . ''^ i^iSLsnjpvcfii Tfc *©40 T 7 ^ 7 ^ i ti irrr^i 11^ K * ^iS-hV X ? c -* ^ TTi ? n ^ ecoiiv .: t:ia iaa’lto lo ‘it rs 4 i * r^pti ♦ srr»/^ni -v .- VfcjT^a lol ci trj)»p -iJ^ip ':© I>tffr ^ * ■■' - . l >. r ' ik ilt ^ Influences at work 201-214 Chapter X— OPEN PPJCE ASSOCIATIONS ANN TIIE PUBLIC WELEilEE 215 The open price plan in its relation to coc 5 >etition 215-216 Benefits to the sellers and buyers conpared 216-218 Conditions under which open price work may jeopardize the public interest 218-219 Inadvisability of abandoning open price work 220-221 Establishment of an open price bureau by the Federal Government 222-226 Illustrative charts 1 . Comparison of prices received by members of American Hard- wood Itoif acturers ' Associations with those received by a non-member follo'wing page 197 2. Con^jarison of prices received by members of American Hard- wood I’Aanufacturers' Association following page 198 3. Coiipilation of prices received by members of American Hardwood Ivlanufacturers' Association disclosing the wide '^ 2 ■' rcG-cc'j 'w ••; l * ^If ^ t;iX£*«4,g;O0( xl« ii'aow tait-g tsm© **oJUft» 14^^ ni^.OlJlfecwO jj L.' .V . diZtUP^ i, '}: -^^:s=^V _ ../fSfi'l ctiTt: % i.tt^a§4S l9 l.-i-45£S ir * XW yS’Jfe^cIidX •^’S•. i&'- tiftv I i^.crr -of Us. ilaafi. ‘>^il ..dcJ^q le cr^. >6 r-*i‘ raiSA.ido*«4 •*iC7.7tf3^1inr*^ 1 DO# !■’ „T ■ - ;~ ■'».' '' — .W-tw Mil f ‘iiuxu^D^jitwaji, t 'yKh%^ :^9tx“ir^ >b vOt^Qktf at>oi*^ To aoi^*f; 4?^ ,» :. iol Lif^Jtrtearz w$ottq ?i .ici^w74?f V] 'tSm^ir, • ',3-' j’ 21: ’ ' ■. d! ’i •ajiJuIsiWta ioi7*i n«(jO \o ?»IJ *.X -e - * la&ficY ; niJTi'. .IMi-l «. 'eli^^OKT XjsrtoljjtST (=, 'H 47c>/»-j3fX^rO \^Xx;,^Q^<^33ctta8t'< ^0 x^*ir=. 7X«kiO lo ni>X#iiiloo«ftX ' >tX slpfi* - 'i :?ofX3U»oi>i^4 tiifXXiB oiiiD F I'T^. fc'*«cf;€ac:C lAJ . *' 14-15. North Carolina Pine Association lS-17. Steel Barrel Tvlantifacturers' Association 18. United States Potash Producers' Association IS. News Print Service Bxireau 20. Ohio Iviillers State Association 21. American Hardwood Manufacturers' Association 22. Vfest Coast Lumbermen's Association 23. Cotton Thread Manufacturers' Exchange 24-25. North Carolina Pine Association 26-27. National Association of Chair Manufacturers 28. Society of Lianufacturing Confectioners 29. Tool Steel Society 30. Drill and Reamer Society 31. American Hardwood Manufacturers' Association 32. Salt Producers' Association 33-34. National Association of Box Manufacturers 35-36. North Carolina Pine Association Bibliograjjhy Vita -Ti- . a'i iOMHA 'iil fftT'rc.*' c3f?/icjO€n '4'?i^o’»JEia*rt iiilrx BjidH rtol.^JitAo^tt at«‘AXjy oidO' i^ruPt -r«x'' •;i**ury - *>i r. 3 k» hi "Uir ; to : ‘*i 6 rf 8 x^iiioofl loc-r -J^h^ooo I*4;rtfli4 ^ ^ r.9i:\tpOBikA, ^ 'Ha-ui/?Si^ *Xi±* iCE iv JL KtiOC . * \ %pi • ' * (wl 5 f •I ■‘.. :- h tvif! •'S'f.,j- 1 CHAPTER I TEIff^IHOLOGY, DEFINITION, PREVALENCE, PURPOSES, AND HISTORIC ORIGIN TER.IINOLOGY It is not easy to identify an open price association "by its name. They are most comconly designated as "associations” or ”‘btirea-as" or "institutes" 1 or "societies" or "e exchanges". The terns most commonly used to designate the kind of activity engaged in oy open price a ssociations are "New Competition", "Open Door Comoetition", "Or.en Price Cooperation", and "Cooperative Competition". Perhaps the last named term is the most e^qpressive because it invites attention to the fact tliat mem- bers of an open price association aim to cooperate in such a manner that compe- tition between themselves vdll not be impaired. The use of such a term as "Open Price Cooperation" is open to the objection that it lays undue stress on the price feature of the open price plan. Ifeny supporters of the plan talce the ground that this activity occupies a position of lesser importance tlian other activities involved in the operation of the plan. That there is some weight to 2 this assertion will be shown in another connection. Of course the garnp criti- cism applies to the use of the term "Open Price Associations". However it has merit in that it calls attention to an activity that is peculiar to this type of association as distinct from that of the ordinary trade a ssociation, namely price reporting. 1 . Illustrations: Airierican Hardwood Manufacturers' Association; Lumbermens' Statistical Bureau; National Bar Iron Institute; Manganese Steel Founders' Society; Steel lacker and Shelving Manufacturers' E:xchange. 2 . See chapter 5, p. 85. 2 DEFINITION The open price association is an organization which provides a medium for the exchange of h-osiness information among members of a given industry \>»hereby they may arrive at an intimate acquaintance with competitive conditions as they exist among themselves and in the whole industry. The business facts most commonly exchanged are those relating to prices actually quoted or charged, terms of payment, manufacturing and selling costs, purchases, stocks, production, orders, shipments, inquiries, bids, contracts, returned goods, cancellations, advertising and credits. price association and the ordinary trade association. The ordinary trade association is very loosely organized and serves only certain general purposes. There is little or no attempt to systematically assemble , compile and dissemin- ate complete and accurate business statistics. Meetings are infrequent; mem- bers do not come much in personal contact at these meetings because the member- ship is usually large. Divergence of interests is more or less great, making it difficult to secure harmony of action. It is often found that the members of such an association do exchange price information. In so far as this is done, the association may be considered a kind of an open price association but it is not a typical one. The typical open price association is a small, closely knit organiza- tion. Its members place heavy emphasis on the importance of assembling, com- piling and disseminating among themselves complete and accurate statistics. These statistics serve the purpose of putting each member in possession of business facts which will provide him '/dth a basis for the intelligent direction and control of his business, if anything, even more emphasis is put upon the inroortance of securing frequent personal contact between members. This is There are discernible several points of difference between an open wbiTinT'^ mittm ;tr>Uiirtfi3*«-o a» «1 ooUHr-o®** 6ahr^ MiT. *wrl9 * ^ :nodv.^ virft*=« iwiJ^enotel o«t«ilt£rif lo ^ »i ’^«r UUiUiiar p Li i Ct dtt^ •CnJt^aI*t>fCA rtC i* ovH*SA ^Cfl« * c 76 n 1 »t«r»ii.T wi B»«w ^&iw »<» ,fcrvi«/*^ tB »»5ioop eoclifr ^mwaaoD^io® ,»i»o» toi *cKttV / olfi'flsorMW ,§9maqifi9 \tn^'ro * o * ■ , ^ B/w jflUi^vBa _r. - V" ca »70 rj^ a oT»r^.tf ^j^neriXB V rintra* flrnrwat#? Sj(' * Atjc*\4 rsA'iBtO crfT .’oiiaisortJI ♦‘iaiJ \iuc^nC' c,tli hki Br.ca<^t i}«*lit^ t«' vrwjor vi ^fiaaroo ;^X-i,t««W xX*^*^^*^!*^*^ 0- '® *|.in: •! •'Tfxff f ^ .4 ,'c4a «rs f^n2X&i«, .vc^.-.iWa #•»*', i*irtf a ^s'i.-:aaT U r*JTc«*;*5 at ifcrts h*jod tfoa^cfc *■ .5 .iatTH »ael T.& tc ftoa»|riovfC ,«:jr:jBf xXX>w2«if ai n^m «i iX .<»liivji otf ♦Xjrt41t1XB tfX I k’’ i al e^ ‘5fl-l o» aJ , ao f al wHcf •-•& mlJ^^ooFM ffaxr« h ■ts^l .t^1JaX 6'5«>«4 ®?iaf7 r:;-pp air !« otxl£ m 94 y.Ma aDl^iiiftxiJia- *rfi , .e» tcoJtc^<‘> ii -’•-^y - -asXnK-^-tc iifri ^X*«or5 ,IX«is* # iTC,li*toQ4k» doi't^r a#4Bi*&t»* vMd ci tt Ji '^0 4mn * t»vo .we/?w rw i Jflij 9ru»^»ii> ^X«a«^ ^p^en- t^i^potn 9«^X al . C’^oi^fll lo woX'folKf; •jf '. -tO>T ion nji aftoHqr tmsiefi '>i ft.’sciaamald . feaoi^a»ait«i «i MnrXev ao*rrji72S’? .bp4i^iui I ' Mk lo vrrair aroff Gsahr^/- ao »1 cs^ijii^ef aja «>H a.Klkr^ *-fTX Jt” , »*«»% di»*er #pod>«f , 05lte Xi/Oitri^ tla’jXJrra «i Ti^rauM) ol oa^tPili^ Vu *f.* ':;^Th<3« aoHf a*ac P«IlA:>-ca *sii Ip ^qlvaln^i ^aX^.owe .v^' jtOlX- "' • * . , ■« ‘ '^£ifX4ao<(;[ JW^atrif «3 vftic.' 'WP XXa Sdssttb act C^Md * -j^i'afiifeT‘^'3 JE»«owl.tX aX^ ta-lXw* arfX “•fc^o^itcrd. ‘aDi%J*^vS> ^ ^'tcnf/ dAi*;c ff-My SffioXi ^rteAX.at?ik!%B ri;ol^*^ooas^^,ft^^HQ cteo eaXft-viaawt hm iarLgfc'd Tacil ^ XaXX a ^^oallo.d Paif &oa hx^b^srH t •asoa oortOiJ ^XT* 9*’.6 XaB»a^<^0 nipa riol:x2c{0 ' ^ » ' ■ ^ •- •* ^*.*£S3q’XB£( i^i/r •»otat ion Mfc *nmvtolni Btfi nwcfopF . 9,io I J Ml Co f'iMiii H ijt'in jDcf c»X(r aoXicr ^»

sl ,’CfifcS ,8 •d"'? ,3L^I 'ars»?n-f=7'f , .5 , IK .*^ V .^ti 1 4 There la no doubt that the late war gave an Inmettis to the spread of this association movement. In supnl 3 ring its needs, the Government made a prac- tice of dealing with associations of manufacturers rather than with individuals. Many associations that were hastily throm together for war purposes were kept 1 up after the advent of peace, Requests made by the Government for statistical data relating to such matters as stocks of goods on hand in any given industry, productive capacity of individual manufacturers, et cetera, provided associations with a strong Incentive for gathering, and compiling statistics relating to their industry. Many associations, organized to do open price work, sprang up. Or- dinary trade associations added certain features of the open price system to their other functions. Shortly after the close of the war, as a part of its avowed purpose of determining the reasons for the high cost of living, the De- partment of Justice of the TJhlted States began a searching investigation into the workings of certain of the so-called open price associations. Early in the year 1°20 a Bill of Con 5 >laint was filed against the largest open price associa- tion in the country, the Americsn Hardwood Manufacturers' Association. A month later, the Federal Court for the Western District of Tennessee'^ granted an in- junction restraining the members of this association #10 were m.embers of the open price plan from engaging in any open price activity ^whatever. Subsequently an announcement was made by one of the assistants to the Attorney General that he considered the law as applied in this case firmly established and that any other ^‘Eohrbach, C. R. Printers' Ink, Feb. 5, 1920. ^’Journal of Commerce, May 11, 1917; May 16, 1918. 3.Bfll of complaint, American Column & Lumber Co. et al vs.U. S. Bill filed in Federal Court for Western District of Tenn. , Feb., 1920. '^•American Lumberman, f.fer. 20, 1920. Decision rendered in Mar. 1920. ' ! -re ■ r i' ■ ' * ' ' y.r ♦ V \ '1 ' tJC ' f !f: ■ i'- . . ,'s: . : r : ■■' '•fdbien^- 'H . , or ■ ij ■ ou to I I 'iJP • j associations operating similarly would te proceeded against.^ These events naturally reacted on the rapid spread of associations of this kind and resulted in the suspension of open price activity on the part of many of them, - at least temporarily, pending the outcome of the spreal that the memibers of the hardwood open price plan had made to the Supremie Court. ^ The open price movement is therefore now (1921) at a standstill. Open price Associations may he fow.d in all parts of the United States A large number of them, if not the largest, appear to have their headquarters in New York and Chicago. A glance at the appended list of open price associations^ will indicate how widely different are the lines of trade in iflhich they flourish The list, vdiich is believed to be a representative one, also points to the con- clusion that the open price movement in its most highly developed form is spread ing most rapidly in lines of trade wherein the number of competitors is relative' ly small. The reasons for this would appear to be, in the first place, that groups of competitors in the smaller lines, not having the benefit of trade papers feel a peculiar need of some medium for learning of conditions of trade. The open price system meets this need. In the second place it is, srenerally speaking, true, that the more numerous the competitors in a given line are, the more difficult it is to bring about effective cooperation bet'.i'een them. This is ^■toerlcar. LantemBn. fer. 20, 1920. Statement of Jndee C. E. Smee Aeaiotant to the Attorney General. 2-For instance. National Coal Association, Hollow Building Tile Association National Warm Air Heatir.g and ventilating Association. Several in lumber indus- try. 3 ■ Appen dix , Hxh ib . 1 . 4. One of the largest if not the largest onen -nrice association of the fifteen National Association cf Finishers of Cotton Fabrics, has 67 members. The avera.ge number seems to be no greater than twenty-five. See Testimony of J. Mathews before the ,ioint Legislative corrarittee on Housing, Legislathre of New York, fjec. 29, 1^20. up. 4602-4603. ,! * -r,'* TW« •• -i- r -'1/ ' ' ' -i ' . 9ktff»V4 VUiSff ^ fcMkfc«^6«Tq s'«f rtrSfO**” . .>« rtf te irtlJl >0 *3s^i**?30tt4 y> fclCBn #rtJ u««f .?> - .wyfvT Ira 'to aa aO^»c*??*^ nd$: Oi w, *^8 - • »x-^j la rrsdisiw »iti I^* 3a wftf >o aettca^t’c ;wi.*&qt?il ,xttwo« :> - . : '■■ .-. • ^ »=! das wr^ sal^ff'^qo #47 ".^lopO #5^1 *£ x^ ^ 1 At » T Ttt rrfti^iiitff Shi t*oo«lt ^ Ism m^lt ' ■ - ' r'-4 H ':7t kf# f5i .^ .-ti >c *3»5U j ^^li»aijbqX, l^itXw ^ -i»t oS tl-tioc obX-* .•oo •Ti^JUf^svTBqperr -» ,IbXX fteC L r ‘ ’ ‘ ^ j; . ' «t \ri«^ I>»wl9?fifc ^ctx^5i^^ #»DKj iT? ♦a^HT *«“ao miuSo r <*«v ^ • » . V* ’ ^ »i •io;?i’J«ctttf.n tuts rXfes*r< • ^‘’r* '.o 4 aaXX '- ^ 1^'^' .'tijfr udif (it , .^' ^ *- XilTx** oao£4&<»'j •jiT . ^ j»bsi^ ’!« 3'XV«o»^ 3t‘»^v#.:’ iiSfl' nSfliMM ♦sf^ «X lo ■ •& *to t«- 5UrlJb«JC -UiXirt^x • X«^l r.^: /’ ■ ,. •- ' X^t*UK»"i .,«! Si oo*iq I'/icouf- at ,^Aoa -s«r»es« #ffT-'! ia [ fi? ' ■■ ■' " i ,^TMi. «u5il o6vI» ff -eJ i«roei.eej oi«ei *»rfi , ScU76 >«qf« ? " aifr , 1 I ' " - 'fcj ' " ."i I 3a»l X#or -o-wX t' ^MJ.^•>r^^. k» gat#.ii8ir %»K> i*y» vi mw%v^ f .9 s ?*1X V XaapIvfjjKiic^' ,Y>t* .*;.1i! n**#JxX«. io > „ - ji, t . _ . _ .■• ,j r^rf 6 "I particularly true w3aen the cooperation required is of a most intimate and un- precedented kind. Even the most intelligent of business men find it difficult to grasp the spirit of cooperation which makes men willing, for example, to lay hare before competitors vital statistics pertaining to their own businesses. Filled, as he is, with distrust and suspicion of the motives and actions of his competitors, the ordinary business man is not easily reconciled to a program which involves cooperation with them in this very intimate way. A long caraoaign of education must ensue before these barriers can be cleared away. Even v^hen he has reached the point where he is willing to cooperate, there is the diffi- cult task of teaching him to be accurate, p-onctual and regular in reporting such Ir^formation as may be requested of him by the bureau gathering, compiling and disseminating the infonnation. The open price plan has been in existence for about nine years only. It would seem almost impossible, then, for lines of trade with large numbers of conpetitors to have arrived at a very high stage of development in open price work. Some industries, like the textile industry, do have open price associations that are highly developed in their structure and functional activities, but it will generally be found that their activities are limited to certain lines of trade in the Industry, wherein comcetitors are relatively few and processes are more or less simple and therefore cocroaratively easy to standardize. The lumber industry, perhaps, offers the most conspicuous examole of the attempt to secure cooperation of a large body of competitors in its entirety under the open price plan. Even in the most successful association of the many in the lumber Industry doing open price work, the American Hardwood Manu- facturers* Association, it was found well nigh impossible to secure sufficient cooperation among conpetitors to make the plan entirely successful. Early in the year 1919, after an existence of about two years as a consolidation of two -rtT fi aji’v-jd^'D &di a^ctv arrr* .v ttjMZ., ■ ... . -'^ Tftr^vif n ^**1^ a&a ’to ae<« oart^ j WB saaLm Jctdbr rso^^^pa^^^ts* 'ic t 0^ - •.J?m«»i-:f«ptf .-tmi- o4 tR^ii*»'S*o!v onolwf - ■ "* * * r ' ^ ‘ tii( 'ic jatu^nsg. L'^ts, mat 5ck sui #• ,Jtka|I^ flUfl'%: tori o vat li&iiM I '** ■■■ '■ V- ‘'’; .ta*»'J'- o-i ju»o «« Wa» Ssvm-eottvxrb^^ S .al , rAro^o* £5? -j,s:ii.Itr el ♦!■. eUT'-vj^* JwX'O? p^^’i e»?ae?-:cl£r! or^ giUle£U«eeel«) ’i^ r .'tl- .jO aaia cirocf* lol •'--.-I ?♦;■»•»■ an-y 6#i? naJjj •aitq' •5o„ irnsbioas «tert/ tg #i»cXt TCi .BepfS iaotui* t^jia^Uifpar-^J T ->,' -k ■ ' '• • ' ’ f 1 ' . ^ i w isoiftL ni lo eijiie ri^i(f^,':o$ m *e evaii o« eo[o#21e«p>0». eoJNg ovjitff oF jjircoe "*dir eiii ; SI itir anrfti/^ia il9st- l^^pievat TcXrfgXrf i ■ ' V ^ - N I .» lo i-iJk ^^TlviScM’ ’rl4a.\T SAif^ laxrolt j$ IlJh» if " ^ i| fxB -^e«e«<53=t5 Ai» ♦aoJH’?qcsoo ai, oMi# ^ \L»?y* 9nu1»^9.'S$ i%cte JiXqttie* eteX -fb oaOfl«^ *!«»«• ttrcxreXrrwnoc .■*«oa ''^Sf eto^'kJ- ‘rettoprX orfT - '#fl|PL ^ r . ■ ■ \^ ‘ 1 ..iTS,- '• iit jxZ etoifilsca®!! to xJ>otit^ .T twfJ. lalcK/ 4 ._ , - • L; « V ^ 1 • ’ V ■ ' ; 1 u hl*c* 4 I ioowJnaH ot'SliriVsA "■ il-io?** ojiT:g /tP

i ,^lMi.!Sx>e£^ 'mext^oel ^ ':-- »• ' % - ; .Xat«e«;ocf* saCem e^olxJ-Oi^o miiJ .o*S to £»l^of'lIo*rK>& a i£Toe^ 7 associations that had existed for several years previous, the membership had nearly reached the four hundred mark. This membership controlled but twenty- eight percent of the total hardwood production of the industry.^ Thousands of small sa'OTill owners scattered over practically the entire Uiited States east of the Mississippi Eiver and west of the Mississipui Mver, in the States of Missouri, Arkansas, Louisiana and Texas were not members. The United States Census for 1910 gives between 12000 to 15000 independent hardwood sawmills? Such statistics of stocks, production, et cetera as were reported by the members would not give totals v^ich could be considered representative of the hardwood industry, except in a very crude, iriaccurate wa.y. Ehough competitors must co- operate in furnishing information to make it possible to at least reduce the operations of the remaining ones to a calculable basis. Those who did join the association were very dilatory in furnishing information. It was found necess- ary to give up the plan of having all members make monthly reuorts of their production, because members failed to do so.' In the coal industry an attempt has been mde to cope with the prob- lem of getting cooperation among large numbers of competitors by having several local bureaus for the gathering, compiling and dissemination of statistics, each one of them being located in a coal operating center, l^ch local bureau then keeps the operators in its vicinity lined up, secures the vital statistics from them, compiles them and relays them to the association headquarters where they receive further treatment in the way of tabulations and conpilations , ^•American Column & Lumber Co. et al vs. U. S. Argument of L. C. Boyle before the Supreme Court, p. 6. ^•Ibid, p. 35. 3. . American Column & Lumber Co. et al vs, U. S. Transcript of Record Vol. 2 p. 1107. •r( - ■f.'i •• * r 1 v*tc TV ^7-1 '~‘Si ^ •■••«; r.— •;, ■ ■ . ' ' . ■«>v:'. 1C . ■ ' I’c •'i -siJ -•aN ■'. ' 'ue^tt ;--•►■ > .': .'". : ■■ «*-S-3f r o. " ■Jfej) ^lii '• : ••■* •■ ? ' * ^ v: -.i/vo ' f -UliS •.■. ■ '-afft. ‘!c %o 7ff<9 1- ''' "lo tnm f *ia . r' . ’% •: . AT.: r . * r ■* -5^ r . , •'''.*• T ^ - • - . _ ■«■ ,'J: * ' • ♦-;' '; . ' f C« ^ e-j.;. •: ‘ r f r • ■'V** ’ *io »si ‘7''7 . ' a, ,'v ^ I .. ' ' * * • <»• ' w^"'- -••: -»*. -i ■•’■ I '»''c . * ‘ 'r ■ r ' ■ ■ J.) ' . ■ .■''' 1^'' Si., -if *io sit . ■■ •■ " -r Tf- .■;:* ^ .' t -• '■ ■ ■*' '■' • '"■■ - ■ ' V . 1*1 ■ - >c '■-■ '.C ' ■ ■■'. » * - +;i 1,' -j ’ , '■ ■ 1 • ;i * ■* «i * _ •■ 'I*.' i.' ’ ' I r ... - * ... - ^ '^r ' ■■ ' ii.r- :' •••* 1 ; : 'r. buA."::- '? ,■■■:"• T ’ ^ ■' ■ '< . r.'lC'‘i£’ ■ * - .’rf ^ . '■? ..tj -i.'. f' J , '3*1 *r^ -:' .• .-.S'T ■ V " ■y i!x’ "‘t . ' 1 *j • * * .? fi ■> '.ri • 1 ■* ;.;r sr*’ ■•• 1 '1 V i '- -’viv’ 1-," vi# -TCfA! :c '. .V c y Lf fljlitt"' »•• * ‘‘r— ft^r •. . *. - * l - "i r • ii ■'* - ■- . * . ' uc * ■ r .'-r f.;: «i- '.-.r:- iifcrrt r,t%t rtiiJ / :*r:-i-i-*r ^:jxi .1131 *. .rt^ i *io*:' r- ..» , -Ti/'.-. ' *1 -t 1' ■'.'fr . - , ^T- * - • . ' ia ' . ■^ • •».'•. '■■.■■ ' ■ tSl5 . V ' r ,r • i --il after which they are returned t o the various local exchanges where they are 1 again disseminated among the local operators. Fearing legal conse fences, the association ceased issuing market reports in July, 1920. How successful this scheme was ingetting the desired c oope rat ion is not kno’m. Probably open price associations occupy as important a place in the lumber industry as they do an3nvhere else. The recent report on the lumber Indus- 2 try rendered by the Federal Trade Commission to the Senate and the House dis- closes that all ten of the lumber manufacturers' associations affiliated with the National Lumoer I.lam.ifacturers' Association }mve been engaged in open urice activity. There are only tv/o large a ssociations devoting themselves principally to the interests of mantifacturers that are not affiliated with the National Lumber Manufacturers' Association, namely, the National Hardwood Lumber Associa- tion and the American Hardwood llanufacturers' Association. Of these orly the National Hardwood Lumber Association has not been doing open price work. The Southern Pine Association ceased doing open price work when the United States Attorney General filed a bill of coirplaint against the jimerican Hardwood R!!anufac- v^urars' Association. The latter association, prior to the cessation of its open | price activities v^s not only the most notable e^arrmlo of an open price associa- tion in the lumoer industry, but it was the largest open price association in 3 I existence. | The Yellow Pine Wholesalers’ Association having recently ceased oper- I ating under the open’price plan, it appears that no associations of wholesalers are nov/ engaged in open price work. As far as c;ua be ascertained, only one retail lumber association is doing open price work, that being the Chicago Lumber Healers' Association. ‘ The Black Diamond. How National Association Reports Sales. Oct. 11, 1319. ’Preliminary Report, Federal Trade Commission, Jan. 10, 1921, ?t. 1, p. 1. 'For further discussion. See chapter 7, pp. 137-148. Preliminary Report, Federal Trade Commission, Jan. 10, 1921, Pt. 2, p. 101. 9 Open price associations seem to occnpy a position ot nearly as great importance in textiles as they do in Itunher. A chronic condition of cut-throat competition characteristic of toe textile industry has ahetted the movementj^ however the secretiveness of competitors, explained in large degree by the impor- tance to them of securing individuality and originality of styles has lapeded the movement as has a certain determined opnosltion manifested by buyers against these associations, particularly in the knit goods line.^ Close to a dozen open price associations are said to be in operation.'^ All of these exist among manufacturers with the exception of one or two to be found among jobbers.^ The first to adopt the open price plan were the important finishing firms (bleachers, dyers, printers). In 1914 they -united to form the ”JTational Association of Finishers of Cotton Ihbrics”, Mr. Eddy organized it and was its counsel from the beginning. It is said that by the end of 1916 all of the cotton finishers had joined the association. Its success in helping the finishers to successfully weather the depression that hit the textile ind-ustry in 1914 stimula-ted mill owners in other centers to adopt the plan. By the end of 1915 such associations existed in Boston, among knit goods manufacturers there, among mill owners at New Bedford and Fall River and among certain of the mill owners in Southern cotton centers. late in 1915 a joint council conroosed of representatives from the two national associations, the National Cotton Man-ufacturers Association and the American Cotton Manufacturers' Association, met to consider the feasibility of ^‘Journal of Commerce. Sept. 18, 1916. ^'Textile World Journal. Jan. 20, 1917. ^•Journal of Commerce. Mar. 19, 1920. "^•Ibid. Mar. 19, 1920. ^•Ibid. Mar. 19, 1920. ^ * •Ibid. Nov. 11, 1915. Mr. Eddy is called the "Father" of the 0 '->en nrlce plan. 'So ^ «S»*. i;spi^«iaa«A ''iOiir' * . ^*:-jurl el ofc' »ta ol .'OnftJNbiitat *',; to!HJtevoa! iiW ono ^ [‘-ixoirr'! J" K^TA'J sxl ^cxr^rfflp«l »«tO?He L j"! 3pW'tr>t#^ 1o oj [ ^ . . . ■ t9^'f ;i e,’5«^MJ/c m mbM jL^ i^oJ *«oI0 ''-c.ali tf^c:« )t:^ *xit af ^ A ‘ ■ ,.'■ ’- ■ . U ' , <^CK(e e'Oo/TS' ^ XI* .5oit* •i9-«^a2 ^ fii Ll»9 msf ff*X^X . '^ t5co3j: '■5< ,»*te^ ,i''i«4S®iXtf) wfiit lU:-. o;l Ap>f #i .t9 .'*90ir.’ 0^ sr-’^if^^ V* to aJiiAXjjoWA . ’ e . - to !X4. ^I?i ta ttt* oo> ’.’«f ^ 1>»4A ^l *r , - sscrit’ JCowwco' ! V tiV'-* "* •' Str-, t^' .aSu*S«Xcof (Ml -sfXl bmeiiii awiios^^ , < "offX twf^aOR rffi 3t»R9cs&n^ .ii 'ail ht »-JO'¥0 IX2«t frfPl tt! tiXl0z9C fhd ik4i X«J**"e btr UAloctt0j$ .ixot 5X^31 to tm TiwXr »rf^ ?i«ib4 25 Ri«int© ■Ji’lit if» t-ssiawo iX'izi inoaa •lyuc'cnayrrieci jaAoct 2>,*s»^ ^oof^ ,fiW4oir o2 -' • . ■_ :i -■ y-^a iTi»tf^A*o2 :£iX 41W0345 rXiai *42 to ■savjR rXaT ' *‘i -■ • Ji’ ■ , ^ V . *'•*-; aab*:! orvltf AyffOBowT to Xits^roo Jaulof; n dfW ftX »ikx iMEfS fu23 cK'iioXooti^A mtM XJ^^sof^cI^ orfO ,0aoi2«Xi>o1ii4 Xo^Jfctoo 'A. ’:^ OiJ? Oi# Jiw ,rjoX2aloo«y< ‘ i-t e vr^ o«tjtn*iftT 1 ■'f** • « k. .a* ,?X .•«w«'-eooX> 1© x^‘w>^ 'f ' ' *^i6X ^CS. .nrX .Xf^njerct X ♦XX^T-^ .CStX . ivr^tBtmap? Yo Xjiinjyot .CStI /:i .-iiK .J^x4r®‘'\^j.iyorDis «? ,,xv .?ixcx ,xi .tof I ■■irilanMaaHM k. ^ 10 joining in the open price movement. As a result of their deliberations it was concluded that because of the comolicatad and Involved nature of the dry goods trade it would probably not be practicable for the national associations to attempt to do open price worh, and that such work coaid best be cmt lined and developed in each line of trade taken as a unit . ^ In the woolen industry open nrice work was inaugurated in 1917, when the so-called "Woolen Exchange" came into existence under the auspices of the National Association of Woolen Manufacturers.^ Its membership represents a considerable percentage of the wool man'ufac tuning machinery of the country.^ This is now the only open price association to be found in the woolen and worsted Industry. Eor a few months the Pennsylvania division of the National Association of Hosiery and Underwear Manufacturers operated an open price plan, but an in- vestigation into its affairs by the Federal Trade Commission became the signal for its abandonment. Among the knit goods manufacturers there now is operated an open price exchange called "The Fnlt Goods Manufacturers of America". Its members control about one third of the entire production of the industry.^ Otner associations are in operation among the gingham, duck, blanket, silk, and blouse and shirt manufacturers.® 1 . 2 . 3. 4. 5. Assn.; Silk Assn, of Anerioa; Batlonal Boys i3 louse & Shirt ffenufacturing Association. All in New York City. Ibid. Nov. 11, 1915. Textile World Journal. Aug;. 5, 1915. Ibid, Jan. 13, 1917. Textile World, Journal, May 20, 1918. Ibid, May 25, 1918. ^ f J W ffUWX'i, 'rq j ? ; r ' ilk 4t JO iXifft>5*i X t* ,^rtKt^'»t3H! 9ttr;{i rncro ■ '.# ^ '4^ 5i£-o^s tpft la? «txr^jMT f^uvXo-vfil fte^4w?lX^ ra:if Is.'^a ,;rf*»7nr ‘«Ci2xff‘ 'i^yo ii- oi ‘ rtiiS^fcS- ^ .Tioit T »t ffiriL»i insXi /»afc* ,‘:'X*X t*--* asiic* c»ijp ftaiocw »tf# at --l!" e4 >? Tii>wa atot «awa '•®v*4ifeXr xa»t*i©!r> fcrliii:5-04i e [fco^fci.-w im r»Iocm a! ti«-’Ot' po / ^^ifCraM »I8|0 -^tao WSa. ;. P ' i ■ > ^ - ^ S ■■ ^r- •/. ■■ - *" ■ '" ■ i „ .-'■ ■■^v-.' M , .. : _ J >•!*$ V> ^i^cwr^ar^'*^ •r^ cf’Scoe* a ^o*I ' - )T^ ■■ ^ '1 a tS3sihrx,c*^^ ofi/fd-raatoar? #-♦! zijUaXjOPiteil XfmilaiaK *' **' C.'j V ■ ■ * • '•...■ T -. ^ • Jt X;4X • Jjf - it» 4iTf ,rf3X«i *^itr ^ :» ir/oTsao r:©3£r^oal;/rat? Kr-iaBedT JMi 7?ri^i(«H '3tc> -- . .■ ,.* ■’»■'' .V' Xa*£§hi ocsae^a’ rtr i*«XrsacO jcf a^t o/nX ooUs:^ti*'»r T!i^' »->- ■ • ' ' f^''T k ^^iJi*:a<7e eX »vg« s»*rfj o»tx/=at a^rt&Jaaa .♦fil'jq a»X*io»f *£li«iff’ ii -59 .&£PX. ,bi fcl Ai i^s*«iova» orf^ «vi«CMi^d >rnoijc^ ijk»l^>q& -=ii>^i^i lo itii *crij«r^a irf v*^«iri 3 c aJ^>Uwi! «ilf «i ^etTI' .xtbi^fa^ e 4 ^ qi-^e IJ^S^bX'iO aij ,TJirl^*c$ itx >7 acnl •s«r Mi^E fcxttif ercMSai t/i? ,*tr 5 >/^tfsl ti;* J*ra .jldS- a^J* iWftg i h ’n 7 oinj»o^ Ia!i>;>r .i^^i^nl a^ tftm q»f e:fS^ j^rXvXfldS 'Xnai '' • ■■ ’ ^,V • xB'u/tst’i^ Ifrx ~$m .’^.♦aXsc^ i^ i: iiiiff ■io Tpacm ^*> 534 i®T® acU sjkuj \z^»fibal I^an ItU -yvxl^ofii nt *i >X 1 ^ • nBw niJwJ >tr£iJ<*^ioa«^i; ,tnci»q*oit« »itf^kOiif Cfil * if^iv '}- ■' “T ”111 lb 1 ^ •t(y \lt:^rl£: ,a 5 - 7 #^cXlirl tLZtk^ i,\-iafi y^ o ,f? •''' ■ "'t - ^£iT.XjS;^I «7 .tai-UAi^-l ;i« iV* lo ymot«a •d 2 ' .-Uswiltfji 0 f 9 3 l v^-^vX^aX*^ 31 »ai 1 d-^ii^iLcXhti e*l; ^,-vd^ in* ^al ‘ ^ •”> • . - -V,/ .V '- t ’ e i ^tiJsSb* ilji X flAOO ta* ^ . : .*■ . . ■ t •' ■ I ?-> r - A '’” •^"*v»' .-jii .•2 ^ ^ j:- -'j|Q iiri^ iviiifci ijteJtIC AT A^ -to^iOiTittA; t.^VA' XShJ'Q SlSKlT-rD/>SM 5 £^‘ IlYI^taiJT^ I^J^SQ ^0 “ic *£*i ill/iAAo^ |!-aXta»fxfc«X. nl~A.'i.oi^»iAOaeLt). qo 1 i«} * "'T^ % si *XXn 5 ^ 9 A->iX'^jh&f^jiXvC«e» .aaiia- a#cfc (V ' • ' ii ■ -i ' With respect to the relative distribution of open price associations among manufacturers, wholesalers and retailers, it may be said that the move- ment is almost exclusively confined to the manufacturing class. One or tv/o associations are known to be operating among jobbers in the textile industry, ^ and one among a group of retailers in the lumber industry.^ Until recently one was in operation among yellow pine lumber wholesalers. Wholesalers and retainers generally carry so many different lines of goods that they find it inrpracticaole to associate themselves in open price work. Retailers do not especially need to exchange information xvith respect to prices because they are in the haoit of marking their goods so that everyone, including competitors, may know what prices are being asked. Farthennore, it is to be reniembered that, since wholesalers are engaged principally in buying and selling, they have built up an organization which is highly efficient in securing its own mar- ket information, and therefore they are as a class less dependent on such aid as mignt oe furnished to them by an open price association than are the manu- facturers. PURPOSES The ultimate aim of all open price associations is to effect greater stability in business conditi ns, in order that profits may be made, if not greater, at least more steady, dependable and calculable from year to year,^ 2* Journal of Commerce, Mar. 19, 1920. (ie)The Chicago Retail Lumber Dealers* Assn.; See Reno rt, Federal Trade ^mmission , Jan. 10, 1921, Pt.2, p.lOl. ^0 stabilize nrice, but **increase the margin of profit". See Textile World Journal, Apr .3, 1916, p.l703 . jfcr. nr \ . \ 4 14 the Interests of their hnslness, and to legally acquire and disseminate valuable mercantile and economic infonnation of interest to its members, thus securing by fair and la'vful means the benefit of cooperation.”^ There is very little hint here of the existence of open price activity. In fact open price work in this instance is confined to a weekly report of prices received v^hich members mail to the secretary, who in turn tabulates these prices and mails them in mimeograph form to the contributing members. 2 Another constitution, typical of the lumber industry, sets forth nine ob.jects, but only one of these mirrors to any extant the purposes us\ially associated with open price work. This is the second object and reads as follows: ”To gather, compile and disseminate data^reports , statistics, and information relative to the properties, uses, values, production, transportation, distribu- ^ion, and consumption of, and markets for lumber srnid other forest products in all markets, and the best and most economical miethods of manufacturing, handling, transporting and disposing of said forest products; to gather, compile and dis- seminate information as to the taxation of forest products and of timber lands and the cultivation, protection and conservation of forests.”^ Returning to a more detailed consideration of the objects as set forth by the typical Eddy association, it is foind that no one object receives more emphasis than that which aims to promote cordial and friendly relations among members. The ordinary trade association makes this one of its objects, too, but the open price association aims to make its accomplishment more certain by having Constitution, Ohio Millers State Association. 2 ‘Constitutions of the So-'jthem Pine Association and the American Hardwood Manufacturers’ Association resemble more those of the Eddy Associations. 3 . Constitution, West Coast Lumber Tfenufacturers * Association. A ^i-rt 90S .•’'rt- ciffiO."'.#- • ir onoo ri i : .2.' ajff I t N~ ST. ’ . .T--T9 id' ' . ■ *''i V.- ft I • .: ■, >•! ■ .V jlgftlMff "r.f:i%X. •■■>■■:' ' "i nn..-- .'iftf .trrift^s - • 'i >c t'vtrr^: , .'X ?i£rsfti;^ . ‘os,' ^ ' ' ' — .‘ ’ -•■* '.. , *. ■' iici , ‘) Sr,,o<; iAfltUn' :■ !. ■• : “ ’l.-ic:" -ri ■• ■ ■: ■'• '■’ ' ' 5 ' *->■ , ■■ ■ ; '. 'i- .'.ftiOisJJ Q?’’ ' • . r . -s. t 1 . , >».i " , ‘ ' IX , • M ^ ^ * - ‘10 ,J ^ *>0 • b.V. .'‘.I -> *'• .•>.TUG ,acf.‘ ,;3 ! . .'ir.jp* i: -'-' • 1 !;• i, 5? 6i*i .?«.<*■' ■■'. : •:,-.* , lij* «; 1^4.. s .-• - y- t . .'«yr 1 !«ft. >C ivt^acT? 'iC’isri J 'o i ncn -■ i r ' ■ :iq : i *<■ ' ; “to ir. oJ fcii“Tto7^s^ ‘'Mcri^ef -:* t* "iS r, *i . jp 9 ' *' : .ju, ft : ic iyii . . ■: , t^pvt^lct cft^9 »J .:;■■• I ii';wa if f c i v. I «r . i ;»tu . * .n9f r r r'TiWl’* wi »* • ■;•.■.<. '.i-ia r-* 'T., ’ '-g’-''' ■ : “t*'.".- ■r:> rr'- 'Ic ? , ■- . ‘ I’’' '"' :.i : i ,* ;■■■ : •''*’ ’ll ;r^' stjario* •.* » J ■ ^ - ) - iiTil. rili* in; \ r>-J Jc:' \o -*■,. -'•• ir- .f ' -r •*~’^ - fi ~ ." ‘ p; * V. 4 1 *, r ’ *'' i ^ o i. ’ ‘i ’ ' V -i ■’ ■•■; ■ ■■ i ‘ . ioc - * • i av V 3 fL.; -.. <£ : v’<-- ii- ,^c.c■'' - .f .■>> -• ' IJbOM .•! J--V v,v'; V, r ■ ‘to #,n -"' i'i ■ ■^rrrf '! '•. I 'Ol ?ir. ■•..• ..V''0« '''' tiStr "moa " ® wfJ ■ ■ •• 'r* t . '' ' i s^f. 1 J ^ C '• t-'. v.l ! i , ■" * ■ r I? ■'''.»*» • '! '* 4 m..% O. * . to V : ?t eo:., .X- ’i. ;> i . su.:.. . ! I. Ti-t^ - ’cV’- ■ l;oi»Ivoti7, 1 ^ V ti , --n ;;;? >i| r: '■■ >r Cl . oLi ' ■ 'V' f 0 fcr "i ' Ir ' ' . s’ r ’ . • ■*:‘7'*: ’ J ' ! 'JO*: r.oi^ii • r ; *c:a7, ’ IJil”. -■^JU , .' IvT ’57,- . 1 . ■^'•oooO , X . .'■ r ; ■ ' jjJi " .’ i-.t? i % r ■:"' , ' .1 rro * ■'c i ;7o-.' \ ., '..'f-nfo f ■ J -' ? ^ ’ n'- ■ =-■ **< 16 In this connection the following quotation is fonnd to he typical: ” To bring out into the open all existing competitive conditions and to introduce an open price policy, to the end that ^'^latever price information is distributed will be absolutely accurate and confined to uurelv statistical ir.formfl.t1 on r,.- ga rding sales and prices that have been Ar^.tn a liy piade . Nothing herein stated permits any member to file or otherwise give any information regarding any urice he expects to make or would like to obtain"^ Provisions that there are to be no pens.lties of any kind in connection with the operation of the plan are of course put in in order to show the clear line of separation that exists between open price associations and combinations that attempt to enforce agreements to control output or prices hy means of penal- ties. The only penalty usmUy provided, if it may he called such, is that those do not file the information called for by the reporting plan, get no informa- tion. Those who file only part of the information called for get like informa- tion in return, and no more. One association has an additional penalty to the effect that a failure to report for twelve days in six months will cause the member falling, to be dropped from membership.^ The laxness shown in reporting have made provisions of this kind necessary. The further provision, that members are to he free to at all times quote such prices and terms as they please, also alms to show clearly that the open price association has nothing in common with illegal combinations of one kind or another that attempt to put price restraints unon members. It may be Constitution, Society of Manufacturing Confectioners 2 ._ Beportlng Plan, American Hardwood Manufacturers' Association, Transcrint of Eecord, American Column & Lumber Co. vs. U. S. Vol. 1 -d.86. . • w ^ ■ • -v^ —» -V* • ■*• V V' ^r. ''-r? “1 c." w V'o'! e ,’ i^S .i ' «' '? jyT * * • .. ffz-,"5* w* ii., : ^iv fOTCj-r ■,n4‘^fis..t *i-. r»e."o rri,' O-J't. i.-.! :ir ' J.** ' • ' ,■.■ '> ■•-■■ >.i * '■■■• ■ C-'-ii'T ■".'l'’*!. ' P*T ..*■. ' ..•: -'5 ■-■• ' •■ •> -Ji- v -" s-iftO i£J i: ;■ f /« c. o;i r*:-. Mov ■ -c; 'i ' •-- ' ■t ci 9-r> • ‘c-rCJ n ■ • : •, • '■i-r ■ ..1 ;_'c ir I ' ’ • • • . i ' o< k f •'• ‘tt^ c . ■• . •- ; ■■ i > •^otJ ?f £,’ *' ,iv: iv, •v/ • • ^ 'f ' r i.rf»qr If It'" . ^ '■'trr? .• T v”?.. ,' r-.'^ I ’ "“f "'- -r.'- . '^^■ 3- ■ p»rV ■'• • .'■»UT-r. i .■:..'»i5 1 ' ; .-r . '- •■ ■■, i.< j '■ : ' 'i ‘■'■rf.' . ■■ ••• .' .'f ■.•»-,*■.■* i- irm.*'.' IvV * **:- I'i-. *»J 04 »p 'r:r -? •'ri-.i ! ■ I •■'.=r.D t I i''" .-tc - stt: .-._■ ».9:f i-.v i!id - iT.i 'ji'jriC '■■■•'" ! . -t- '. ■-: j j. -tru.jr^ T[ .■■■•. tc £»,cri.:.' f; ? ■:: ' ■':'?• . - v.' rr: ' ■■ • V .; •'> .‘•mfi , ,• V .. ’ 1 i 17 said in this connection that some open price associations, at least, expect members who have made a particnlarly low price to explain in meeting, the reasons that pronpted them to maJ^^e this low price. Others merely provide the onport'cin- ity for such explanations to he made. As a rule no one hut the secretary kno'ws the identity of the persons that have made this price. 'Without actually making their identity kno'ATi he will invite such persons to make an explanation if they ^ ^ 2 care to do so. The promotion of publicity in all business transactions and absence of secrecy in meetings and in association operations is insisted on by those asso- ciations v^hich endeavor to strictly follow the principles laid down by Mr. Eddy. Mr. Eddy writes as follows: *' There is no reason why the American manufacturer should not throw his da op open to customers, ’;fey he should not mark everything he makes in Plain figures and let every body know what those figures are, chang- ing them as he pleases, but changing them to all alike, making such discounts as he pleases on large orders, but makir.g them openly."'^ Inquiry develops that few of the open price associations are willing to go to the length of Inviting buyers to utilize infonration that has been collected in the central office. The Hardwood Mantifacturers' Association is a notable exception. In this case the Manager of Statistics encouraged buyers to make inquiries, for exainple, regarding the loca- tion of items of stocks of lumber and the quantities available.^ Some of the associations permit members to invite customers to attend meetings;® others do ^*Lord, F. W. , Ethics of Contracting and Stabilizing of Profits, p.l74. 2*The National Association of Box Manufacturers follows this procedure. 3. Eddy, J. New Competion , 1912, p.108. 4. Pecord, Smerlcan Col. f r * ' • r r - . "r'i : , ; ..s¥ db(lw ■: :'■- - ..j- 'jp ”'■ ‘“aM V f, 72 . A. f ie. f ^ r ■* l■'j; *<••' .'• .Tr *• ■ ' X * "i ▼ 1 ‘t; ’ ; r ,r: i ' VjO*u • '.'n - .-i. 2 ) '■ f,'- .'7.-. ■ , ,- ' s’vritfii™ cf.''tT,D8r 7 -L^. - '■ ": f r: * . . ' •' 7 CC:;'r fjl^ l-V.tCV ■J^ i ,•> ftm ■•Jl •• A.** ) »*5* va (kUroitu » r f . -- f r-'- V •.ft-’' v« ■ tf ?>j; iar- r-: ^ ’ ar'i:. 1 ;. T: 4 ?f' , ■ ' • ■ ;■'■■' ? : if I ^ J * 6 , r' aS9df v,r '. J ’■’i: .1 .■; 9c '■ . f '-r^'.' '.r ' :;.r 9 , 1 ^ c; ■ .q.^.^riTD' H^cL.' ii i ..ft : *'i ,L-'’‘l^ -r^! ft.’r'il 64 ' *».• 'O/i -,•.*: V -VO *r>’£ (• ^’v* f !•' • »!»": » ' f 4 *i'^''rrHar ■'> JT'' .■ i 't j r- T- <> ' r?>‘*-' -- ;,t ^ T .. '.tj ■‘ar I4; ,'>‘,',7 :• ' :- 7 ,r n •.- _* q-' ' ‘ ' K 4 r ..!■<■ ''fciiffiiUf 18 not. The Hardwood Association was very free in permitting outsiders to attend meetings, and hardly a meeting passed that was not attended, either hy customers, 2 representatives of the press, or other outsiders. It is evident that few mem- bers of open price associations have yet reached the uoint where they are will- ing to confide their business affairs to the public. This is not to be wondered at. The idea that business should be conducted in secret has so long had poss- ession of the business man that it will take years of education to persuade him to adopt the policy of full publicity. In the retail trade, "it has taken a century to grow into the one-price-plainly-marked policy. The object \*\hich calls for the correction of all unintellig-^nces is in lin.e with the idea that ignorance of competitive conditions is a millstone to industrial prosperity. In this connection, the paimose as expressed by the Hardwood Manufacturers’ Association is "to disseminate among members accurate knowledge of production and marketing, so that each member may gauge the market intelligently instead of guessing at it."'^ Cooperation in devising cost accounting systems and cooperation in the standardization of sizes and dimensions are not functions that are peculiar in any sense to open price associations. These are very common activities of the ordinary trade association. Knowledge of costs makes an intelligent competitor out of any ignorant one. Open price associations can therefore not afford to ignore this function. Although only a few' associations give the special mention of cost accounting that its importance warrants, yet it will be found that prac- tically all open price associations are engaged in cost educational work. It Steel Barrel Manufacturers' Association. ? 'Minutes. of Meeting, Becord, American Col. & Lumber Co., vs. U. S. Vol. 1 p 165. 3. Eddy, A. J. Mew Competition. 1912, p. 115. "^•Gadd Exhibit "B", Becord, American Col. & Lumber Co. vs. U. G. Vol. II, p.1226. . */ ' ■ 7 • • » -r ■ i •' (,;^c *x ; :m» -i i J»Suftncz 'T '* • iLfJ- r'hk 'X ' i4K£^. i *cJi J »rf n- *1^1 .’il f iii ‘ • i, V - i wCOt/* « '- ■•■'•■ -> 4. iJ.'W • r' i' :jo.:-;ViO v; ' ^•’■' ;X- •• ‘ * ' ' .;;t! rv "-f;i rr ;*-■•),>« ; • - ►>•;•. ' ' .*r * - .*50 .' ' ' ' .» ‘ - 4 ^ “I: “.-■ 'T . :'»>PC *a r i - - ; j«^Lr P 1 . f * c j y W .v1 V i’ c r lu . j.' ‘ :■ ■ ': ,. .T. - « (V , i r| / Ui-r,:T ” : : j . • i 7 '«'■*. ci I- '■-C - Ag 0-fl. 7 J 3‘t..7-j “ ; ’ I X *• a ‘ ' a-i». A ^ V . ' • i 7f v'l*;'' n^i* . ' '" ^ 1 t-ii'J .IvrO';/! '■ • » !> IS is noteworthy that one association states that its purpose in devising a uniform system of cost accounting ”is not to impose upon any member any cost items or 1 to use in any manner the cost system as a means for controlling prices. " Coop- eration in standardization of sizes, dimensions and processes, et cetera is an integral part of the worm of all open price associations "because prices cannot he intelligently coEparsd unless the products subject to price quotation are comparable in size, shape, and quality. Otner objects of open price associations, s'nch as the exchange of in- formation relating to contracts, returned goods, cancellations, advertising and credits are not usually given ^ecific mention in constitutions but are provided for by some such clause as "the collection and dissemination of statistics of 2 importance to the industry." HISTORIC ORIGIN Tne earliest open price associations of which record can be found had their birth in 1911 in the iron and steel industry and in the lumber industry in 1912. In the iron and steel industry, the earliest association on record is that of the Bridge Builders' Society, now known as the Bridge Builders' and Stractural Society, with headquarters in New York City. This society was organ- ized by Mr* nddy in 1911. Twenty-five comx:ianies doing structural and bridge work went into it. Only one important independent concern did not join; this was a subsidiary corporation of the Ikiited States Steel Corporation, namely the Imeri- 1 . 2 . Constitution, Ehit Goods llfgrs. of America. Textile World. May 19, 1917. The following exception Is noted: "To diffuse accu.rate and reliable infor- matlon among Its members as to the standing of merchants and others en^ao-ed in selling of knit goods or the furnishing of materials therefor." Quoted from Constitution, Knit Goods Mfgrs, of America. Textile World, May 13, 20 can Bridge Co. w. Eddy organized this association strictly along the lines ad- vocated In his book vdilch made its appearance a year later. ^ Meetings were to be held once a month. They were to be public. All orders, prices and tonnage were to be reported to a secretary. Those viho filed copies of bids pertaining to any given piece of work would immediately receive a statement from the secre- tary showing the prices indicated on all the other bids that had been filed. Orders vrould be handled in the same way. Once a month the secretary would re- port to the whole society the tonnage taken by each member during the past month, together with the total tonnage. A constitution and by-laws were adopted simi- lar in form to those vhich have been described as being typical of the Eddy associations. The following quotation taken from the fifth object of the con- stitution illustrates the care taken to mate clear that there was no intent to restrict competition. ETo this end each member of the society agrees to file with the secretary copies of all bids, terms, and prices within such period after same are made as may reasonably be required by resolution or by-law, it being definitely understood that each member is at all times free to make such bids and quote such terms and prices as he pleases, and to change the same at will, either before or after filing with the Secretary, either before or after receiving information regarding bids, terms, and prices made by others, the only obligation being to file promptly all bids, terms and prices as the same may be 2 from time to time made,” The second open price association to be founded in the iron and steel industry was the ffenganese Track Society, in 1912, and the third, the Manganese ‘Eddy, A. J. Mew Comoetition Mew York, 1912. 2 . Testimony of J. S. Dean, Record, U. S. vs. Ikiited States Steel Corporation Vol. 2, pp. 797-811. ri: ^ ^"WM & • *«ic ai^rf tr «• ’» >« ^*/#t « c. ..’v ‘ ^ ^n.-^r •-.«•. mwfyirtr t •i®i. ^ _ '*_j J •-.'•ii-- . trm^ *' •. . ^ J a : ' •» t Wo‘‘ */# tliUr^ || * ' * •- ' . iao «<• . ■ ' ^ jfl ~^ ' ■» ' '*^ “ 4 •■ _j^r *. • •»'i| ^ . ■ - .'^ '•‘•4'l iw ^ -V ■ ‘ t5* * \frr<‘ ^ ^*«i7 j ^ • . ‘-^ :.jf- ^ Xrorrv ' 4c>^*: ’<^ ■ ■ ■ . 4.' ‘ * ■; *.<• . . >*> a «?. nr* ^ . t i^toc .. ^ - / ■ ^ ^'-.1 '■'*..v'.'^. > ^ f * ..^f 'T tr. f : cr»> ♦ ^ • Ml' .*s> ... i^‘ • t ♦. i, ~ ft.’ 1 -*ji%Jvgf{£t - ir '' "'J' ^r''- . ■ " ' I* Aiii'fT ;t'i'»*r' , -iC ' 4^£cm?t>* "f •; .-r.'- -- «. ■' vf. Jt. :?>!>% r/^p*ur^ iv'i . i..; •♦vkK*' iW'f* «' -c.'f'.'*'* '.:tj!^ ' ■ i»v.i (tUtfXd' 9^*^" r ' :-a .1 ».*fr »SV.»> t ' • '' S tl9m*^'^i ■ Vl»n^ .It/f-!' fr’“r .i^^Nf::( :•!/ ■ »#s!'tt*; *J, : ,***|tf «rtl?4y»oW '■; *' r^^,: «iv'|f' PNrO cv t''*' Ixu* *.n,a;* ,*^lv - rtai^^H^o J ■*^.H e»ii^ J J’4i rjn -L? .•P£ ,'?tjY *4'* >* ,x*?5a .i R ",\-#*' .-vst.' 7 i**r: . ?f.-: .^«^>dcy .»»■ .' J£ /tp- .: W ■■ _ r r£^ r*ls^' ^ ■fA'^h!: - .p: 4' ,r 21 Steel FoTjnders' Society, In 1913. They were patterned after the Brldf^e Builders' Society,^ Following these the zEoven.ent took on greater rapidity, with the result that there now exists a score or more open price associations in the iron and steel Industry. The lumber manufacturers started to work out their own system of ex- changing Information relative to stocks, production, shipments and sales as early as 1912, Even before this time the then largest association among lumber manu- facturers, the Yellow Pine Association, later reorganized under the nam .9 of the Southern Pine Association, was collecting statistics of stocks, production, and shipments and occasior^ally the secretary would call for a report of sales. ^ He used these reports of sales as a basis for makir^^ up a price list and also as a mecns of learning how closely members were conforming to the price list previous- ly issued. In making un the new price list the secretary would include in it only the highest prices shown by any of the sales reports. The list would then be issued to members with the understanding that it was to he used as a guide in quoting future prices. The result was, in the ^^ord 3 of the ^udge of the Suprem.e Court of Missouri, who condemned this practice, that "prices charged revolved about prices fixed like planets in their orbits revolve about the sun."^ plan was a price boosting scheire pure and simple. It was altogether incompatible with the onen nrice plan vihich requires that members are to be free to quote such prices as they nlease, and that all prices filed with the secretary shall he reported by him to the members, be they high or low. Follo’wing this condemna- by the court, the yellow pine manu.facturers Involved, reorganized on legitimate Eecord, U. S. vs. United States Steel Comoration Vol. 20,pr. 7970, 7971. ' " 2 •As early as 1906. State vs. Arl-snsas Lumber Co. et al 159 S n 1=6 3- Ibid p. 156. ’ ' ’ 4. Ibid. n. 177. , 4 '• qf'! Tt-«» ^ca*r .fLT>*^iii?ir*T»i5'2U$/ 9dC . V ■ ■*>- ' ■ .. 'O . • , 4 . "■ - l>r*-t iffr:^3crXri» ,rtotffO£rBdTq Efot4£:xrT6l:i3i-S^itar. i w - ' ‘ 1 ^ -“•n; t i«» Ir^^^aw' rto*rS .Ci'Pl'tfA " ?f;t >c ,fs;An «Mffff Tpbmf fi^»*ryi%MRT ,zsDt?.t?t&o4<>5 *aif? '*fplf'4't' %0 ■ -irtrx^r^rjsl J ’, '* -■ * • ■''K> ^ , ‘® '■ 1 iSkXiv ^o ■s.'.-'tflffjfcfo jf-jlrooIrH.'Hb I- r ■ ' .-■ ^ Si-- ^t> ff-iOTOT. XXoo ft.r*f<3W f^^**-* -ifl»ff-To^'i oiorfy lf««iy * '7' • _y • , '^ ■’*irr.:/iy^T-;: S9tl 9ti$ ^ %rthrt^a^^^ rl4«at» wotS >TXinjMit ,^or^»»ecs ' ..-•7 >.'"7 ^ JL rtjifltiiil fclyow xW'/oto<»# i^' hltj^ar JtXr iutf ^.•JiagT'x INitiir orf^ '• ’^abM- '\f ■C _ - ' ,?, .-'■ fl.^ tttlR-. » K* X*or Od tff- »#«r ii ffJWJff . ‘t fir» ' Ofr » /ft ii? fw n«C(nam 0#’ v«rf . Fv " - - ' * ^ ^ ■?*> 8i#ift, orfff Ip’ dyfe*rff? . »i#oXt^ V; W \ - ■" ■ ^‘■ ■ - .- ^ fc»B’»fa?ers A’osrtrtir* eooX'iy?*' ffjos'ff ,«fi.f-ffoino h^myttj&n cdK , i'*aoi till, led "'■ . -'- •"" ■ ' \ ^ r.d!'' ■*^7otn erfi *ffocf# «T|oir^T t^tldlio iii ,nff *)(ir ^jiid-i^uc^jsi rrwfffogdffi® ttwJl ,«Xciii-f tne '■■•LiAj;- jat^f/Zoa fdfiqf’’® - *,,, «#cu^ Off Olf nff trrt ettoeflaate iAciff ttfnitf'pOT cfclda ceXa '7*^ '\ f- a. H ^ r '.. .’ , ’'li ■ ■ ■• ? ' . .ri , •. ^' XXsift TTJ»ffdT»f>f »/l|, X?H -fiirfj B«s» 7i5WwX^'''4lG^^ ’.ftf iieiTOi^ 'aef; j i . ’ , y . 7 ; ^ ■' ’^'' b*ztese>i^^Ti , ‘9trcynt exiri5tiii4\fTf^' 9hle}mtiitnx>'!^^ ;7rro9 'toff -^a ‘ ^ >*■' ^ *wiwi im^.i 11' 11 I ■■iiwi.i^dWi'i»w ii r ,ao*fff»'^gist"^0 ffetiC ,tv ,:- >r • 4 »’ %i' i'V • . ,A 22 open price lines. It was at this reorganization meeting that some of the men present called Mr. Eddy's attention to the fact that the plan he was explaining to them was already heing tried ont in a small way hy a grorp of 1‘umher manufac- turers in Mississipni.^ Inquiry made hy the writer, of one of the men present at this meeting elicits the follo'wing: "The account that you found in the American Lumherman, December 20, 1913, is correct. The open price idea 'was started in Laurel, Miss- issipni, by a group of three or four mills in this city in .an informal way. at that time each mill made four or five copies of orders received each day and sent one of these copies to each of the other mills in town. After a time, other neighboring mills asked to be put on the exchange list and some four or five nearby towns 'were added. No central secretary was used in comnillnK or sending out the information. Tnis system ran along for several months and 'was very successful and beneficial. "In December 1913, Mr. Eddy, an attorney living in Chicago, requested the yellow pine representatives to meet him in St. Louis to hear a talk on the open price corrpetition idea, which he had developed in several other industries. The writer attended this meeting and much to his surprise found out that Mr. Eddy's plan was merely an elaboration of the sustsm which we already had in ef- fect. "Aether or not Mr. Eddy was the originator of the idea, I am unable to state. It may be that in 1913 we read of his plan and tried it on our o’*vn initiative. I cannot state positively v^hether this is the case, cr vh.ether the same idea occurred to us without knowledge of Mr. Eddy's plan. ^‘American Lumberman, Dec. 20, 1913, 2 ‘Gardiner, P. S. , Letter dated Nov. 26 1920. V • >r . <• . * is’ ;c . L '. r:r: ' t ol^*" r « ' ; f* . ^ 'j’lOB ti ' . ' ■ -r ; «.'. f /Hi K 'li , i^«-j • ■ -■ .■»•.: t -. • '^ac* i'.ric . ’ ' '.--1 gr(X33 >i:< . x: — *. aj * .‘ijr>r 0 '1Kn> ■ ^ ' I l‘ r •)' '•• ’ * 1- iu. j. ■ V ’ • 'f'’-- ’ . *■ . » ;■*';:< ■v .c'T'*» :.■■ : :.’ *t>- ■ 1 - rtft;'. '>:fP <* . J ,• ;*r^" • cl'..'- ‘C>.* ' /!] If< '^t : . 1^.* 'T s''., ' I u?v T’, . '■ , .^ * ■ '■I’s-'" ,,,M'’ *' •*-^ ' r Mil U* ITJ V'’’ of' ■' . ' ' . ■ -ir^ ^rc:.\ lo' ?. ■ oi io-tTini^ •’ , *•!;■. ■■) . -ifra jU - f’_ ro' 23 It would appear from this that although Mr. Eddy's influence in the lumber industry was early felt, there is some room for belief that the onen price movement in an elementary form, at least, had originated in certain locali- ties independent ly of Mr. Eddy's intervention, if not of his influence. This point of view is further substantiated by information received from the secre- of a lumber manufacturers' association having headquarters in Oregon.^ He writes as follows: " You are right in sumosing that this association has oper- ated an open price plan, or as we have called it, an infor-mation bureau, since 1912. Our idea originated in a way within the association, but it first became effective locally in certain regions on the West Coast, xihere the ngcnu- facturers of fir created small exchanges independently for the exchange of sales data." He adds, however, "-out it is my recollection that a book was written on the subject and that the writer of the book or pamphlet made numerous addresses on the subject in various parts of the country. I am inclined to think that 2 this was the origin of the idea." He is undoubtedly referring here to Mr. Eddy. So-called "Information Bureaus" also were developed in the year 1912 by the West Coast Lumbermen's Association, the North Carolina Pine Association, and the Northern Hemlock and Hardwood Manufacturers' Association. Evidence seems to warrant the conclusion that the origin of open price associations in the lumber industry is attributable to the publicity that Mr. Eddy gave to his plan in the years of 1911 and 1912. The lumber and iron and steel industries offer the earliest examples of open urice associations on record. The other industries seem to have followed ^•Western Pine Manufacturers' Assn. 2 . ’A. F. Coouer, Secretary, Western Pine Manufacturers' Assn. Letter Dec 17 1920. s ril . ;? ♦■••'sifjri* ^sscwye^ flaow il [_ K "SiilXtrf •jo'^ CFfrO'» ■*i *^o^’r"' . i*^^■'- ^itjsn cjiv, . tp - -;|ji«u flU^tiwc. al loirf ,?i .■♦»£> . y ' ■ >a " 4WT4 wnt 1- -i «^r to 4|#cr- • r ‘ ^ ■' •■ . •' .ac>t«^ Bio^uisrplUMM^ ^aivc^ acii^foctM -^«0 > . •' ■ ■ ' ' , , \ " ■ -‘’‘ ■ '' '■ ^ -1/?' . .‘■^ mi •itSi 4%i6 \j^d%c^ -ai» td 4"y.H ♦•sul 4<»cT ” *^-fnroX£«'^ «4l i|ii4i>xsr ' ’ ' ^ ■I . w ,fjpjtvrd :K)Ustmt>W ep ttdlm fil'd i^ u ,i-aiXcf dciisg - . . ' ( iritt 4l IvQ ..-aD^4#i£»odai# ec» ;J fJJl; Jiidili' ^iiO SXfd '^id^ rP’ttaBi: *d4 Ji^ai' -n^ 4#fl44hriot«I'‘’ fc/il A l/rr.?- ,tsifJjtlfi99*-A »»£Ti7 j>/tifot#D tcf4 ,pcVi4*l^#*A a’imsflff^dasBil 4tt*c?t» • - * . •.' .cc*?'*irJOi«A ’ AoeXftwff ^ ■' ., Ac Hi?' fK.q[« to im(9 Tci9ijfc^» -■l!^ if.-ariO^ * ‘ Acaiot oa .Tol-X;ir;31''’ '*J ' ' ■ ■ - ■ ! V'B 4' ,5tI(P'l! A/t* ixti* 1o ft^irv Oft? Ill fliX^r^tM -Oid iifAiwv ,f ■ 't4£Aik^>e ?e»XXtj|«, *^3 tstto Xo»4* fixs® )io» '^idsuaX • “ V ‘ oflot nvstxS 04 .t*tti2f Offf .Maool /» iwroi4.«Jooil» iSr««d Ito’- » . . . i'rt'AO? '*'ft*JOOtCP3X^AlCTai^ . ■■ X“- 'v » < ,Vt ,9Ul ,ro»i»^ '»it«T3'i;®1o’aeifc>ofl4*’' in*^f*o‘K ‘,S'S*4'^rr?«a .#- .4 '■'.oecr in their wate. Z4 The Bahson Statistical Organization helned to popularize the open Price inovement hy devoting a session to it at each of its annual conferences for manufacturers in 1914 and 1915.^ Furthermore this organization began publishing as apart of its service to manufacturers , a set of bulletins that are intended to serve as a guide to those ’.ivho are contemplating Inaugurating the open price plan.^ Enterprising men who have picked up the r:idiments of the plan either from Mr. Eddy himself, or from his writings, have organized secretarial service bureaus. These are so organized that they can take over the operation of several open price associations and run them simnltaneously. Secretaries of these bur- eaus are constantly on the watch for opportunities to organize manufacturers in- to open price associations and are proving a strong factor in their development. Some of them operate as many as a dozen associations.^ The result of the publi- city given to the movement through the instrumentality of these various factors, is becoming increasingly apparent. There is hardly a trade secretary that does not know something of the workings of the plan and a surprising n-omber of busi- ness men are acquainted with it. Gaunt, T?". H. Open "^r^'ce Plan, Woolens and Worsteds, Textile World Journal April 8, 1916, p. 1709. 2 . Babson's Reports on Cooperation, Wei les ley Hills , 1915. 3 " * •For instance, Organization Service Corporation, New York City; A. A. Ainsworth New York City. , rr JK *' •z t rv nt 'iAk * *' ■- ,Vo?[' t#OTrt» ^ i.' r- i a*«f a '|jfl.V6^*«5 ttT' nm^' tjf-' ' .mH ‘fcaa • ■■' . . ••' -, ° ' ‘ <*j ' I C’Di'fff r»qtf e/£J ‘**a/r »ftixrsr* Mi .Pt^***' oH I'tMlq 1^3 «|f? orti' ^ - * ' oV- ' .» #tifr*r0(» tiefStiSts^cs sr.iH tltf jBc^Vi to ,1X*«rJel aotl^ fjrr. r*V« Vs aoi?«tw «f? irovo irtti.cf ■f ^ *■ ^ : - ' *“ • ^ ara4* ‘"f«n boM hivsi.^iiibt>oii*^ mi’i'ti tmtrptr#t orf?' .t«#’0X> a m ^ifaS^ ya"«??a^ »awfi'"%r--w » 1: ^ * , -'^'■■^ V "' h - ' '" . -lO^ai*^ ^M4fdi lo -«i,r*c^4feri;3twtt tti: '■ . TTro^-Attita i c'nwflp . ^'^-i«,£*cr tocT?arrt '^iaH^furf^a-^ran ’fsi.Ia' a>i# lo ' j^il /fv*«i^ INJici ,1 I T!’. •^- Vf ^ ,Xijnjtfs>t i-f no*' c-f i^tiirT ' fiAeifato* too fc’n€.f,<3o*,njH£*r '♦©•’•fj# u/itO§^ ,.?£ .Tff^iariiiC’* , '..'.*ri :'■ . "..'• • -r*:"'.' c ..'.1 '.rr.-^-ij.jix® '.-.i ,n.; ’. .,.-i2'^' rv 5;ri.‘ ;■ \ '' i\' ~- ':b L-:c^’ * .. .•'^' ';l.- • :.-:-''r^ ,.v: a ji '• ♦•:■- *Tr{? .. Z. 7 ,rJ.-»o/:- 1 j.‘: lytft '• 1 .*'. = ' , >_>»+ •';" i • i ' Li. •*».*’' :B •: ■ ^ ■ - ■' i "C. . . •.■.*; iT-.-f.c ' -r.L. •tr-’O •»• ,; '■ J , l-.r •,._. , J '. T. •■■.,:■'•■ 0.1 C'-’ jStfJ o uV‘ Gr^~rr?' • ''7 f; ‘.ri-< ’■ lA? '■ ■■ ‘ ,.**;'Ti ,«f .“Cf :: L. ■ ;J^'' Zjh r~-. •f.•^ 7 Cf: r 7 to . >t 3 «- ■..■ .•'*T *.w. ii'O.: • ' -■• i ba.' . _i LL'.-'C V '. « 0 -“ ^ <■. <>> ; .li V J t ■ ‘Li r . ■' ‘ ■ . . ' ^rltog ■., . ivOct:- "Ta ■■■it j•'’ :• u o? L.yiC'- »^ */, Til ’.1 4 ' . ^ ■ij to t. ? . 1 • .’riiicf i'A,,...''": ■'t'Lv .Li' ^i’-' ■'.' to ffoifi I:i to"' ■•.--• if at ■•..'• '•■. .:! •? , ;: .AoSi'e ?n- ; . I', ;, i ‘t J i/i . li 'ir'Sisi 'td IZlxi ,l-£ • A" V .',v f ■■; ^ -• 00 ' . ' < •■ V.' ' •. aCm,- .iVv 7 r'!> 7 . A*:‘ ; rvi ' ' '.-ii ?n:' 4 - •*■ ».■ ■» I ( j . K u/- or; *. iuAiiA?-- ■- ^•■■^ ' •- x t •'* .'.-^ 0 ;^+^ -iro-' . .r , t. ;f) irr - >:.•.' ■ ' ' :. .^r r ^ ., . ^ N .-•» .■ r ?■ n r . -V .r:‘l^£bo^c'- Jl.' f" vr- rr A' 26 shipped* In the majority of casesi the price "being fixed, no pur'oso was served in requiring a report of prices. Penalties were provided for those who exceeded their percentage of allotted business. Those who exceeded the output agreed upon, were taxed a certain amount, based on a charge per ton or per hundred pounds on the amount of the excess. Those who fall short of shipping their allotted percentage,* were credited with a corresponding amount based on the ainount that had been shipped less than the allotted percentage. Tne commissioner after ma,-cing these calculations would send the comoiled 1 reports to each member. It may be noted that the exaction of penalties, thought so neces- sary in those days when so little confidence prevailed among coapetitors, is entirely out of harmony with the philosophy of the open price plan, which has for its aim, the upbuilding of a Sx^irit of confidence and trust among competitors. The reporting system in use among combinations may have given Mr. Eddy a clue which led him to develop the reporting system that he did in the open price association. The combination reporting scheme, although narrow in scope, resembled somewhat that in vogue in the open price associa- tion. The comoination system called for reports of production, orders and shipments; so does the open price system. The commissioner coiipiled and disseminated these statistics; so does the secretary of an open price as- 3 sociation. The form in which the statistics were compiled were of course not identical with foms in use by open price associations because the ob- jocus have not been similar. The object of the members of the combination Testimony, W. C. Temple, Record, Vol. 15, p. 6032. 2 Reporting Planj Amo ri can Hardwood I-Ifrs. ' Assn. Record, American Col. & LumberCo. vs. U. S. Vol. 1, p. 86 ■a it Jll In ^ n- CiltTv criii^l. --V t- -f-: ) . . -.'i * 1 *. - J ’•' .i’CiT/.c- 'io V.? :.’ ■t'j : T . ' l-ic I' f’ t ;-■ :i* r /:il ^ ; ■ I /rill.'-' ic‘' . 1 .. of/ •, :ij a^j?? :*!::£ 0^:4 •'i'.'d:i i:'4^6^5S» xfc ,iactri r;J>. 7 *rc^ *. ^'iinr ^flcqci •' :‘uc:^JjV - - • I ^ '' ■ ; y ' .. •. -’t'l! Oi;* to' jvrfr aQ"ai,-rr-Oi ^'ar.V-taff ‘••r V •• .• ‘ "' - be,"iX^'^o «*rovi T . ■• . ’• ; *; l)'-s:or£ : \ ' 'S- ’?•-'■ r.c .}■ • • n. •• iot ' r:. Ij -ApriT’X-^ rjf'c’ '♦ • i , [ ' O'; «rrj; 'I -.lic 'fc,.v'. -/ti -l x-r - : as*#' c .• r?*jo' ": r‘ • ♦ . n- <•:'. ' / ira m. ^ ^ AMM •*. .*; iT \r ‘ ..-it. ai:’:rl \'4i rerf-* es :.i xt. . : fO: ' .''‘‘i. 'O ' T, -. 1 .. .1 o Vv r '■iT.' ^ }J£ ts I *.qI i£:l ' f'QiT r;^ ‘ 4 % '.if» ^ ^ ■ ', ' • ' ;r " .^. ?aoA; ' j:»o ixt. :o *4 « • W» 1 * i» * 1 ■J .-'o' : .r'y ' ■- 1 .•.' * ,• ■ c • ». ,n- ?Tr a' ; i*, .*' :i icov-fa/ui ; 'T ',0 ; Jaa* .'i 4 _ A A 27 was to regulate business by nieans of collusion in controlling output and dividing business. Such statenients as were tabulated and disseminated were, therefore, intended to show the members how closely they were conforming to the provisions of their agreement. The object of the open price association being to educate members in all conditions pertaining to their business so that they may oairpete intelligently, such compiled reports as are dissemi- nated are intended to enlighten each member with reference to his relative position as regards volume of production, orders and shipments, et cetera. The foregoing maJces it clear that the combination and t he open price associa- tion have no essential f eatures in common except a certain resemblance in the manner of reporting statistics of production, orders and shipments. It has been noted chs-t the ultimate object of combination and open price association activity has been to stabilize conditions. It is perhaps worth while to note in passing taat their immediate objects also seem to have been identical. The object apparently has been to combat the efforts put forth by buyers to "beat down” prices by misrepresenting prices actually current among competitors. This has been one of the most prominent liamediate objectives of the open price association. The practice also seems to have prompted plate and structural steel producers to orgaaize the structural and plate pools in 1900. Note the testimony of the corcmissionert "Prior to 1897 there were disastrous times in the steel industry. Maivofacturers of structural and its sister product, plate, which enters large- ly into structuraj., had oeen fooled so oftenand so coirpletely by some of the oiggest buyers of structural material in the market that apparently there was alv^ays somebody wno was ready to quote twenty or twenty-five per cent below the coat to produce the mar-ufactured st-ff, judging from the quotations that buyers would bring to the marrafacturers. Finally two or three iranufacturers ■ - . - .-"i shiet :*r C4*» V :../f..;; : :i5> ilt..:.r:., . . . v ajcllivii: - ' • ■ ■•■ fV'i-, V. ••srf^ \/.:-t'''c rofl -'u.-i.- ^{. .t?^i ,e*^ol®rnn£j .-..oi:; oil. . ...;J '!-■ ■»: ■. ■ tS~ . ' * :.r.Cr»jf *1* ' ■ r-4. ’;''" -.-J-bsC^ ' t ,iT,’ J-; ,•5:.' ITt ;.■. , ^ C? jftlt . *>■ » §?*icKi •; ieJh-aoo ,v' ••' : u v;, 4 ' X " - ' c * -/r Jv. , ■ . . ?-ro -. ^ ■ . r* An i Gri J i..-.- :" ■ i*j of / 2 : .1 ■■ ... ..1 1 ; ' . •.: < ' . .: i II. ,r '.f • . -T-^* , --i “r.L S vi . l‘‘ ®r'J f . . ; 11. f Ltr-Al r ' 'zr'xle, fi' * ..■o 0^ • ' . .. 1 \ .XX^-'V-.. v:- ■■ .‘ V- !• . , »• s-c I t- * • .X - ! - ■ ■• ’ : .. 1 . ' •-••■■/. >•’ a ■ -. . ..'•r r.T' ,- fj:.? - , ■ • —* ♦ - * 1 ^ - . ■> r >-• V t. 4*. ^ ^ - i-r-V.^. 'r (.! ■ r- - >s ■ .' * V •; ‘ ■ ' 7 * , I. '• -ivtU} ■v. • "i *"' itl-Ui 1:^1. xtv.'.. ‘ ■ '.7 I. -■ ‘Vdj 'll X/.i - c'Jvw 'hi' ' ICS” ?*«*; ' •T'f''- ;rrv::J& ; V4. ^r-r: 0? ■*;.'■ Jf|i“ . .;: ': s t //{, , : t" cx‘'i C’ht r t"*' c . ■; • 3 1 Oi, t-d J *i i .■1 'f 1 28 got together and swapped notes and found to their surprise that each of them had been quoting prices, five, six and seven dollars a ton less than they had ever quoted to anybody, and they awoke to the fact that they had probably been lied to. " TThen, however, it came to the point of determining upon a remedy the methods chosen proved to be at opposite poles from each other. The open price plan ains to meet a situation of this kind by providing for the ex~ change of inforimtion between competitors. Knowing all the facts, the con” tention is, that they will then not be deceived into meeting a price that is purely fictitious. Ikch competitor is left free to name his own orice, but he is now in a position to do so intelligently. Tiie organizers of these pools attempted to meet the situation by fixing a minimum price to which all agreed to adhere, peaking of the action taken by the organizers of these pools, the commissioner v/ent on to say: “They called for a meeting among a large number of them and they found that the only way to block that thing was for them to get together and agree on a price and tell eacn other the honest truth as to what 'orices they 3 were quoting." With the decade beginning 1900, the Government began vigorously to enforce the Sherman Act. In view of this state of affairs Mr. Gary decided to withdraw all subsidiaries of the United States Steel Corporation from participation in pools. This step was taken in 1904 and led to the inmediate 4 disruption of the principal combinations in the iron and steel industry. ^Temple, Eecord, Vol. 15, p. 6046. 2 ^ See Jay. Eecord, Vol. 20, p. 7971. 3 . Temple, Eecord, Vol. 15, p. 6046. temple, W. C. Eeoord, Vol. 15, p. 6034-5. J. . .r> r.: iuie a>'?.Jr: .-o' i/ s'' itv -v- ^4 •>-;:>•! ^ * ' ' c* ^ ^ - 9 . C* ?. .4 4 # ' •’ W t'j r '. "■■ fe ji.:’. ..--. i: ^-riforrf rsisf hsf; / .Ti/.;f :*;^1 '! -i,'- ' *‘■'■' 0 ?/ \VHi' L •JO^T'^r ■•'/r : ■' ■- V-- ^•■‘ *■'■ '-■ . 's^ ^/•■•., £ i ,'lf}V--^o:-: ,r^c:n ' V . f •*L^e oyT": r*^?;-: :'.^o St; ot" oj c2'rof(3';Wii>fi4f' ci 'iU^JTiT i. r»? r • liT '■- 1- . ■:z.^l '^’''1 * ['• , TO-ti?." ■ >:,>0 '’fi'; i,.; , nu V;^ 4:r,*1.H. • ■ viii-f-f’;: -■'■ .. ;c-vi£S)ci: &r^ . r»yf c,jj -, i ■»• • •»-- . > > ••■ ‘ji -.O'^.trc" /j:. ' 4; ■: . -j' • *;oi; *rX<-".-f , ’> \j'‘ V • : wi^ -v, v3« •:!- bj t r.l ;-i»rt *'i - » #l'r■^■ j. ,^*'^0 ...H n ■■ . r A •' vv ri.^ bC-> ..-A- V-'-‘ i*T- .’l:\': *t'r4 :n’:- it ^..y. : , ■» 6 J ;.o in • no ' Xtsso-*- *> oc/r %.'«i /.•'.>i^;;. ii. - ■ : r„ ^ 'C’.3 'j'' V* f • '■»• .• ■ : n ■ *'.i. 'i' '': <.■; o:? 'yn.” •■: X: •> Xrr, ■ *. ' •] * I *; r.^.i Of' -I ' -•;: : p ..» :• r-#" — i OUi^j.po .• n . ■ . •.;T, ' V ''4 :i.:l^ . ■•' t/ii'Y:). ic (Ujij; ,».-•.■* I’o v.’v -T .Ai,.:; ft. 0 ,--. •-'•iJ . 5 > ’ . vl;i', .’•>'• 4*’ ;. ..; • JX; »? J ;;/i .•" a: X T^b «£*•?. ftri 7 hf'.OC'*' ^ . .'i o%- : ai ac ' : , . .f . oJ ' ii iro.i:: • •■.•.. ■• .' X '''i-".^ ' ■■ • i .IX!. -J rti-.'i . -o roJ^aiTtcli ► ''v' jO, • . , . . . . ,' , . 1*1 ‘T •■ - t A”. V*. '•r « ... ^ • A £ t JbW ^ ' I *J / I :,T. «c^' ,o. mt 29 They were replaced by the so-called Scatistical Associations. The members formerly associated in the combination sic^ily changed the nature of their activities so that they might appear less offensive. With this stage of association activity, it becomes easier to discern resemblances to the open price form of activity. Members have now made considerable headway toward becoming freer agents. Business is no longer apportioned nor production regulated by means 0* as^eement. Penalties are no longer exacted. There are no agreements in writing. Members are no longer required to submit affidavits with their reports. Voting at meetings to determine how members shall conduct their 1 business operations is abandoned. Members continue to malce renorts every 2 month of their jp reduction, orders, and shipments, but the purpose in doing so is no lohger that of determining what penalties or credits may be due mem* bers for exceeding or falling short of allotted quotas but to keep members informed as to whether they were maintaining the same relative position in 3 the industry that they had previously occupied. It is probably fair to assume that moral obligation to abide by the percentages approximating those which were enforced ly the combination had now supplanted hard and fast agree- ments backed up by a money penalty. Whether at meetings members made declaration of purposes respect- ing their production policy is not made clear, but it is clear that each member made an announcement of prices whichhe expected to charge and that as a result of their deliberations each member would announce a price identical with that of every other member. Furthermore, it was generally understood 4 that the price announced was to hold until the next meeting. Evidently strong ^‘Langan, Record, Vol. 2, p. 839-342; King, Record, Vol. 6, p. 2083 ’Ibid, p. 839 ^•Temple, Record, Vol. 15, p. 6037. Record. Vol. 6. u. 2083 1 ‘ ( 'W? X 3 tfltio-X.y. 0 ' »'ity,» t-aJ £•„ . • ■•. yii !»b jf. ; c ir;? ^ 41 as;' ^’ 4.-5 |4 fe. j; io oEiaJ •; '<: i .■* >. c* - * 'vVj 1 .i -ho < -yi 6 *: 9 rc o w ‘-'--V* ; Cij 'r .tcfCi ■* ;j , .'i.. X^c>i : ‘ ., ■ J ■' . i' X."0* *: '■ -r;.: ; sci' -*■ ^ ^ V ■' .\i s n- '-'ij'j r?r c.vTM.-:'»'f t ■ owat' ' '} - j''"*'': . i-.jojy'jv');..' ^r. -;vy-;-f."^X Oil wt '« R^'V, * -'U-.*' •, -' -w- c.-T-ori erlilJsjsz---.- . .. ■•"■f'f's “j • •' -'X- ''Ml- _ jC'-a: • tu'ii -• -■• '•" ■■■ • '‘4 '■>,♦ 4 .:. ,:iC 30 . 7 ', 3 : ’ 1 • ^ ‘ 'v- ■ ■ .• ? oXT ,''-::::. ?■' ’ye?:' .7 r,o...rt#':r -it aroJUfi -?o »s»i ? . •lierfi /r>" ■: ^ fn -V • , .-. • ^s. r ' *3* i' . . KV 1-\ Si h . *. • 4 * ** ^ ii* ».' *ii ‘ * ?.>s C . Ji-C: ' - — . ■ * ^ ;.j *»d9 f f/I : . -J, o'! ' j: :■’• ■. .' . i ? < d\ : i'©. ^ > t • ■ * '•■ * X » '. > •' '.■ ■ ■. -Jit;,. t;. ..A. . ' • . ' T V r.-Ji.;. icn' -i,.; •■ ’j.^ “■ ■/ i .i'-K* ‘ I r.J 's-.i. '* r ■• tx'ix.s. , j i. .t : r - A ■ ?; .;ri ’■ '* • ’’ •. ' . .' . rrc- ' •*.-..•( vij*’' , . T.c.5r^ •*'•>' 't : • . * •■ '%;. ; ;.;• ••■••■• vt * ■- '.■ ,. .** c ■'-4 > ); •;■ 4 .ij- %%■' " ■' f ■ ,' ' . .•jif! ; i '■ Ijv 11 nu ..•’jfj,.'5-'‘. *. *TTL ' \ roq t.'trv4 >'j V 4 . .i>\r ;.. j' : ■.■ '• ■ - very fomdaticn stones for his systeiii of cooperative con^petition. He con- ceived the idea, first that systeiaatic attenpts sho-ald be made to bnild np a spirit of cooperation between competitors. Cooperation in Vasiness wculd fol- low if a friendly feeling coald be developed betv/een competitors. A feeling of friendship could best be developed by arranging for frepaent gatherings. TiiO second thought ;ms that competitors should be induced to exchange informa- urCti ticn between each other, freely and frankly. In the words of llLr, Gary the pur- poses served by the Gary Dinners were "TIjo roughly establishing, if possible, a friendly feeling amongst the steel mailers, and of inducing, if possible, the manufacturers to state frankly and freely what they were doing, how much business theyvere doing, what prices they were cha-rging, how much wages they were paying their men, and oftentimes wh.a.t their methods v'vere, .and in fact furnishing franlcly to the Oohers, all information concerning their business, to maintain as far as practicable the s tability of business and to prevent oy exnortation the vTide and sudden fluctuation of prices which would be injuri- 1 ous to everyone interested in the business of the iron and steel manufacturers*’’ Ifr. Gary well recognized that in order to make effective his ideas of building up, first, the cooperative spirit; second, a sentiment of mutual helpfulness to be manifested in a free and frank exchange of infomation, it would oe necessary to do more than provide for an occasional dinner. The size ox the industry would not permit of more tlian the leaders of eacli line of trade being present at these dinners. It was imperative that each line of product be organised in such fashion as to provide for the frequent ex- 2 change of Information a:.il the grov;th of friendly feeling among competitors. ^’Gary, Record, Vol. 12, p. 4839. 2 . See Robinson, II. H. Unpublished lianuscript, Gary Dinners, p.5 . -*' V . V * •■ _f ' 2 . •. .'-l-'..v- ::i • : . •'r ' I ’0vao6 ~ _*wP . \T 4 . ; 4 MV.«^J 3 bi V . -.1 .. •n^s-'T "Ol '^.A^... • .'j f'i I ;rv.> <(‘. • /j:.)^.;.,. ^>j 3 I: « .:--‘h wo: -I r:o ^U.i?.:d>:: a:? :jt * c; .. • U;J ’. ' r .--';r ,•' .: : AOc : ; , --■ - ■ X' ■■ ^'- ' • ” , . A. 9 ^' “ v; •; ::jA ; t ..; O' row": .t t f ^ 'ta dt!wjea. ' i X..-L. ’;:i -.i , . .? 5.. . j ■ - - " .’. -• - !.,' , ■ — ,, •;,. .. r::-- ' .' r ' T*i ,J ; -» * i -. : ^i::'.'^.- *.C/tr ,. ■ ’ A^r; I 2 to : ' liJlIoV . *: f * - i “ r.'; ' l « , ? ■ -K - *■ . ’ - • :X^n _ . ■ - . . ;X >0 ' .- ; o‘.£ "r- ir - • 'i ^ ^ t • V* 4 * t*--- - - - .1 . -i- J-.'lai'! 'Tnrzo±r.H '. 4 b. . t . .V;-. . - ■ ■-3'^ . 2 , , 4 tiftifcJHi o-r ■c ii£iy 05- t; ! v,c- fiis CM' • - J- STi^i •'. ■ . . . .s: 'Itk. cTi/L..:- -.moto V: r- . * -ji H» 9 i. . *r . 32 The method devised was to appoint a general comiTiittee of five who were clothed v/ith authority to select a number of subcommittees to represent the important branches of the iron cCid s tsel industry. This action was voted at the first Gary dinner. The sub- commit tees voted in, represented the follovd.ng lines ;of products, ore ana pig iron; rails and billets; structural miaterials; plates; steel bars; pipes and tuo-olar goods; sheets and plates; v/ire products. The general comniittee was of value in coordinating the work of and stimulating to action the memoers of the several sub-committees. The latter , 2 may be regai-ded as the successors of the so-called S:atistical Associations. iheir program, however, was a larger one. Thej^’ were coranitted to the addition- al tasK, first, of ouilding up an esprit de eexps among competitors making for cooperation; second, of oroadening the sphere of cooperative activity in tne direction ox a more frank, free and comprehensive exchange of business information. The way was rapidly being prepared for the advent of the open price stage of development. !.lr. Gary not only pointed the -way by preadhing cooperation and by creating the organization by which it mi:-):it be translated into action, but as the President of the United States Steel Corporation, he tremendously aoetted the movement by practicing what he preached, as the folloT^ving will indicate : -Ir. Smith, has the existence of the United States Steel Cor- poration had any effect, good or bad, upon your business? A. Before the for- mation of the Steel Corporation business ethics I mi-ght say w^ere in very bad shape, corrpstitors had no confidence in each other; they resorted to sub- Ibid., pp. 6,7. 2 . Ibid., p. 7. 33 terf-agas, misrepresentations and false statements. The same lack of confidence 3xist3d iDst^veen sellers and raany purd-iasing agents. It \vns a very -andssir- aoxG condition in vvhicn to do business. For the past seven or ten yeai’s-- in later times, at any rate — all of that misunderstanding or misgiving has been replaced by manly, straightfonvard dealings. Qe io vnat extent ao you. think the Steel Corporation has brought aoout that change? A. I do not think it could have been brought about without their influe me and example. ,> i-ow wnat is the difference, if any. In the attitude of com- petitors in your line tov;ard one ano.her from .the condition that prevailed say fifteen years ago? A. We are honestly friends now. Then we pre- 1 eSnied to oe ii-iends, out were the bitterest enemies. Just what the Steel Coiporaticn aid to build up this friendly sxJirit is revealed in Mr. Qary*s testimony: "j'e have keptcoirpetitors, employes, and customers well informed In regard to our goiieral business affairs. Of course I do not mean to say tliat we always a3,lo;;3d e^.^eryone to know of our negotiations concerning contracts and things of that mind th.^t might interfere with the regularity or eucesss of our ousinesB in detail, but sc far as cur policies and principles and t^eneral conduct anu results and methods are concerned, we have endeavored to 2 keep the j.yublic informed. ” Although Mr. Gary’s teachings and exarrple had their ultimate influ- ence, the immediate results were not gratifying. Very soon after the initia- tion of the Gary system it became plain that competitors wore not wdlllng to show the same degree of frankness and faith-fulness to Mr, Gary in reporting 2 . {Ir.lth, C. C., Eocord, Vol. 20, p. 8057-8058. Gary, Itecord, Vol. 12, p. 4917. chan;:ies in their "business methods, as he was doing to them. Testifying on this matter, LIr. Gary saidt "We decided not to meat and give ot?i3rs information as to exactly 1 •why.t we wore doing, what our orders wci-a, and where the^r were, or any in- formation a"bout our business. Conditions had clranged. This step was forced upon the corporation. Others did the same. ♦ + * * + yjxd. prevented de- ^aoralization; we xiad by our business friendship and our coming close to- gether and keeping one another posted, prevented the wide and sudden fluc- tuation which I particularly was attempting to prevent. But there had been changes fi'om time to time and sales made below the advertised price — vwrat are considered the trade paper prices, but never-the-less I believed it vxas good business and good morals x,o continue to furnish the information which we liad been furnishing from time to time -ontil we reached the period when it was perfectly evident thi:t there was a disposition on the part of everyone outside of ourselves to do j^ast exactly as he pleased; tliat is, to pub- lish one price and sell at another, to sell far below the ]:rlce 3 that were supposed to exist without notifying us. When competitors were imaioing radical cnanges in prices below their published prices they ought ixx fairness to notify the rest and especially to notify us, because we were notifying them always. They were not obligated to do it except as two men who nrofess to be friends, or professing to give information to one aiiother as to what they 2 were doing, naturally ought to tell the trath about it." Mr. Gary’ s announcemjent to his competitors that he w'ould no longer _ TMs Ixa opened early in 1909. 2 . Gary, Eecord, Vol. 12, p. 4902. is K t - , ■S' a.- f *• f r. r *• ^•v t . . r a . ■ '' / 35 cooperate with them caused, the temporary aoanioimient in 1909 of all associa- tion activity. ITo fr.rthsr meetings were held, and the committees were dis- X banded. It is well to point out in this connection that the breakdO'.vn of Gary's cooperative plan cannot *o« regarded as an atigury of the probable ul- timate fai?wure of the open price plaii. Under the open price plan there is no discussion cf future prices, nor is any attempt made on the part of mem- bers to come to ari under standing, express, or tacit, respecting the cou.rse of future prices. lestimcny tahen in the steel case imal:es it clear tiuit iron and steel producers conceived cooperation to be synonymous with a united effort to maintain prices. In ISOB, Hr. Bope wrote to the directors of the Carnegie Comr.any as follows: "One concern that has been reported as 'cooperating' r/ith us in the price policy has been x^srsistently atid consistently doing the other thing, taking business at any kind of prices they could get ^ * that in the bar end of our business we are meeting competition today that is just xnocxlng everything In the he.ad. The bar situation is the w/e-akest feature 3 of the whole price policy." Testifying as to what transpired at the graap meetings held under the auspices of the vai'ious sub-coirKdttees, Hr. Crav/^ ford said: "There v/ac.ld be a general understanding that we would do what we woulc »ji,y v/e would do — ciaote a certain figure until v/e foimd rs.ascn to cnange it; arid if we fo'ond reason to change it we would notify cur conmeti- tors, or talk with them about it, when another meeting wor.ld be held and conditions discussed. 1 . 3 . Bocinscn, LI. H. Unpublished Lhnuscript Gary Dinner System, p. 2S. I/Ir. Bope to the directors, Hecord, G-ov. Exhib. Vol. 3, p. 52C. I “i -Vi Iw r* ' V « ■ .•■'■ 6 ii ■! .- ■rj:.’ • ,r -K: - - . •-#? +■ ffvi -fs- ■ r ‘:;-v . . . ^ • rr:: x C. : , ■z-.S'C:. "lU. il - .,1- V I • t '.-j , V -■ ... -h^r-’ ■' **J» Oj . b ; ?'i . V. -:rv ■:w i- ; s. ..w U’C ~ . m . r ' < r r;.*; — i**- • - *1^1 — .. . . UT-O »ZO" n.s: v:..‘:c_ erJlr •- •- i. ^e-ff ’ »•.. 2f % r- -ro :. :: *? J « j .4 S*J 1 J iti ; *.-»f i'>. 7 2 V ‘‘Ott. ; ..: (.X.^Vs : l-n : * ■ c.. .rr ? ' • • \ ' ■ if ^ -k. < A. IS w'4. ■|ij p . , . 1 - -t .■ T 36 ”A price iVO’jJ-d always os s'cigrjested. Tlis s'cate/rent was ■uuoaniroous in every case on the part of all that they would q;j.ote a certain price. The natter of price cutting world os Drought up and dis erased and t’lat discuxioio v/oula end itj hecauss there was nothing to do in case there v/as. ”lve would say, *We will q;rote a certain price until we find reason to change it. ’ Then would leave wdth the sar^e "mders tending t’lat sach v/as go- ing to ssll at that price. The affect was to keep a steady price. There were soae I xcct aat?-0ns. I'ne understanding after these prices were announced was that there was amoral obligation to sell at that price until competitors were no t if is d. ” Ths Gary system failed at this juncture because niarlcst conditions led to more and more price cutting on the part of those who felt obliged to disregard tneir '’moral obligations.” It ceased to opeo’at-s when it no longer v/as aole to control the price situation, constituting proof sufficient t:iat members 'understood it to be a plan for maintaining prices by joint effort. In coni/Taso to tnis, prospective members of open price associations are made to understand that tne cpjsn price plan' hc<.s no place for agreements or under- standings of any kind^ They join knowing that they ars e^Qseted to q^aote any j^rioes tn-t they may see fit to quote. The open price association is tnerefere not liaole to be disrupted because of broken price understandings, -or such agreements not on_y do not exist but are positively discountenanced. ->eginning in tne latter pa'rt of 19C9 Mr. Gary thought the time rine to attempt a resunption of his cooperative activities. The newly organized Iren and Steel Instifute, modelled on the lines of the British Iron and Steel Crawford, Hecord, Vol. 15, p. 1777. 3 • ^Constitution, Society of Kicnufacturing Oonf ecticners and other constitutions of open price assns., also Eddy, ITew Cenwetition, p. 122, 124. xiistitiite cecame the r.ev: center of ope rdt ions. Plans were going lor’./ard locking toward the effective orgcc-ication of the industry on "cooperative lines" when in ISll, the Government launched its attack upon the Steel Cor- _^>c*^uion. In vie\/ of tnxs cxrc^.'jiis trance it was deonod "best to discontinue 1 the coop 0 rat i /e mcvcxont. This siage of association activity, however, was pronrotly succeeded by the open price system. Mr. Eddy, Ixaving rnade a specialty of the study of lav/ as it pertained to the vax-ious fciaxs of combination became a close stu- 2 dent of the methods pursued by Idr. Gary in the iron and steel industry/. He was quick to see the a-.erits of cooperation as pi*eached by Hr. G.,.ry pro- vided it could ce directed in such a way as to result in no violation of t!xe law. In studying tnis aspect ox the situation he conceived, the idea th.xt there could oe nothing illegal in pexncitting competitors to exchange infcrtia- ticn dealing with past transactions. Eis observation of the wtJrkings of the Gary system ccnvinocd him that understandings in violation of law inevitably followed ux^on the heels of discussions devoted to a consideration of futui’e iH'ices, cut discussions of prices tlxat were ali’ea.dy being charged or quoted cot.ld never be constraed in the nature of -under standings in conti’avsntion ox 3 tne law, he thought. Around tixis idea as a pivotal pci-nt he build up the system mxov.n as the open price plan. The principal elements of the plan, a reporting syster.”, an open, fxoe ana frank exchaxigG of information betv/een com- x-ei.itOi’s and an ax^oreciation of the wortn of friendliness between competitors Jm • ^ Inbrnson, M. H. Urr-ublished lianuscript, Gary Linner System, p. il. ^ See Edui--, A. J. The Law of Combinabions, Chicago, 1901. J^ddy, ITew Competition, p. IIS, lar. Eddy quotes from Bill filed in case of U. S. vs. U. C. Steel Corporation as follows: " * It is not here alleged tnat mei’exy assembling and nrutually exclianging. information and declaration of rjurj.ose amount to an agreement or a coiTibinaticn in rest'raint of t'orade.-’ " See also p, 121. 38 already lay at his aand, coiitrihuted, as they had heen, "by systerr.s of a30ocia- ted activity that had gone oefore. It reniained for Mr. Eddy to iinit them to- gether, weaving into the faerie this new strand of thought of his, namely, that the exenange of information nmst oe limited to transactions that ^re of the past. An exa...inauion feff the list of open _.i'’lce associations found in the appcindix leads one to feel justified in aiaking the assuimotion that an open price association is new in existence in almost every line of product former- ly contrOu.led oy the suh-ccmrr.it tees in operation under the Gary system. If this he true it is a developirient of sons significance. Of course the fact that the suhsidiarj^ companies of the United States Steel Corporation are not mem- oers of any of the open price associations detracts from the importance of the movement. However, the rr.ethods and operations of the Steel Coroorations have always been more or less open so that the independents, all of whom are mem- oers of open price associations, can prohahly reduce the operations of the Steel Corporation to a calculahle basis, thereby offsetting, somewhat, the handicap of having a corporation as large as this ou.tside the ranlts of mem- bership. The Ariierican Iron and Steel Institute has continued to be the cen- tral organ of the industry. I^.der its auspices tw general meetings are held each year at wnich technical papers are read and discussed. The Institute also collects the statistics of tonnage production of pig iron, steel ingots, finished rolled iron and steel products, et cetera. Ho statistics of prices are gathered. From time to time the Institute publishes a book knovn as the Uirectory of Iron arid Steel T/orks of the United States and Canada describing See ch. 8 for legal discussion. 39 1 the various iron and etesl con^t'anies and their plants. Those vvhc liave- studied the association movement amiong iron and steel producers natvLrally wonder how s-accessfully they are adhering to those prin- cij^les of the open price system which dictate that competitive methods are to he free aad open, untrammelled hy associated action. Having learned that the price fi^.ing viras has oeen ironoculated in years gone hy, it is manifestly of interest to Imacw Itow the open price plan is managing to comhat the effects of this viru.s. Tne Eiovement is too much in its infancy to permit of any exoras- sicns in elucidation of this point. Haturally, too, this is .a iaatter on which it is very difficult to secure data. Letter from H. H. Cook, Am.6rican Iron and Steel Institute, Jan. 17, 1921. chapter III THE EDDY THEORY AM) PLAN OF MEV/ COT>'PETITION Vary little theory has been developed in support of the open price plan. Three of the most fundamental concepts associated 'vith the plan, n^^ely, firsu, puolicity in the transaction of business, second, interchange of busines infonnation among conpetitors, and, third, the development of a spirit of con- fidence and tr>j.st beti?,/een sellers themselves and bet^' 5 een sellers and buyei-s, were being put into practice by Mr. Cary in the iron and steel industry several years before Mr. Eddy publishea anything on the sp.bject. However Mr. Car;;.’’, as far as is Iniown, has contributed no theories pertaining to the plan. Only Mr. Eddy appears to have contributed anything in the way of theory. Su.ch addresses or articles as others have published are practically without exception a rehash of the ideas presented by Mr. Eddy. jBut even the ■.vorx of Ivir. Eddy scarcely deserves to be designated as a theoretical contrlbp- 1 tion. The purpose of his book, apparently, has been to win converts to his plan, cy presenting the plan in a popular way, calculated to catch the eye of the ordinary business man. Naturally before plunging into an exposition of his theory, he undertaxes to denounce the kind of con^^etition now extant. This comoetition, tne ’’old coEipetition” as he calls it, is fierce, brutal, ruthless, destructive and wastef'c-l. It is the law of the survival of the strongest applied to the Eddy, A. J. , New Competlticn . N. Y. 1S12. Mr. Eddy was an attorney! not an economist. Ibid, pp. 1-37. .■- .1.- - ; ’I-r-V rr ■ * . . i :r I'.r ^ [j lo . -[r r^. \,: tx:/ . . l«i :?4vr.i.;.In.l •« -jpi’' tf ^ ' ^ •> .^ h-'i. J. . rc ooiii.* - id ■- I - - \ . .■. ’ ■ *V-! ■ p • WX J&dlV , • i .-'i -J .0.; - *:y dc .*t <•■„• f . •«. -T 1 ir -3 'I'- \ * ' * % *v . -Ar:ftcfi .; i.'-.-.tv a '■ • a nJi.l '.'c pOij'. ' ujT . i: 6 r ^i 4 «xrrf -li-ic ef v ><- ^ *ti , ;vi.*; * V.uaac . v.;-- • » •' ' '/\ .'•- ; c 'ic vC'.-'-.'iOfrel •^.. i.. -i ,:i i ’w-JJl; ■: -J;:r dH;\" v.v tif: lo . . .. i,..i '.«i ' , .* . ,v^ . ■ * , ‘:' i, " ^ 1 4 41 commercial and industrial relationships of man, a law by which the s tronger, by fair means or loul, over come the weaker in commercial combat. He decries the existence of a competition which seems only to foster the feeling among business men that in order to be successful they must ruin their congpetitors. Fitness does not seem to insure survival. To take just one example, many a contractor who is rendering satisfactory service finds himself bidding against others of his class for the custom of a single person or group of persons act- ing as a rnit. Ignorant of the terms being made by competitors, it becomes easy for the individual or group whose custom is being bid for to play one off against the other by misrepresenting to each in turn the terms which have been made by others. The result is that bids are often made vMch do not cover costs. Inevitaoly men are forced out of business whose services society needs. They are Often the very ones who are the most valuable to society oecause of their honesty in business practices. The more ■unscrupulous competitors succeed in surviving by resorting to poor workmanship, ad-olteration, and scin^ing on specifications. One of the worst oy-products of the old competition, according to Eddy, is the secrecy existing between each competitor.^ Ignorant of what his 1 competitors are doing, ne bids against his ’’own fears and necessities”. The result of this state of secrecy together with the state of industrial warfare that is associated with it is to fill the world with suspicion. Labor distrusts capital; the distributor distru.sts the producer; the producers distrust each other^and the consumer distrasts them all. It is not necessary to do mors than call attention to the line of thought that jiddy has here pursued. For a long time economdsts have been 1 . Eddy, New Competition, p, 82. X# r' “ic - . • A. y. ,'...■ *• I 4 >««I ^ ■ ';C 3 # »*C'i j 'c*-.- . w -V •?-:•' . i\‘n.,'a I".: ^ i o> btfftt :i.-.h-^ iT ’ . .'•. ; . ■'. : •»». . •. . • . . .. L'-^-a ir.r-i i ! -; 3 i. . _ Ji.:;- - , ■■ ii''..is- -. c • ■:**.„ -’d r^«j 0 J to'i 4Mi- . ': :■ t^ec’Jp m \ U' -'■ ww-'j Vi^co e. : “lo ."itfOu ^ ' ?> ' ' i .* lA 3 c. »• 0 '?^ 1 ? f -irfy TC'^ r i K i..r:*y ■'< / rxrj ri oAx* .? •.' -\ *cfe t '-•‘•rf'?:- ..'V itl'J 3 rf."'. '1 '''0 ''J .iJ. 1.1 ■ oAr ftTulirtf lo .-> • u i«fi , . . ■. ■si. \ • . •lifmrlMr A ^■:■.^ .V 56 otTr~ ST*^ “ . ■-*:' ’ot-ileiTtf r i Tii'tiJ -.i. , 7 . ^ ,1 T/v, c/ t: f f V -.v*iL-t rl '■ • ‘ . ;.• r i3 • ii.I. rc,; ., -.►j ..: -i.-: ■•-•.' /•. ,.* J; .'*t> -> ,»;..• IK *£:0 42 cognizant of the fact that the coir.petltion that they have regarded as ideal, characterized by an open uiarket, with ntunero'as buyers and n->jnerous sellers, each conscious of the bids and offers of the others, is not the kind of conpetition that is actuailyfaced by the business man. When the business man has attempted to avoid the disastrous con- sequences of actua,! competitive conditions by means of combinations, consoli- dations, and association activities, the jurists and legistators have felt it incumbent upon them to force them back into the old conditions. This is a case of outright discrimination against the business man, contends Mr. Eddy. He points out that farmers' organizations to control the production and mar- keting of their products are countenanced by the courts as are labor unions 2 which exist chiefly to control wages. "The country has reached the parting of the ways", he goes on to say. "It must make its choice, and make it intelligently^ either the com- petitive or cooperative basis. If the conmetitive, then no class should be penoitted to organize a coaperative movement to get more for wliat it lias to sell; if the cooperative basis, then no class should be prevented from organizing- either one policy or the other, the tv,ro cannot exist together. Tne Eian who argues for competition must be consistent; he must argue against farmers' cooperative societies and Lhibor unions just as vehemently as he argues 3 against comcinations of dealers and manufacturers. " After thus pointing out that "the old order rnast give place to the new" and that judicial opinion and public sentiment is beginning to shov/ signs of a more tolerant spirit toward cooperative efforts among business men, Mr. Eddy is ready to launch into an exposition of what he tenns the "true comoeti- Johnson, A. S. Eeview of "New Competition", Pol. Sc. Quar. , Mar. , 1913, p. 142. • Eddy, New Competition , See ch. 19. Ibid, p.35. 't . ■>; ■ I ml. ^iried ' f . r:'»l adj ^a ■jWatnsoo , ■ ^ . ' , 4 4*T*./'“78:, frxt>:a«tPr to* i^«xtn tjKrtf*&tui oa^V * -»* • *:.C. SdijL ficf^'; ioc »» .ntwa© tnii 9lii ^o. etr«i-|i5wy£; dafc« ■» /I .cas£r «»«*c itvtnJ iwi;. i!4i3^.> x* ti wi * • « t I ~JS^ *owi5ftj»i^ iiJoTj!, tt ti/f tn> 35 k£» ■•^rS' ' ’-^ ., . *j “J-oatsoa ,»££piirti^&o ^o er^^dej at - ~ ^ ^j aoar cqmh^p^m ' ■ i j ■ ■')! ^ :1 3i'\ f^t'X p^^shiaft ,i*JLsiyi4't«ii Jj^io ^taaJSiil f. > , ■ ,‘ 4i eis£? •jaoi:2\^o hls> ^v-t* i^ii iu- JU7i» Inda.-O'^^atas -•^a» Ifrw a |iK> ‘-rawJfSAl ^ ■ I ' »« tA4 fc^r^.rra^^«-t>b, 6ta> ti^yi^cjii^iyarf;-' s‘/5 '■ L ■fcl :p Bfi ,»*E^ 6'/ i^tjsr fr'iS" wi i-daca Jbrui, Iorf;i ^vMt #1* ^ u* *'<■'■ 0 V tUr>i9 on A^4f ^ , ittzl ;^i ^ftsSr -:<»^ war irt o^ ? yij#ri* ^ T * Jjcal *o*t3#^r»« 4/^.4 Xe^o iul*rQ9 STxiCt* Jrt*iei%;> artc® a ,! - ■• _ ■ -■ : ' v? ■' alH sa ^'#i . *' *’::^qp ^ '.*5 . , *ntl:i iifs^-'jXiQ t*> v<® .a mV .ifoi .idct J ' ■ , ■ X‘ ,.j{5 ,^n0ljl3r#ic?a»^ 1*^1^ k: -* • ’\ . L " n .■ r-z i> ' - « .de.q ■ i^ 43 tion, " or the "new competition," which he predicts will very soon supplant the old coirpetition. "True conpetition, " expressed in his words, "exists only where there are two or more coirpetitors competiting under conditions that enahi each to know and fairly judge wnat the others are doing. The essence of com- petition lies in the element of knowledge, it is real, true and beneficial in proportion to its openness and frankness, its freedom from secrecy and under- 1 hand methods". Tnis constitutes a statement of his theory. In substance the only amplification that he makes of this statement is to point out what he thinks will he the important effects of competition carried on under open conditions, all competitors being possessed of full knowledge. In the first place, prices will be stabilized, he thinks, and his main reason for thinking so, apparently is tl^t evei*y competitor will "refrain instinctively from cutting because he knows if one cuts all will" in as much as "the industry has probably been through more than one disastrous trade war and is ever on tho verge of another In the second place the absence of secrecy will eliminate the evils attending the old competitive regime. Distrust that peiwades every class from producers to consumers v/ill give way to friendliness and trust. Since dealings are no n longer in secret, they will not be attended by fraud and misrepresentation.^ Mr. Eddy thus states what he deems '/vlll be the main effects of his theory, out he doss not explain why "true competition exists only where there are two or more competitors compebiting under conditions that enable each to know and fairly judge what the others are doing". Knowledge is the essence of ^•Eddy, New Competition p.B2 2- Ibid, p.lOl •7 Eor a discussion of the effect of open price activity on prices see ch. 9 For a discussion of the advaiit ages of the open price pl.an see ch. 6. w to If «n*iatrtr» tt>- ..c XIl«r ^ daldtf ” ,o'oi? wac* 14 ;^' td'' ”, troll ‘ ° • , V- ^tXro ,Birtcfw tUl ^ Aoah'Waiai • ,ool7iio<{eiFOO *rt:^ii:oqpaos> hie 3.^ srrollif rros -roifo# ^^xt^/tet^rteo o'IChd iq ool 014 *t«t« •^o ’ic *ee>f,eB*f4 acf? K 14 (K^ft^ \o olootlt loittoc^al Mia *d XXii? J - .- .ertitlri o«{ff ril .e>!^XocftSi JJLpl ^ It^toa^oq lia 'a \X3*i«5Ve ^atxall(l leX rw^cit aijKJj ir.* «<:/ffl»r- ium’t ai«c5o^* / ilw toffI.fo^^!> xirovu 'ff4t(> at ■ r a 0^6 cS ^Xcfiio'twq t«ci ♦Jiff‘S ai ”14^ Xio esf?o- 11 Z ' '-'’" ! otfi* lo Bj^ 0 v «4i cr? leto «1 J^v \ci» ‘ ulkve Miff JLTIa -xo^co* ’h' ,«£! 0^:4^^ JLoocfiO a^ al a‘i»ctfffc©'?<5[ iiffrrl aa^itj l^p 4fCd i *-a ■« • ' ' oa oic. ocuslfi tte OC orIj.XXio iioaxTUSOC ol .4.t3i4»|noii^‘r<(v":0l« i^rjj luarrl MiifloJlA atT ffue -ffXiv/ iiK?ff ol iesr.r.1 i» t ■', «ldf yo oloollo alKs aaff e4 SI b» ipoemh fti( iff'iAr • p • ^ 1 Vjfclt %fao ffjolffl Jonwoc •oil” vtSr itijbCvato ;foa irs 6 «»li{c 4 Ird . ,xi-ooc{|,(, ■’t a 1 ^* aXd^Aaa ffW( ’ aaoitlXaco 7oJ5cor J^Riallpo^aoo tie.'tl^o^BiC'O sioc^to owl a^T . iV lo ftoet«fc» irfff tl •c 0 ^irrt\aj ."*.i;J[ 0 Jt 070 . c*tadlo orfl 5 *aSo sj^liut aX-ri^l lOKL tw Sf. v-ej?' ■; . . '■ ‘ 9 .^'3 -eoc iiio -tfffltljjo* -fi'tJKg lo ffoel^e lo TtQtpmxip'lb », 7oX .^.^o f-Q* rule rt«>^o etlff lo ftojta isidff Ic acli« east 1 ^ 4 lol *•’ !l 44 conrpetitiori, he declares, but he gives no reasons for so tliinking. After making the statement of his theory he immediately proceeds, as has been noted, to consider the probable effects .resulting from the acceptance and application of the theory. This being accomplished, he is ready to suggest plans for putting his theory into practice. Before turning to a consideration of these plans, it may be in order to assert that in the opinion of the writer the statement of theory as made by Mr. Eddy contains in itself nothing essentially new to the science of economics. Economists have long recognized that innumerable elements of friction are ever present under actual competitive conditions to prevent the law of supply and demand from functioning as it would if they were not present. Ignorance has been recognized as one of the deterrents to aui approach to a condition of free 1,2 competition. In fact, economists, in foimralating the law of supply and demand which lies at the basis of commercial conraetition, have made the e^jplicit re- ser'/’ation tnat the law only holds if it is assumed that all parties are intelli- 3 gent enough to know their O'wi interest. Obviously they will not know their own interest if they are not acc^ainted wdth all the conditions affecting the supply of and the demand for the particular product in which interest is center- ed. Ignorance of business conditions is admittedly so prevalent among business men of the ordinary type as to render them incapable of acting intelligently in their o-m interest. Perhaps the reasons why knowledge is the essence of competition may be made clear by the follo^wing. A knowledge on the part of sellers and buyers of their own interest, implying as it does, a knowledge of all conditions that might have a bearing on the supply of, and the demand for, a given commodity, In every case where the term "comoetition” is used, the meaning is” commercial competition”. 2- See Taussig, P.W., Principles of Economics, Vol. 1. p.l49. See Palgrave , Dictionary of Political Economy on ”Com-Detition", Vol I. -on. ^_sr- / , . f ■* ■Y' \ •y.nWdfjj. cft npl ,%ji'.?-Mp •: o-a act ,f sii!.Xii<>6 * . ' • J ?5 ^joff nocKf DA ^fcoei^Ttrt tle^«l£9rt®i ad »id lo^ «d.? ' ' (Ti* 'i ^ •]aol7^i^/i<^g• Am e.-^ {ooil ^icCwfo^r? »9^g« od# -J»^i^W »!onti’Oi adj ©^ Vis';, y^^J^cfwao ^-cUriJoa tXotii k 1 snA»4«oo •r^v*:- irt* noiTc^-jt to i^toeXa oltf^aasttu l Ji-ejs ^'«**di<^^e^aot-2^ ' •* t: .-f - ■ • ‘ ' ' tv wftX Ida .■’Devfjg o# Iih/7Ci *j6fkair intan ^imkmssii ml =&U&aef. tftfit to rwijii.'tjH' a 6s d^AtviQtjfc fLM «xj nSittttie^sub #*lg to, eiox4s 4- aiioKooM /naooM ^ s^;V brwr^Bli iiU \tirytt \o *^S jdS fiaii.£jMir^<>'^ ,E^fo4-rcot imS 5 oMi e^^ad ,Ac2Ai^V"«cw l£lt9f«;ytaoo to tIiMkd edg g«.acuu uds Itk ^fpij^in^oa*soa »ta ^adi^'^11 /^friasal* ' '.- ' t^ ■ ’■ -^ogo'50 •! Sa>ti^ai dul/fr df Ot-rlOTtc, i^XvoJl^cr -iii ttct, l>6% ’ \aes rJ 9 X?i?i^"ssoer ttv ?o 2 ta««^ a^g *1 Xiir a*x«# 6 t " l;c* n*r#XJo* tp. g:;;^ Mi? /to o&halTtoesi. A , x<^ Tt«»Xo %6a©i fiaoijibfloo Jtlo to »st«Xroff3^ * ,9aoi 9t tje, vri^X^isri iXwf^ to' e 4 ^ UQ wrJhcfcfttf.B a-Tad 3 dj»i» ,Y^t^c^^‘9 /i ,Tot iiVietfaL mi^ ito ,it?' .. .1 ^ if '■'■ ji J«i;'ii*.tr-‘ i - 'iimuts vds ,i>oOir-«t yXiefTtoo** ’stsa^/adj’ «»t8dw oa^ jiieW arl *X -s 2 M.c ,X .loT x*,iT ■ isncfkc^*^ tuf x*oaosir fAouixo'i to , ovw'xihrotr' &'«e *^s X ■' ’ '■ *'' ' . _ together with the ability and willingness to intelligently act thereon, would res^ilt, according to the lav/ of supply and demand, in similar exchanges talcing place on similar terms, or to state it in terms of price, it wo^ild result in the naming of an equilibriiun price "for the same unit of the same qTxality of 1 the same article in the same market". This stability of market conditions, which finds expression in a single price, will ensue only under the conditions named. It is attainable only in theory. But such stability can be approx- imated by means of systematic efforts put forth to eradicate sources of fri- tion. Undoubtedly one of the most serious saarces of friction is due to sellers and buyers lacking adequate knowledge. The nearest approximation in real life to a stability of conditions such as is attainable theoretically seems to have been achieved in the case of those commodities v/hioh have their market made on the Exchanges. The reason Tondoubtedly is that the machinery of these Exchanges, be they sotek, bond, wheat, cofiee, cotton or any other kind of Exchanges, puts at the di^osal of buyers and sellers an unusual amount of Information bearing on competitive conditions. The higgling between buyers and sellers, based as it is, on a general knowledge of suDstantially all facts that have a bearing on competitive conditions, re- sults in prices being named which vary very little from each other for given units oi a given comodi ty of a given }rXjnr Am /it ii*ij|3ak£?&r* HkiLrJ'/^ iTl -JZ-^-. l '■ ixtk wei lAf. ,rXv»«2 al i^fim/JbUco* #X ,*5i'.c tc- ori fi « / to xadlx.i9 isojie /S*^ to Jlfe/ e'*jw i*?*!** ar Hq cc'HwXiiaio au l9 l^iLll - r-'i . •’ ^ ' . 5 e iklixt .* lairjJWE «s»e al •loin’s* wsp« ®/(t . V-* IffUfTc i^iiiioo *^U tdJbAr ?Xny #x?»cr% Xihf cl^.^ilii j^toteTCj^fc €Jtai^ | ^4 -■ ■■-. . -.r^. . •% 'jjai«' ^ a; aufc i/’ noiJoHl 'xo >d7 to *o» .Bj*lt/v»oe:/ oiao elii F AJhto*!; iww ^ I ■ Jr % . I . 4coi7M«rr to zfUa*^ik 4 c*a olll Sjk^ fti o;l#4i^-btWiV’ »iS‘ * ;' to r 1 .'T4i,#(l c3 fcxt^>♦p ‘' ai 'aan/^bsh- ccc^en ax?*’ i«|^itMt»*7 *4ii i® ftdiwi, jfa^riap tI(«l ? avwi tl Ui'w #alttoi»xeoo %t«(j v^ %4} ij^t 'ti. vJi>at4D<^inT 1 ‘ ■■ ■ ■ ..^-V; •■ ^.„ 1^1 ' ■ fc'J^XJt^ lo iaeOtjjsJLfc «rfl ,4^4^|iA^'‘a^S :« afftt 19 CX4^0 ‘tfrftltoc 'i ./.rtc-^r tiwK'Q avfJUi:$900 (to irofi^TfctoJt to Ujaimii xw 6ioXX»»^|to jA'Zfixxfi^ Jto ,al .ji Ka ,«it;TX»a- x,r;» s'xr^j^ o»rfn3»d ^iX^sJUf «d?' ’f « » C '' ' ■'■■ ' ■ft h vot •i- -'i V iU 0f! inTil ©li^iX if Irfsf ipcjux i!;Oi«4 a^lt^ ti*xP^ H^OG» aoioatooa lan.irws, adt aOi}.a oJ ■ « *^, ^ - ■ -i ■ f ^ , to edo®apB« tr* fMsi rmzt x^di tiadn rot?ftoq a fll Xve f- "4 . 915 ijb' .'.:^ =.■ J ' i. i - ' I .' ' ' 1 i t X. I* Ix' f .' . t.Tat /* .'v'lc: ='■•' : iL-ixi ^- ccmatu - # i - . , ■ ' r: , - • -.-til a . 4 ’:-. Iv i .*4 <• na-w,-, 'ant' ' ^otdf ifi. >' , ■. :rafl5 ;•::■* ’•".'cwl (Irfi* ,c ,;x— :■!« •■ . /. :a AscI &■: r^i, > -..< .' ! .* ' . ! 4 ; 5 i. •■ ■ ’ d~ “ : ^ .w' , ■' * . -.• loi- aiJ ■;■ •vi.* Yf' a; L,‘.. •: rc#^'; f.. ■'!>« : i;.di 'J^ 47 ing market conditions. However he should not also be credited v>/ith developing a new theory of competition. The discovery that knowledge is the essence of com- jjst i uion, iS| as previously statea, not a na'v one. Mr. Eddy, however, apparently thinks tlnat he has lonnd a new theory of competition, when, as a rmitter of fact, econoraists have always asanmed the existence of the 'e. The incorporated ti^^pe boon ohserved to 1 exist aiaong a few of the lumber maiivi’actxirers' associations. Only one of these, riamely the Southern Pine Association was organized to do open pries work; the others Iiave made it an adjunct of their other activities. The oouthem Pine Association, in adopting the form of association tha\. it did was act'uated chiefly by legal motives. Even though it r*as ceased to ftuiction as an oijen pirlce association, it is interesting to recount the circum- Z stances attending the organization of this association, because here record” eci one ox one first atteirgjts made to avoid the alleged weaknesses of the volun- tary form of association. It was in 1314 that this association came into exist- ence as a result of the reorgaiilzation of the old Yellov/ Pine Association, the latter having been dissolved and many members heavily fined by decree of the 3 Si^renie court of Missouri in consequence of a consuiracy to boost prices. Tlie Oj-d association nad ceen a voluntary one. Its disastrous experience with the courxs nade it clear that under this foxm of association any member might be neld oound by the acus or comrients, public or private, of every other member. Under such circumstances as these there would not be much inducement for yellow pine mariufacturers to again join hands as Hiembers of a voluntary’ association. So'o.them Pine Association; West Coast Lumbeimens* Association; Califomla \Tiiite & Sugar Pins llaiTufacturers' Association. 3 Price leportlng was abandoned when suit was brought against the Hardwood Association. '7 '■'American Lumberman, Lee. 30, 1913. ‘ -I r :2^ aE^-io ecr*'.:^:. ,/^ ■ urroG, tii^ictrc |te?*i‘.’ *nJhi.. .'^•3j*Triii t**s3i,j..t-!ijcc» wel \-i^v 4#i7 '■ , "■■ ' Mi,, -n *K«* »4i^ ri^^i^iao«C)V lefj j«i ^ 'tfe ■ ^ ,' "i.’ ^ 56^iLLj : :^X d.v/vV:j .latS . *•■ .,;0k3 T,X*,%Jbcr3-t*f^" , j'^ fiJti ,#i I *ri; ••njsDC'fei o? iAl?4«v.^?a tit it ,.’“iiyj»i'ijt;4e» e^i^iq 4 . ■ ■ ■ ff i fe- " !^--Jr’tOt>ei Jl ex«-; e«^'J^0i/a^ iM*; jaoi^aai.nasxd *sdr^ p*. - * ;,. frit ^ H^^Ia %ti: c: r*E*;r#t tm Xt t&y lif tt* Xi>^ --* r.V «!(wc. %is,r rX »/^*3, r. /^i.*/5o«aa 5o ariol Y*t’* C ■V ' ii'. ‘ ,. rrk^;«i lio od: "io /tv£?«jc?fl-/7 !♦*? t^r lo ijjGrtoi a »a - ^E ^ SI 'Xitf !ic' -;:f i’ S'*:! * a-^-igtfca ‘ 3jT^f«r t«t}-ritl ^ - * . ' -* - ' .' ’ ^^•-’ ;T .ear ,'‘»c^o o5 a tissue rJ to ?^i/cD asett^joe P >• "'i ’ '. .' ’■:?< \ 'o;:? J:tv 9Zi •itt^ac nijiioet T*i.' Hi .ojo :xfe-^n--Ivv A }.4t£ *TN>l^Xoi>4Mr^|:ic f •a «#ocai:L! iix efca^i ’S«#uri'3 •t .*toi3^j!^5dftjua v*w5,ff!vIov A t-j vTEfijfiRtToi •* cXrfisf «lot; ai4)^ * * t «*'^*5art^ia«ra **#-iXo:1i] V. ' 4 [a-v; . ' *4 / .-. -’aliqO rfifwZj^ic-oisA, iL^X^it . -_'J:,*j8ioe*ttl 'sr:riA*2Sic,tti3aii4 tiXiST * •->t:r‘ >:<.! iftd'l ! *ifrr .TjXxiliaoowA' » Uj • -aC jc^^oXttcair,*^ iw 51 Neither was it likely that State authorities, particularly those of Missouri, would view with any degree of equanimity any efforts that might he made to resuscitate the old form of organisation. Faced as they were hy this two-homed dilemma, the leaders among the yellow pine manufacturers hit upon the corporate form of organization as a welcome solution to their problem. IMder the corporate form there would he no members from the legal point of view. A corporation would he organized to sell information to subscribers in a manner similar to that done hy Bradstreet's or Dun's. Instead of having members, it would have subscribers Mvho would enter into a contract with the corporation for such ser- vice as the corporation might be authorized under its charter and by-laws to furnish. Meetings of subscribers would be held at various times and places, to makB recoEmendations to the directors, who would act upon themi only if the action recommended came within the la-w. The subscribers meetings would be in effect voluntary organizations, '.^ose ^vill and wishes the corporate directors would follow so far as the law permitted,^ It was contended by counsel^ as previously intimated, that the act of one subscriber would not bind any other subscriber. Neither would any act of the corporation, - the association itself, bind the subscriber. Further- more the legality of the plan, it was contended, would be tested in advance. After filing the articles of incorporation with the Secretary of State, they would be brought to the notice of the attorney G-eneral in order that he might advise against their certification if he found them in conflict with the law. One other leading argument in favor of the corporate form had to do with the ^*See American Lumbermian, Dec. 12, 1914. 2 . , Argument of Judge Lucas before meeting of Yellow Pine manufacturers. See American Lumberman, Dec. 12, 1S14. • '-TC . jiC^ ri -:r. sU '*■ - .^ -■ C^AVJ^^^ %; -■•'■?.•-' '•'■V I\- Upf n/t ^'■' • ■' >f '*■?, rtc*^ ' lo •'; ■:; / r'';-': tj'' ■ ' :' ’- , .* •;. <-ncr'f9»r P s^t .' * n* i. .•■ ':o \o • ■V' *.•’ T*. I ' _X •'i.' ■'t' 'r- ■ ' ■ Tij’O'" iCf ■ - ■ f 'T .'IC . : c- " oS ftt! •.,•;;■•• ;l ''4 .- .' '.jf^^TnC 'ik' - rr// : r f I ' '"r- T ' ::i/7 ID ' Jf'eT'- . 'zS rc wn* ^ X->'* J jrrJ." ^ . ' -. -*iic ^I;rt^ • '• tvffig'.'iDc ^ w« &■••-■ - 'I' .■■ * • - 7 <»/ ;* » X'- ' c: '■-^■.,■J||l #oi' . ;eswC'" Nr ■ : N v ; - M • • •■« *■: ■:. Ji ’Xsii. , ' * :*d/" '" ■ f.’ •’•iv ®e> :? ■ : .*... ;ij ■i'lr'iJ*; .*:fi;;.' 7 'r " ■’ ^ '*■ V/> ” ^ ^ *^.r'**. ?*X , r : >- * - - ■ . ‘ '■■■■ ■ A •'£'•.■. rj’"V na.'.-i’ ,:PfirO "S •» ■ *• ^ ‘-A ■ . '*'i- r ■ ..-p.-f v.'^ 'trv • hr.' V. cA ' ' I /c*' ' ■TS . .. ; « ^ioa''•'■£ *• ..,! 'Noaa* *•'■’ - . 0:1J '' ' . • .j. L- ••'> • ,‘ _'r- .. •< '] , • vj. ; '; '"- - .:I STQ.a ' ’’ ■’ ^ T'--');-’ , ' ‘ Nrt :‘rr : rVi!!-'r ■f-* Jc.-' • * r, 4. t. ^ >c • IV * ^*4 “rn -, » 9 - w . < N • » A . . i * .\t« r •tnrfpc ‘-*n *?»rr« .- . >lrfr •1 - t,.T - . f.' y-V* ^ i/T* ' '"**fcaBr' • ■ -■ n; Iioa^ •Ji':;: tti .2? - s . 52 placing of responsibility with those who subscribe d. Under the voluntary form there were, it was contended, no adequate means of getting members to live up to their obligations. Under the corporate form, however, subscribers would sign contracts which would be legal, bindirxg and enforceable. There could be no vol- untary withdrawal, the contract running its full term to the date of expiration, during which time the subscriber would be bound, legally as well as morally, to all obligations assumed by him therein. Among other things, promptness in report- ing necessary business information would be Insured, as would the necessary financial support needed to carry out the pu.rposes of the corporation. These arguments are passed on to the reader for \h.at they are worth. They involve prinarily questions of law; which in tima will be passed upon by the courts. Undoubtedly one of the serious weaknesses of the voluntary type is the lax manner in wiiich members carry their responsibilities. The irrfliction of penalties, for infractions of rules, such as is provided for by the corporate form of association is a business lil-'e way of coping with this difficulty, say the advocates of this plan. Advocates of the voluntary type, ho'wever, maintain that the infliction of penalties is out of harmony with the very purpose of the open price association, in that it tends to tear down the very thing that the open price plan aims to build up, namely/ a mutual spirit of friendliness, con- fidence and trust between members. The infliction of penalties is at best a cru.de means of securing a 1 . The Armstrong "Bureau of Related Ii^dustries , Chicago, Illinois, is organized as a corporation to do open price work for manufacturers ^;h.o become subscribers. In this case a bond deposit is required as a guarantee of faithful performance of all terms. For an explanation of this system, see Ferry, Montagiie In- telligent Selfishness. Chicago, 1919, Ch. 6. ; mioTi XtmistxTiav dilv i^flLt|,j*ilXcfo ’ititff \ ,-^»£f^ iv# o-wi# tfc4T-‘W ^liswrfjfe^lw %i? t«xr 4 e- »» ritrojn ai t »9tntqtso^r . tSfOi} ail rf ytf b m^ft r^ XX) * . mlincqvoo -.K? ,V*t»ueo fca 6 *jie #-aaicvla^ -‘j .{fj-jcm vim t«b«on ot iio-i6t«i«._|i’-,^ ^,-'J r; X’t^a^ro*' -vrft \0 MtnuoiB-^ ' c't 5 } V> Btsu xSbaiiachdB . ■ V ^ ^ - t, . yf ■ oijltcll\al dffT . ^IacTsI ” stiaMi t rt» ft X ri^afMei. zMki.\ -yi ' ■ '■'>, ■ *-) ; 4 . S' m 5 < ‘ i V pea xtf «1 MS rfacft ♦o laof/osntai «Uir^ t ^V’ . ,v *'■«&, ■*lo *»ft3rittar J3 ^ '43'.. . 4 ^*: V * ,ifqrj yu^Ji^Xov ' A ‘‘viwtfi flfStJ’ ■’ - 4 • * '' 4^ j H Mcchjs^ s!c\» '^ ‘- linaom ^ fw» M ' ^ .■■ jT] ■?<' 4 «cT 3 ,. iis#^ od aftaM; ai im-ia aj .eroiifalwjawi asXw. 7 ^ ► ” "* ' - " ^ _ -V 3 I.O , i:*;fiiry« Xf(«arv7 .;jir tiX V'e? »Sii^ c^sl - . : ..." Si ' '" » / 3 *urrd bam mtjtmbti '' ' i' ■ •' »— HuJmvta •!' .a^WillT ,o?>«.%*.rC , b^Smt^S i(P w«u o> aoi* position of pronibitions us^iiilly generates a desire to circujnvent them. With respect to the relative immunity of the tw^o types from visitations of the law perhaps the only safe statement tljat a layman can make is that the >- 0 urws will seek to punisn those who are guilty of violations of the law regard- less of the form of association that may have been adopted. Irrespective of whether they belong to the corporate or the vol-ontar^^ type of association, axl open price associations may be grouped according to the foxlowing classification: they have either been organised as open price associa- tions, or they have come into existence as an. outgrowth of a trade association or i/he^ iav3 ^ad tneir functions assumed by trade associations as a departmental 2 activity. Most of the associations that were organized by Idr. Eddy would belong ^’Eor a further discussion of the VTSaknesses of open price associations see ch. 6. A simixar classification is made by H. E. Tosdal in his article on Open Price Associations which appeared in the American Economic Eeview for June. 1S17. See p. 336. •»! \o BZOb& . ■' ' '5 ,1 lu Ji 2 LT*f r.fiv,' 1 «lfO«9^ 7X>iS 'e*if-’£S 0 * •XQSSGd^ Of ’^tihoiiA 9 oq d&iM AX teccfx yvsc • :;%irAict©«ifC, a«>qo lo i^Mc»Xc-t ."i® Uh ■W :, *• >‘ ’' '™ ^dXr«o aalioirr'^'ldJiX 4t-aicl t'j Xi*l arilir ‘f^eeoX :?>» »_ ^;r «* jX iii w£T trf: *:< , ‘V'i^ . -■-'/<» - '^f' Mtf/ -? »c rrcj £X^ £!&:.- win, «; la c-dl cr.j ;}iuCc fwxT Ic •fi’flatj nti^ as ^fislXcr-X ? X ' ,4 • V-i -'i,-'.--' »i rT .I'al-af tXli''l<;. j_,t r^i ’r|>jbg.. »r‘i lo» o J Mi *4^ . ..'icafflio-s la. r’o!.*c-ln;t.‘vr oa cirf riecaat 1«, oi:?ikl^»2c4 ■ •«-T'‘-." • ’^ •• • * - Hfk »'l » ;'•■ . V 4^- 1 iiii'’ . :«!.* Sst^'T’r-n?*. 'c cs A er-I“i!fJxici^ to {r»lSi«w ;%fv-vrit.:v iatl uv-? cmf s^3 It cviseXea ^ ' &)<, d:iM . ^ .■ 'I " ' . ' 9^ tM't- tj ftt^W « ancvOKf'irr I - • - - ' '• ' J : H *-3 • ^ ^ ' ♦ U viti 'i? to fcjA ^ oeoXf* .^siair; oeSSt-im a f-:; 05r| joi* ’'•■'•oo' '>Yttl wto't .iolSAXoof^A Is srrol^i^ill TJ<4*^ Off? 10 ofiTiOviot 0^ itaatvijr lo ' ** i. . - ■ ^ ■ .1 r • **- , fVrfS' Hi vr-r'-sootsA t *kf5o*»s «nxri»£ Vfsfio •x£»::/w^ i«fSo aif# **5f cJ ?f»r»0i. xf** «vj4 4t£ 'xl9dJ y^al tax nci^ttfy* ^ 'tilXo r-‘ ^ 3 l»A■ ormx. im ^Sfvtfat Ic 1 w S '4, - W: aiio 9/ff ^ - e# el4uH3 ^^t«s *irN Mo •orftf *fir,l< 1 " ”' - 1 WkcoiOo rrr A'Sr.fccf'H £Yj« 4 a3Di:')» olrfJt ^ IXJ lor5t 4?ew Mltqr noqo 14 I fgfsi tbi'R a4^ 13 «irf> loii e!3t9 .jutXiiojj« oMyq 4t^ *3»ljftano’knX 5^ 97.rrp.d^a sibeaoat 9d^ 'lol e5^rtiYY||.*aYirf^O .^«<^||.,rjGM34iX90»£i^. -XB lo ‘ralin*-'i * -aitid -^aa aYiitlc fjCii* t^ioscl. »i 4i Uiw ,ia^0 It ,mabl»d .Yivi>*»!#do fiajjfjrJI « Ip rmlJjianclnt^l^/*. Mil 3 I ^«Y1 ^>‘»rqpB<» fWif 44iX i^ELtrC^tia lA/t uj jeii«f{0^4 aB3l}«tdoll||f. o» ^£>41^ •’ . .V ‘ ' * ‘‘i - ^ L5*Tti erf? \o »X /Arf? wmc 2 jidr*i s/ioaH «ol^i'tndtai yrlsaajfcSf> ,£qaoz;i cmf ufj 0/ |fi'.i(mle4 *i?r ’ ^/rX »o ? *« »4!f fiiifJ 5oo4tlw upo-r icr~’5f ^*a»; -^Xjurir^ rTJS^ahf-oa osXia itiflP ar^otf ■>' .tsal^HtogaPn lo Yp; jC-aitXvIrixi -iYiV4Y»tjf>cs t/i.*^i lo -ifo f jlumtrx viiif ifxfi (f^:^ oJ i«C'YO nX ' • ‘’v 1 . _ - »: , 'i i' ryo^li'otja^c rrVi?0": o?’ -iiitiiol*** in»i^a;oefM ffs; ►- M .' ' : ♦. A ■« ’'s»^!xyJ'o«^4faa!X '»p.$ XlUcUf^k :*rJt qxro^.fcYi 044\lo ;pT>t/;:fopla^wW iww? \c 5#lw<4* ia^oitaJf^iaitA S*: Jt ^foo»pi«f 0 ob-/':i»r 1 * 5 ^' ,'s*B4^^-WabIlirC Xol -1-; • jJ*' ■■ • I “■.I • 55 are engaged in the various lines W-iich these associations would aspire to control. It will therefore he found, that in so far as the industry is localized, the rrem- hership of these associations will he localized. In so far as the territorial distribution of the industry is a national one, memhershin will he snread over a wide area. No memhers of the National Association of the Finishers of Cotton Fabrics, for exaimle, will he found anywhere hut in the East, for the industry is localized there. On the other hand menihership in the Leather Beltine Exchan* , * , ? - t 1 ■? X '• f'l : > -• 1r‘1 r;* - *i> ^'^■1 ' • cd mi-' ' ' ci fXhjf il ...«;•:•■■ 1 . k .‘-V .'Ti'- '■ 1 1 #!*r'a .-r’-'-rv'.-'- r , ' . ■ ‘r.,-r "fili - * V:‘vLj. : -'■.J * • * .rr' :.’j LCixoi »-.»■. ■'m • ■• - • •• '-tT*' '■. ?«•- '•,-f ? ’ * .' ’ I Z dJc 'ft'' . h^’. - '*1 ’ : ■ 'ft'i '* 'Hi * *.l ‘ •■ . •; •'. r ' v; .•' 'j *7 .{../rr;:. — 9 A * y . ■"' ■‘"•r - .- *■ !•: . • : - ■• ■ ' CJUS^' ■ I vTtrtir ..' ’ r.-t* •■ ai it: .1“': 'cro *'■>•," - r 000*1 ^ I ? I: :■ '. .i •> ui ; * I '• ••■• ‘ * t :{'■■■> .T.*' ,n .'• * fr-.* n ' C'O - ,X' '1 ’/y^ ■ ;• .”• :c' , ,n<»o u -'.'jv 'j.i r*." . ' 1 0*iw* ^ j ^ cj ? rsr ' ':. - L‘ , : b' • , 'r-r:.': < ■'■* -ri - :.- ‘ ■ r- 'T* ^ - ,'j'* ' " 't ': ■ *■ ''f -Vi-' ' ■* ' cf i :r arfi ci ':c*'ot6 ['-'rl '’• : z'.i’'r,T fn! ifyo Irt ; r.yc'. zcdf cl : * a 'oia-V?? ’ • ,'i- - «. -i I'?vf i' Swg *• '- -s . htta • - ■ : c ' it-^i ' i2^ C' '■*-•• . • ! rb . > ’ *?'' '.f.'.-f^ -1 ,'r. it ~ frv. ,in V ,T» -tx;o 73> :j '^4 < *r.^^aic(. i "T ’i^!*^. '■ '. J/J • ^ ..? '’O i£ 7».-' • *■ •. - A, ^<'T . . ^ I * /•' * * ■" “..•jAOidO , ■» :j«..ivir, V,-' -f- ■ ■* . 2!3V'.'r nki , ■■ ^ ' -'T - - .. .• -'S^-y O' ,*.■:*'• ,•^ •' w; •♦ifh «r;' ', ^ • '"“ X*^ ‘ ■ :’ ‘‘o • .. •*.-^3 .li aria O'^ :•.: >"..''--*•'5 ' -■ ■' ■<*'7Tyoo ■'. • ■■ ,'■•■ ■ . fC3ZZ;ad ' ■ ' *04i f J rvw . i8?c ? ^ f * 00-85fc? oil .■* ‘ •• ^ ^<1 T ? V ;’rA*,'i vnj', nq £:^ f Jo ?» ; :• ^ •'r ) »r* • '*ooO -'■-' "I' •i , t y ,y- 57 “ber of the association and "other persons, firms, and ccroorations may be admitt- ed and become "Jissociate" members, ♦ * * * "and may have all the nrivileges of Eegular members, except voting.^ The Fnit Goods Ivlan-ofacturers of America also provides for regular and associate members. The regular members are to be those 2 vho participate in the reporting plan. The associate members are divisible into two classes. One class consists of maimfacturers who do not p--^rticipate in open price work; the other class consists of sales agents or commission houses vihich sell knit goods, and this class is to have no vote in the management of the asso- 3 elation. It is evident that manufacturers, even in the few cases where they permit others than members of their own class to come ixito the association, are careful to see that no control of management shall fall into any other hands than their own. The miles determining the manner in vihich members shall be voted into the association vary considerably. The most common practice seems to be to re- quire the affirmative vote of the majority of m.embers present at regular meet- 4 ing. The Tan and Dye Institute requires the affirmative vote of three-fourths 5 of the members present.' The Society of Kfenufac tuning Confectioners requires the approval of the executive committee followed by the majority vote of members g present in regular meeting. The American Hardwood Manufacturers' Association 7 merely requires a majority vote of the Board of Directors; the Salt Producers ^'Constitution, Art. 3, Sec. 1, 2. 2 ‘Constitution, Art. 4. ^'Ibid, Art. 5, gec.l, ^'For instance, the Ohio Millers' State Assn; National Coal Assn.; Leather Belting Exchange; Steel Barrel Manufacturers' Assn. 5 ‘Constitution, Art. 3, Sec. 2. ® 'Constitution, Art. 4, Sec. 2. 7 . Constitution, Art. 3, Sec. 2. ; ~ — -ss-^asi*. i » C C? 0 T- * ‘ ^ r f #• -.A . > f •:«» .••n- ,:.• '* 1 At ' J I '. iut • • •'/•.- ^■' r‘‘‘ ■ ■'..'T® /■" ■ , T ' . ; r: t -. s:--M •' t ■ (T= • r ' :/ .. . r _ t - : 'DT S> . O ■! i..-. : :• » ' Tsrfl - / C . ^*s’’r - •-•n S' .M. llVflt !-i,'ai r ••? * .'ic * ' ■: ii ^ ' t 'to • »< i o: Vf ^3 - r,-. c." • . 1 . ■•» f * »i 4 -i • , c Tl^rtfrq «.-. • iuf - • » / ■;.■■•:. v-’isr r : ii-r ■■•;? rJ-V :vfj. tc^ .•■■•’ ■ vn J lO . J ■ ■■ ' •kTr?^ ' * fd! 'j ■ . 1 - . '? r : i;-': » 4 ff ;»“* 3 r cdv 5 v r- ;®rc -’-•rV e ' -:v r In' ■.» ■ I t*-' ■ • .-?.i ,' f . t-x , »■ • 1 ■ ■ ' ' f . ■ ‘ .V >• vff >;■' ' .... ; - r. V'i ■ * -•'■ • '..* '-T^-nr fc ‘.‘‘.-::>'^,»s^ . . .' -.' ’v,’ : " f -’ .} . r| ' ‘ •'i w J!,rQ“‘A ' *n ^ . :r .--: '.cr *\:a Ir. -.r .vO.C^" .:■'■■ :.-f- :: .'‘uti. .('’.vtl‘ ‘ t , *'•* . *►“ : ! ’F- ■■ ' »’ ■• M '■: r •* ' r ■ *■ r J ■’(> f O '- - r; ri- - f r * A * •. ' - *V - . - / d •', V ' p- j ‘-r o:r^ - i.: ,:,.d 19 .' ■•'■.: '■| ■ lii:r:-;iX'i 'sc ' j .' .■' ■ ■ ^ , 1 .r i * , ' 01 ' #■-'*- ■ *< ^ . o-' ' , . r -i ' 9 n':l 59 wood Manufacturers' Association, for examnle , pay dues in twelve monthly install- ments, based on an assessment "at the rate of not to exceed five cents ner thou- sand feet log scale, with a maximum of $2000.00 uer annum, based on the number of feet of hardwood logs c*at for the preceding calendar year." ^ All assessments 2 levied by the Salt Producers' Association are on the basis of output. The same is true of the ITational Coal dissociation. The National Chair Manufacturers' Association bases its dues on the volume of shipments. Tne Tap and Dye Institute and the Steel Barrel Manufacturers' Association and the Society of Manufacturing 4 Confectioners base their dues on the amount ox sales. Obviously there is a disa.dvantage vdiich militates against the proper financing of the work of an association in having dues based upon the amount of business done. Those in control cannot be sure of securing stated amounts of money from 7 /ear to year. It is therefore rendered difficult to plan a program of financial expenditure that will not overreach or underreach the size of the fund that is available at any given time, "hen business is poor, the income from dues is small, and the consequence often is that operations must be curtail- ed. Of course this ob,5ection loses force vdien those in control are sagacious enough to reserve for the lean years surplus fun^ that have been collected dur- ing the fat years. Members as a class have as their chief duties, aside from the payment of dues, first, to furnish information to the central office, second, to attend meetings. Their chief privileges are to vote at meetings and to receive such in- formation as the secretary may circulate among them. Usually the rule is, that ^'Constitution, Art. 5, Sec. 1. '°rinted in the Becord. U. S. vs. American Column and Lumber Co. Vol. 1, p.73. 2 ’Constitution, Art. 5, ^’Constitution, Art. 5. 4. Constitutions , Art. 6, Art. 5, Art. 7, Sec. 9. «T* r? • - - ? - /<• SI'v-IeirC t . '' ' '• 5 ] 1 '■ * , ■ ?Ov ’. * ’'vtin ^ . — “ ^ "AT* ' V ■ • .Tt..* * ■ .rjiraA $t ' rLv-i >. ,r -..f-rc’i rc 'I £oi ;a^,r,oo floi.-r, c/a ♦j-re^v ©//-i '»i • * .> 't cj ' . eri - ' ’ t ^ f flil *»r ■■; ’•/ ■ ' , 4 tM-' -rtra Ti»i'iritr:» f y w , T-' : ' .11^ .- s . .%> ■iL^ 60 ■unless members are willing to f-umish information, they receive none. OFFICERS The list of officers of an open price association differs in no essen- tial particulars from that which is found in any formal type of association. These officers are a President, Vice-President, Secretary, Treasurer with an Executive Comnlttee or a Board of Directors, The Ohio Millers* State Associa- tion has both a Board of Directors and an Executive Committee.^' Such an arran>?e- ment is not often found. In the lumber industry nrcvision is also made for 2 several vice-presidents. The typical Eddy association, however, seldom has more than one vice-president. The president is ustially elected annually by a majority vote of the membership. He is practically alwaj’-s a man active in the line of business which the association represents. In fact the constitution of the Leather Belt- ing Exchange specifically states that the "President shall be a member of the Exchange, and engaged in the nmmfacture of leather belting."^ He performs the usual duties of the chief executive officer. In most constitutions they are not minutely specified. They may be summed up as follows: to preside at all meet- ings, including those of the executive comi. ittee; to appoint all committees not provided for in some other way; call meetings of the Executive Committee, and special meetings of the association upon written request of a certain number of members, as well as call meetings of all permanent and special comniittees . He is generally an ex-officio member of all committees. It is usually customary ^'Constitution, Art. 4. o •Hardwood Manufacturers' Association, Constitution, Art. 8, Record, Vol. 1, P,7£ 3._ _ By-Laws, Sec. 2. fe»jl..xr -.T^ 4 « .rr*-. / ' .■ . *» •■'f cr^- 'M'^c' ' : :?«*! ,'riT ■■ r '['■ ~-r\: ■ ..tan: ' •: ‘ ifir r" vl il-l.S ■■■'■ti bw- ’f - ri ■ ‘‘ '. *« \ 7 f.cS /)-10 • ’ ^0 ♦ .-•V .?•’?*’’ 1 ^: " . '' •■:■•• I*' ■ ‘ ' • c*T e if r~. iofvii*;-' ■. "v." ' *3 • '* : , }v*^ , '<0 **>•!' .V ,r r fw .' I ’ i .. , : i r- 2 ^ •. »^ • T ^ r.*’* ' a'S >C 9Z!ii: 'r-, ' : '‘ . '0 -:■ ii.^ i>4b ,2 • ’Inc s rCAW ■t' , /TO «“• 'T . * 'TV»r;' r /» * !'r**' * •* ** ^*> 1 " ' rr*. C ? .! ■' ‘ ' > 0 '' ■ ' r - * *•''' ,r\ '■ '2j j-t;:,..*)'}'' 61 for him to review the work of the year before the anrmal meeting. Ihe Vice-President assnmes the cbaties of the President daring his absence. Most constitutions provide that the treasurer and the secretary may be one and the same person. In cases v\here the treasurer is not also the sec- retary the common practice is to elect him at the annual meeting. Only in a few cases is it customary to elect a tressu.rer vfhen he is also the secretary.^ More often the procedure followed is that the Executive Committee makes an appointment subject to the approval of the membership. The constitution of the Leather Belting Exchange, in contrast to the general nractlce, snecifies that the Treasurer shall be a Trust Co. or other banking corooration of recognized standing, and shall be appointed by the Exchange. In general it is the duty of the Treasurer to collect and receive all moneys of the association; pay all orders for money vdien countersigned by the Secretary, and keen a correct record of all receipts and disbursements. If the Treasurer and the Secretary are united in one person, his signature upon checks is usually considered sufficient.^ The Executive Committee usually consists of one or more of the elective officers in addition to several elected members ranging anywhere from three to seven in number. The Executive Committee of the Ta-o and Dye Institute is com- posed of the President, Vice-President, and three other m.erabers elected at the annual meeting.'^ That of the Salt Producers' Association is comnosed of the ^'Tap & Dye Institute, Constitution, Art. 1. ^•By-Laws, Sec. 4. ‘^•Society of Mamafacturing Confectioners, By-Laws, Sec. 3; Hardwood Ifenuf a ctur- ers' Association, Constitution, Art. 9, Sec, 3. ‘Constitution, Art. 4, Sec. 3, 62 President and seven elected members. Only three members comprise the Executive Committee of the Leather Belting Exchange.^' The Executive Committee of the Ohio Millers' State Association is made up of the President, Vice-President, Treas^^rer 2 Secretary, and a Board of Directors comprised of five elected members. The common type of Executive Committee has the general po\';er of management of the affairs of the a,ssociat ion. Its function is to see that all of the objects and purposes of the association are carried out. Typical of the powers given to Execiitive Committees are the following; 1. Call special meetings; 2. Fill vacant offices until the next annual meeting; 3. Detain counsel, 4. Titarloy a Secretary; 5. Authorize necessary exnenditu.res Practically always there is a provision that all acts of the Executive Committee must be submitted to the next regular or special meeting of the associa,tion for auproval. The office of the Secretary is by far the most important cog in the machinery of the open price organization. The Secretary of one open price asso- ciation writes as follows; "The success of any individua.1 organization depends entirely on the Secretary and unquestionably most of the failures of the asso- ciation work have been due to liis ignorance of what constitutes proper coopera- tion and how to attain it.” A representative of Babsons Statistical Organiza- tion who has been active in acquainting the business world with the open price form of cooperation states that a Secretary shcraldbe, first, an executive offi- cer, not merely a clerk; second, he should have business experience, education, tact, and ability to speak in public; third, he should command respect for his merits as a man; fourth, that it is not necessary that he be familiar with the ^■•By-Taws, Sec. 2. 2 ... By-Laws, Art. 1, sec. 5. 3 •Society of Manufacturing Confectioners, Constitution, Art. 3, Sec. 4. 4. Letter from D. S. Hunter, Secretary of the Steel Barrel Manuf actiirers ' Assn. Dec. 20, 19^20. \ ... ! :i I , ... i i . 'ics*' j < '-ncr-.. • : t X, i' > I ' i , K : ,• ■^•'. •■ tf'lt " a“ . ; ; , . '.; ti- ., X ' ; - ,'"■'■.^3 ■ ■ 'Tr>' txtsi.ad: ffirr r.- < * V-^-- ' ■ - ■ ^ : rr-- 0 .* iXj' 4 ' T. * 0 t» Ii»o;j 3 :r-r ■ «!?■.%,•» Pif.^ .i? ’ J " , L% !<'" -••; . .v .'4 ^ 1 *' . , 'V-.S « •iO i5J4.'"N r:I v.-‘ ''(•i I-' • ' X f*''-" ' fi *j '.' ••• ' : 1 . e K- ^ -V' -• ■' :^L-.>'i ’ 4." ' *•'. ^ J . ’v. 'it . ^ . ■.c :>So ed? ■ /.;i-irr , r'. JO »di . L--. .• : r; ; ' - i--' .• .\_w . . : " d* £■:; ' f .‘r. i c ,'i r-.e-.-j ' n . j , ' r*- •■' oi '"Vi-ri br.f .:^I 7 i : ^ -L?- '•^ . JWf Citi ' 'i 3 nt ■; -f .; 3 rye v2 -1 /- C ■ j : ' : 1 ffr - i\ t : ' • -‘jsi . . r £ \ . . » ,f . . J-* L ' . ! f .. .! ' J^evo'' , »^v • 14". : \:''oZ t-r I 63 line of "bixsiness that the association is at work on.^ It shcrald he added that It is absolutely necessary that he be a man of integ^rity and dimity, for he occunies a position of confidence and trust. Because of his position of confidence and trust a nrovision is found in most constitutions specifying that he must have no connection or affiliation ’;? ! ri t»> f -1'' u;J£^ I :>! in 4 ♦ * : ■ . .' '-t.-' -'-V'lr''' .'•* ' -M lo e^Ji' ’•^n- . - f : jci^i -■, ?v sglJ/r'iJ-U'Ot I >• : . : ^ '.r '^•; uj Z ■ . .^ 'r? nI.’-.. :■• E* 'crel^llp^ •J??'* • ri*, •;:iiv ■•• ot . 1 . 3 «’.' ■''i's^'l '*• . ? ^ 4 , ' ' 0 '••I ‘ Z . -.’I'i -, ‘ ,)df rro.^ 1 ^. . ..i; ■ ' • . » f: *\^r- 4 cl/*«'- ^t'’‘ . (i ,'j 4 Ai • “r .. : T •*'“ wi. .'Vv. ‘iT.r-^ ;Pi^C- TOlrr' e«o ^ -:?.75r>ui to h 'Cr T £. fV' ^ iiC . : c . :'? 0 3 1 »m ‘ <'v i'^'i - ■ 1 V ': J^- :'• .v,.‘*r.. .■ ’ ■ r- u oj • 5 '-' ' 1 ^. " If .<. odS'f|!tA\. . * ^ . 'tt'fXff. >i > ''‘Z- 1 . Iv * 1 ^ 0 >‘ * -/ t - tf* ^ ♦ r:? *.■’ v-T* •OJ «.'#1 .>* .*- ■ . i.-« ■.v'’*'':^j Isyr-*' ■ " -?,oi • *!o •• r-lf^ . v-.-J.V- •< ,*./:r ■I*- vl^ C/." *'/? »i>?Ztfret I* . ^ 64 1 is elected "by the Executive Committee. In the Leather Belting Exchange the 2 office is filled hy an election conducted by the Exchange. The same is true of 3 the Tap and Dye Institute. ^pnointment is made bv the membership in the case 4 of the National Coal A.3Sociatlon, The duties of the Secretary, as outlined by one association, are, first, to provide and operate a regular central office for the proper care of business; second, to take care of fir^ces and funds; third, to keep in close personal touch with all members at meetings and by personal visits; fourth, to conduct necessary correspondence; fifth, to maintain and increase membership; sixth, to serve as a clearing house between the miembers for the exchange of credit infor- mation; seventh, to develop and distribute information and statistics of educa- tional value relating to costs of nroduction, selling markets, trade and labor conditions; eighth, to attend all nieetings and keep accurate stenosraphic records 5 thereof. Other duties sometimes enumerated are, to send copies of minutes of meetings of the Association and the Executive Committee to m.embers; to keep a 7 list of members and the date of their election; to notify all members of assess- g ments due; to notify all members of the times and places of meetings; to examine "i^ills and countersign all orders on the Treasurer;"' to prepare an annual and semi-annual report of all transactions and all conditions; ^®to preside at all Constitution, Art. 4, Sec. 4. ’By-Ia-A=s, Sec. 4. 3 ^ Constitution, Art. 4, Sec. Z, ■Constitution, Art. 2. ^■Tap & Bye Institute, By-La-.vs, Sec. 2. ^ Leather Belting Exchange, By-Laws, Sec. 3. ^•Steel Barrel Manufacturing Assn., Constlttitlon, Art. 4, Sec. 4. ^•bociety of Manufacturing Confectioners, By-Lav.-s, Sec. 3. ^^Soclety of Manufacturing Confectioners, By-Laws, Sec. 3. American Hardwood Manufacturers’ Assn., Constitution, Art. 9, Sec. 4. nifci hr . . t ^ . '• t t.i? . ■ • V ? V ; i~y ': V/f ‘ . I ■ "* ■ '<-'■« . -'I I i 1 e'l ' r . - , :- iv.-^ *>**a Of' . .. ’ Ij #»5 T"/; r 'ft li, • •> .■ '. ' : — — n,; f cv; - 1 V' ' ■ * -• , \ \ .. • ? •'•'• a> 9 $ 0 rn eM' .^ • ■ 'r ,b-fl • ; r. •- .’w l*> 03 Ul* r.*' - • - :-••■•.; *i» f- .. . r?' 'rfjji*' ; Ta"*. * - t ; : ,; ^ ’ •.''sXo c c.v t ‘■■H h :>y r* ' ■ i ;-^v«fi ;.-c r ;-■ ■ ’ •'»■' r Jjc.Tr>!; .;' -r J : ■‘.^ r;* . ;*.“!> t4ih.TT>il •i.; .: *"• V -u^'- ♦■■ i'.i.-riD • ‘ ■'• V t ;'; •<' .is' ■ Z: ■.'■ rrit "to - -'J '' \^. ' fr' yc'.i 5a- 7o »fl. •i • -■al * . .' ' [jtion V- ;«-tt ' J’. CT’^'e '. ^ '' -•. ■ ■ > ., ■ -*■ •. f .rijN ..TO iero: ■ , I ■ ■ .; .• :, ‘ I ‘ ,K' fl :< .• ■ ■■ , , -'I .■■•'VV-.O *r ■>‘r;''X»''’ lo . . ' !■**?■-'■' .7 y *•.•!' 65 meetinss. TEE CEMTHAL OEFICE An essential part of the structure of an open price association is an office \<^ere the secretary may carry on the work of gathering and disseminating information. Some associations have their own central office in charge of a 2 salaried Secretary. However, a very common practice is for several open price 3 associations to have an office and secretary in common. There is a tendency in the direction of centralization of tShis kind. Not only does it reduce exnens^ hut it makes possible the employment of a secretary, highly trained in coopera- tive work, whose salary in the aggregate would he too large, perhaps, for any one association to undertake to pay. Secretaries find, that by a proper organ- ization of their office force, they can readily handle several associations. In fact the experience which a secretary derives from coming in contact with the problems ox several different lines of business can be used to good account in coping with the problems that are encomtered by any one of the associations. There open price work is done as an adj\mct to other trade association activities it is customary for the trade association secretary also to assume the duties connected therewith. A few instances may be found where an association does not run an office of its own nor employ a secretary, but simply arranges for an out- side agency to manage the details of operation. The Pressed Metal Association, for example, has its open price work done hy a Boston firm of certified public 4 accountants. Oie Associated Metal I^ith Manufacturers and the Linseed Oil ‘Leather Belting Exchange, By-La,ws, Sec. 3, 2 ‘Bridge Builders' Society, National -Association of Fin'shers of Cotton Fabrics* Leather Belting Exchange. ’ 3 , A. A. Ainsw'orth and A. A. Blake each serve about a dozen associations in New York City. 4 'Scovell - Wellington & Co. . r* ' "i ‘S. • ^ ' ft r . • ^0 smrSewtv. ■r'^019^' — "©Jiw sc-’V ■U'O - .*r ^ jVi *v t » i ' Li Ic ’■-^' ' t X-’ • “ I. '.■r i ^ is r"ri:;i;o rr is' ib pi:" r . ri --O -r >f>' - -r- rj 7% '’>'i ■-- x;» tO\ .•■V£^: 0 C 5 • •- V -'-': c-j rrl ;-<•/ ;HI’ a- nwasT ■ ,-.-:.b"' f’-r '.-T'- r r '•--I -i .v^.' V ‘ V >1 ' 1 _ ; . . ^ ^ „ ’■ ,tr r> r- ■ f V' ■ /' 1 v/t' V . '■' v: ' '-■ ’ 1 ; -'j ;f , ■ •, 'r-tro -r *■"'*■ » r'r , ; » , . . _ ,V ;- 5 ^^' ■ * ' •- " s:: * ."fr: 1 . j *t €*(J^ ^ Ov . '-^**- 4 ^ •* . - - • ■ *:r- -''Ty In^ ■ ' -: ••; ,.s. ,-c» vcT ■ "^ ’ r '•■-•r ^ r, ’ -iZir' . " 'I®/ " “ • ^' -■; ■. . 1 , -cr -: trOt )b 1 u:£ 9 h r -■ **i: « • . . •-■' ‘ * . .'tlJ ilyf ' f o 66 Association operate through the Araistrong Bureau of Belated industries which is 1 located in Chicago. IffiETINGS Great stress is placed on the importance of oringing members frequently together An meetings. Most of the associations that are planned along the lines 2 ^ 3 advocated oy Mr. Eddy have monthly meetings. A few have them two months aoa.rt Those associations that are really trade associations engaged in open "orice work as a oranch of their activity usually have meetings only once crted.ce a year. Besides the monthly meetings there are the annual and special meetings. The con- stitution nearly always provides a set date for regular and annual meetings. Special meetings may us-ually be called by the President, or on the written re- quest of a certain number of members. The constitution of the Leather Belting Exchange however provides that special meetings may be called at any time or place by the Executive Coianittee, or upon the demand of six members. That of the Khii., Goods Mam.;facturers of America provides that they may be called upon the re- quest of the secretary, or by five members, or a majority of the Executive Comm- 5 ittes, or 'hipon the sole authority of the President." Sometimes the date for , ^ 6 tne monthly meeting of the Executive Committee is specified. It is nearly al- ways provided tloao members must be notified of meetings aosrtain number of days in advance. Ths usual quorum for the transaction of business is a majority of Eor a description of the Armstrong Plan, See I,fontagi:.e Perry's book Intelli- gent Selfishness, Chicago, 1S19. 2 . For Instance, Leather Belting Exchange, Cotton Finishers, Bridge Builders' Society, Hardwood Man'ofacturers' Association. 3. For instance, Steel Barrel Llanufacturers' A.ssociation. 4. Examples are Knit Goods IJanufacturers of America; Ohio State Millers' ASsn. ^•Constitution, Art. 8, Sec. 2. 6 . See Constitution, Franklin County Coal Operators' A^ssociation, Art. 1. ' ^ ff -.‘A.’:. t I I li.- .-. ,**•: m 'tr* . -.r:^k 'C •■' *’ ^'3 hi*: -3 r.l t* \ It': - A- . , t t t • , --A :» :• - ' ’ ' V r . rc.; ,’ r :■ ''f ■ .■^•7T>:i' 4*3^ J : t>3V -i* 2 , rci^ ?' T.- ' I- 'tc 3 # . *r . -'ngSl . - ■• , -.i- i ~ ^0 t ...:3 .: r - .>a V J ■ A ,Vy >y. £rIJ V 3 ST*. * 'Ti C .iM m i ^ B A »i «»«lUh ' *..v* *'.'i* ic{- •..*/: . -rr\yi ,7 J ^ . itC , ' 7 v... ^-r.l'T r-” _ : :. :►> !'<■ ' 'H'j't V A j y;'.* i^' 5 .ti •jUr.*ir;>' cj.> a>w,fcTii^ f- T> •* ■, r-i. 'j I:- rriA^OufC r ' 3 ^.' J.-. 'iP S£^' '-M.H («r -..J. :.l i.-’- •* ’ •’I' -li-. ■'..*■ Ti'-.-vi' . T* ,.'. £:'• .‘7 . -•:. ..j'.ri io¥ ‘' f ii > . .‘li :i ■ , .*rc 7 : » i : p ;--v0' &I to 67 tlie membership. The Obilo Millers’ State Association provides that fifteen mem- 1 bers present at meetings constitutes a quorom. A few associations, judging from the clauses incorporated in their con- 2 stitutions, encourage the attendance of buyers at meetings; others urohibit it; the majority, hov/sver, mai.e no declaration on the matter. Those who are uninitiated in tns worlc of open price associations would naturally suppose that the chief topic of discussion in meetings is prices. The truth seems to be that prices, themselves, are not so much discussed as are, firsfc, the circumstances attendirig the quotation of certain prices, second, the condi- tions of the market that make for lower or higher prices. The reason for the apparent anomaly, tnat prices themselves are not discussed to any extent in em open price meeting, is that this infor.nation is imparted to the membership tnrough the reporting system. Members, therefore, already knov/ what prices have been charged, and they come to the meetings to find out why prices are as they are, and to learn what the business outlook is in order that they may put them- selves in a position to intelligently quote future prices. An examination of the mixiates of all the group meetings of the American Hardwood Manufacturers’ Associ- ation for the year 1S19 discloses only three references to the prices of specific items^of lumoer, and two of these, by the way, were made by non-members of the pxan. UndouDtedly there is a temptation to discuss future prices; it is there- fore gene-rally provided that counsel be present at meetings to see that discuss- ions are confined to strictly lawful a’ubject ratter. ■^’Constitution, Art. 7, Sec. 3. 2 . Goods tlan-ofacturers of America, Const ifut ion, Art. 8. Anerican Hardwood i.aivufacturers’ Association^ Record, Anierican Col-urn & L'omber Co. vs. U. S. Yol. , p. 1104; Society of Manufacturing Confectioners, Constitution, Art. 5. Steel Barrel lan^ofacturers’ Association, Letter, Jan. 20, 1921. See Record, American Col. & Lumber Co. vs. U. S. , Yol. 1, p, 100. jT ir€ " • ' f-- •>'- i 1 . »»T! I Cl 0"; -■/• — - - /I ,0no*c w>'’t . ; . ,:.v r^’ !• tftS* 14 t£ .« .« i.1 j: Ji . - c ' ' '■■V • - ‘'i. s'**' -i-i’ ./ -::-f .:■ t , ■ ■** Jcc:, : j , , n -V*.'* pjis 'o n- ' ' ‘ .itl2A'*'■! ,.i .•*\4t. 5 /-.:• *0 ■..,l:.?->r . - r . ,., W[#^ XIa ^0 So?^ iv : *xo^ ft-;* • ,J ^ .’*1 , 10 ocdj .’ uatsant . ‘i IX • 'i-j.’' '*ii«r“ '-!l i * f»r .*5ji . . { , . U-. ,'^ti r - ■ o '/i r*- “• , d iT'i .'^' ' ■'.''Oi; . j:!'. Xs .■, ' 'Li ■')Z ,»'t - ' -'; • .‘-v'r.flj ;-vii ■ ...r>.:,:.ijf .•, c/. . 7 . V 7< 1 oii i ■ t » : K'.'. ,.-*i?'Oeri t tf'' ■c;i 68 The Eddy associations appear to ’ce very scraptiloas in avoiding discuss- ion tliat might he construed to he in violation of the law. iiinong organizations that have not come under the influence of Mr. Edd^r or his lieutenants less vigi- lance in this respect is not infrequently displayed. The following quotation illustrates the kind of discussion which is permitted hy many so-called or;en price associations hut which wovdd not he tolerated hy an Eddy Association; " As showing the utility of the Price Exchange Plan, a price was taken from the first report presented and was stated to the memhers present for their opinion. The merchandize concerned was a 176-needle lialf hose, 15 ounce, with looped toe, sold at $1.15. It was the opinion of all, including several York selling agents who were present as gu.es ts that the nrice was too low, and one 1 selling agent stated tliat the price should he $1.35 . ” Reference to the minutes of a typical Eddy Association shows that aem- 2 hers are not even permitted to act as a body in standardizing terms of p)ayment. In as much as terms of payment are an integral part of price, a united effort to fix terms would he just as illegal as a united effort to fix the prices themselves Apparently this fact is not recognized among many associations because the prac-' tice of standardizing terms is exceedingly p)revalent. In general the chief features of a.a open price meeting program as con- ducted by the typical Eddy associations may he sumirarized as follows; first, a meeting of the execu.tive committee, followed hy a meeting of the association; second, the transaction of all routine business; third, discussion of questions touching on the details of past transactions such as reasons for quoting certain T X • Account of a meeting of the Pennsylvania Division of the national Association of Hosiery & Underwear I.’anufacturers. Textile World Journal, Oct. 20, 1917, p.73. 3 » The Drill and Reamer Society; Mnutes of Meeting, June 11, 1920. Particularly so in the lumber industry, see American Lumberman, Dec. 22, 1317, Uov. 3, 1917, Oct. 20, 1917. V ' . ;• u-.' t ; ja-'C-.j.' . t . : v.'f; loiww Ml ... cvjBCf ^x. .’ fv# . .iki/' V,: -/v ' *-5n :.: iM • ••- ' • i..v ao' -Cfli '' « i fouci'J^I iwrf Ohl'- *''■ ri5 • • :, ::c!L , ■ ■ Lir: fni? ,?crafo - (Ca x. 1 I ^ , .,. '. ■-. UJt' • , ... A-'o -*^CT -V . ■• '■ ; ' ■ ... . : vM,> • I'i."* • ... .r -,'5'5^? , ' - * - ^ • ' h ( ►. L*; v"'- ’ * ■ /• -r- i 'io %i r;: : C5„ ••:;/■ Ji * ^ * - ' : .;.■ ■ : r-'J. A •; r ? f 4iA4 . Vf .'V.. 3^® a-. - *” ■ ■ -w . ’ ' ■ ■') -.i - ' * • i t* O';* , - ' < bilj.. ■#’ ta^jtbc. 'J .-I % . vVi ; •vA -lAvi! ! ■ ■ , «.M T.'n • - * - •- • * * ** '' IVJ ly a S - V».»i i- » 'I T xr £ , ilX.-"'/ \'X:r-. * * < X! «j ' . > '. -.Aii . . . . »• ■ ' ' 1 bil* **' w*t- fjt’n ***-. . ' "a.- t-Oo^ . ..-...^4, ,.l s* «■ ’ji: .'V :•“. , 'C ft ^ %»•* :® viCt^ 1 .' 'i ^ j .i-:* .hacote j :;i:: V: . 3Q gltlilc. * I I j-.'rrr^ • :^r^: m ■r.,i ,s - Si *;ViJ£! riJ*'- -' ,._> f.tr ,v; ; : -**. ^ .5* r ,T*^ ? ? t,!.' ‘ ’ '’ " '’ v,:'iirXrt)i-iT4i'i 3 *1 7 '■p ^ ' V 69 1 pric6s, mstiiods of figuring costs, suid. tli6 liksj lonrtli, tii6 li63,riiig of rOjjOrts from each memter regarding general conditions in the industry. The device which the Eardwocd fianufacturers’ Association adopted for making the round robin discussion of market conditions most effective is wortljy of s'oscial comment. Prior to the holding of the monthly meetings a questionaire was sent to each member. The following ($esticns were contained in the question- aire: 1. "Prom what class of crastomers are your inquiries coming and what per cent of your total inquiries conis from each class? 2. "Prom what class of customers are your orders coming and what per cent of your total orders come from this class? 3. "Check off from the following list how long it would take you to ship out the total orders on hand working under normal conditions, and assuming tliat all orders you have on your books are ready for shipment? 4. "TJhat is your total production of liardv;oods during the month of ... . What do you estimate your production will probably be for months? 5. "Y?hat is yov.r total present stock of hardwoods, sold and unsold? What part of your present stock of hardwood is unsold? 6. "Are your labor conditions any different from 30 days ago? Are they bettor or v;orse? What caused the change, if any? 7. "How is the car supply at the present time; better or worse, as compared with 30 days ago? What per cent of your requirements are you getting? 6. "How are your collections? Are they better or worse as compared v/ith 30 days ago? 9. "What per cent of normal for this time of the year is your present supply of legs banked ahead of the mill? l.See Textile World Journal, Jan. 13, 1917. p. 109. 2 Transcripts of Minutes of Meetings of the AiXierican Hardwood Manufacturer’s Association may be found in the Appendix. See E^ib. No. 2. \ bkU • .•.■'! *r" 't Lf'i'j *.' • '-J*** • .lo,:vO ®0l' ...^■- . ■..viJl eJj -v :voi .3 col8Lu-;&i!l clcd^ . wiJ iv . ,^Lw», . ''-'ICO vj 1 ^ .'O < ■ '1,0 }4^ .•.'0^T' , , * I*' ^S»-j2 !! • - »— •IwJ'. -0 ^ , C 0-o,-2rfa. .0 ■1 - - ■ : ^ ■ — ■■ ., •.;_ \3 ,';f xonq c'.j. ■; -•■1 ^ - DC ---•' ^iciJci ■'■'(. oti,-i- -. ■‘.'TJ.^'Ax ■■ ^ *c • . ‘•^i fc-i 4 TX> :‘^w « • ’ ' ■* ^ ■■ * ® ■' ' ' Ti/ '.OO - •• ‘.l.i*' : - a; w. • i£a edi c.- ■'> " , .* r:. 7* i ' To^i* *«'•/-'• Ci& c£. ; 2.-.yi*;e-lI‘35 viia won" 'c:W. e /I ,. L:? -f - *, \0 9 rt :. ' ‘ *; ' \'. ‘uiA itr '.'igr-''^ \c :ci .. , ■ - • . j : .-. . ...» -'f’' ■ .■‘laa.'w 'fT ‘ " 1 iO ‘ ' .0 ». .'. w.*X » . i w w - 70 10. "Do you expect to 'ce shut down w'ithin the next few months on account of the shortage of logs, or for any other reason? If sc, please state how long mill '^11 he idle. 11. "V/hat is your view of market conditions for the next few months? \7hat T_ is the general outlook for business? State all reasons for your conclusions." A summary’’ of the replies received under each headvias prepared oy the lianager of Statistics and the results were made the oasis of discu-ssion at “foe next group meetings, each memher present being called upon in turn to express his point of view with reference to each question as it came up for discussion. Gathered, as they were, from a substantial part of the whole industry, these data when p)roperly s'amoarized gave a birds-eye view of the industry’’, which when re- enforced by an open aiid free discussion in meetings, proved a great aid to mem?* bers in securing remedies for conditions that were unsatisfactory. It is peculiarly characteristic of the open price meeting that dis- cussions, instead of being of a rambling, discorniected nature and leading to no definite end, are calculated to give each member a perspective of the industry as a whole to the effect that he may direct his individual business efforts in consor.ance with those of all the others in ffuch a way as to inure to the greatest 2 ■orofit of all. 1 . Affidavit of F. R. Gadd, Record, American Column d Lumber Co. vs. U. S. , Vol. 2, p. 1101. 2 . For a copy of a typical open price constitution, see Appendix, Exhib. 3» ■ jfc •■■Tn ■ ■ ,$ cf feugif '•<1 mdi ■if* U.':r.7^' rrcJ .^xu'i t.- " i . : : . ..TOO -;i • ■ t:-*. ’ '\e 'k -I'oOT .1 XBWv^tt V> A aj xiiT fJ .^j' •■ . ♦. "C 10^ ^0Q*^S»^» «f;‘ -i ..leTf :. ..-I -'ti' jfi- *:o u©?- . ■ V ;r f'- , i..,.i:Ii<*ff?' >.■' ‘i:-\ . V . MiotlL lol i- - •"-’ /; • 'r-J , 0? Aor.Mfpt „Y *>> • •Ii..:'.* tv'v ‘*V i ^ • .' ?," • ’:«*- 9 >t£ 9 titfd.L . :••' i' ‘ ':.!r%6.. 6'iPWtJ ••• - •'♦•*■ ■ *-- ■ * ' '" ■'^■■‘^■^ lITv'^ • n: tl ^ , c, . ,.UU.I -•::' • i 1 ■' . I .. . .. .» -... -V .:^ vi.. ..r ilc. •■••-'“••' •!-£• j? a** r r.i t.’i.^' : U • ' > •Z>' t rarfi, j---’ '■ •'*■“ ■ ■>. 10 i n gy;:>v ^ * k ^ ‘ A p* ^ «# ^ ^ ., - o i-: ' 10 < I ': 4 ■f A L - -fiSH«S^?5L' 71 CHAPTER V THE REPORTING PLAN Barring the work done at meetings, the reporting system covers most of the activities ordinarily engaged in by open price associations. Since no two industries use the same method in marketing their output there will be found points of difference in every reporting plan; however, these plans readily group themselves into two broad classes; one pertains to manufacturers who produce goods sold to Jobbers and retailers, the other to manufacturers who make goods only to suecification, each contract differing more or less from all others and 1 . calling for ^ecial bids and prices. REPORTING AMONG 14 NUEACTURERS ^10 MAKE GOODS TO SPECIFICATION. Variations in plans among this group of manufacturers are less pro- nounced than they are among the other group. Mr. Ed^jy evidently had chiefly the class of contracting manufacturers in mind when hem'Ote his book, for only pass- ing notice is given to the class of manufacturers that sells to Jobbers and 2 . dealers. Briefly outlined, tSr. Eddy’s plan as presented in his book calls for the filing by members of all intpiiries received, all bids made, and all contracts awarded. Under this plan the secretary does not permit the information contained in the reports of inquiries to be interchanged among members for the reason that 3. there would be a strong temptation for members to resort to collusive bidding. The reports of inquiries are used to make a weekly bulletin containing statis- tical Information throwing li^t on the volume of work in project, as well as the general character of the work. The secretary interchaacges all bids as re- ceived among those who have bid on a given piece of work, provided that all have — - Eddy, A. J. 9ew Competition , p. 123. 2* Ibid. , p. 123. ’Ibid., p. 128. 7 \r *: 0-:< o" i*.c:. ' ' ffvV ’ j'lot' f!.'. . • •Yii • i •. ' '•: dc:? ,aprfx ■ C'ji.^ ur's • loccr r „:vi'. . '■ TC ■ • . : oi?jD 5 ::u "iil'W-s. -^7 • - asi? iYl- 20 .- -if,r.y ,; ■ ■•■■•• --•:«da j}-- :a pi „• fte^’iJcf’X ; - :.t.. " : 'Jti-: r-ri-.' •. i x earrei ^':lb 'lo y' XT t ;:.A*Lr(u.:5 oi *.•.1/. ':':. '; vr' x« tc cw? o t'i It.? ^ • -t ^ ' - r> fc-i .•^ tf'j ■-■<* :.' i.'* OJ liXOS t’Ar'JOi; . ,. ' « " ■ r* , ai'.' ^*5 i/ i'- ,r : .f i.11- ti i tol -j^nl r^nc^ s.^.’ wu-.- ...•u^'.*a^:i';. V *•: 'X.' r '» . : • - * •• >? w. ^ '• <^ ■ .r*' ':o' # A ^ ■' I k •';o.- J! ... ■ "' ••-•'.■. iTi"' L.'.. a .--■ ~ r-. x^i .j; , u * .-•:-y*V it-r.-.: -n; .‘tw xx^'v “7fceore:r^J , :,:... . • - fcrxi- .;i > -lea:-:;-. X/::x ■ »:‘r -.-jrxac "iD •'.■ ' *•:• ■ nrv :x 1. A-'n/iO h\ > V ****** * fy • :.t:. - .'. ■ .1.’ ' ,-- ■ - y*vil- v: .-'ToX;?- ,-■... -i; . J.o- J:.' :*x Ri f' • r, : ;I Jt to -;o ' . _- -. ■ J 3X? :f.A ••'1 - ’it. -. '... > n*I-Y ; Ir..' 'raJaiJ •' ..,':.^'^C:- •' rir V’ i e-r.' r : ••'.'tr ; -: V ;X :■ •■ - Iirt • r'.Ii if-, ri *^ iJ*2CO:«':; <"•- iT* '.'-rox ■■•■j uucriov w.'xij.i. T-tl. v:--: w'xa*'* v'l.ii - -'...t..: r-:’": .i-i-k ■ ,,j It ■. XA.*^a«f eria o* r j.'.'f x.'J » J*xxk;*‘-*i oxIj i'C..'.*.'; •. .*■■<;• I :■„.■* q- it ’'- t:r . A. 's' f * ! V' '• •0 rrevi.r r. nc'Xir ,rv^ t ott otrs; Xvvita , '"rbi I X .- ox-sioO T ^ . I • ‘ I 72 filed copies of their bids and have not narked them "sealed". Those who have not filed copies of their bids get no Infonaation concerning the bids of the others. If a member sends in a bid marls d "sealed" the secretary will retain it, and no information regarding that bid will bo sent to other members until after the contract is awarded, whereupon all bids are opened for discussion. The mem'oer who marks his bid "sealed" gets no information regarding other bids. Apparently the reason for a provision calling for "sealed bids" is to induce the ^eptlcal to try out the open price plan by giving them the right to file bids sealed if they so desire; in time they drop the practice because it offers no advantages. No bidder is bound to adhere to the bid that he has filed. After ascertaining the bids of others he is free to lower his own bid to secure the work, but he must immediately file all charges so as to give other bidders opportunity to re- vise their bids if they care to do so. The final report sent out to the bidders by the secretary is a copy of the contract as finally awarded. This, in brief, constitutes the reportirg system as laid down by Eddy for this class of 2 . manufacturers. How closely have open price associations followed the plan laid down by Mr. Eddy? At any rate, among chose associations for which Mr. Eddy* s suc- 3. cessor is counsel, there appears to be one pronounced deviation. This per- 1 . The Bridge Builders' Society started this plan but soon dropped it. See testi- mony of J. S. Dean, Eecord, U. S. vs. United States Steel Corporation, Vol. 2, p. 797. Eddy, A. J. New Competition , chap. VI. 3 . J/Ir. J. W. Mathews, Mr. Eddy's successor, is counsel for the following associa- tions organized by I*!ir. Eddy: Bridge Builders and Structural Society; Hng Travellers* Society; Hot Eoll Strip Steel Society; Institute of I4*kers of Explosives, Dynamite and Gun Powder; Bolt, Nut and Eivet Society; Cold Boll Sti'ip Steel Institute; Wire Pence ^.manufacturers; National Association of Finishers of Cotton Fabrics. See Hearings before Joint Legislative Comnittee on Housing, New York City, N. Y. Dec. 28, 1920. Becord p. 4602. L'4. \ TXjrvsr, I taln 3 to the niatter of inquiries. In his testimony before the New York Joint Legislative Committee on Housing, Mr. Eddy’s successor stated that none of the associations with Whidi he was connected made reports of inquiries. He could 73 not explain #iy this feature had not been adopted by Mr. Eddy when he organized 1 . these associations. Perhaps he feared that outsiders might come to the con- clusion that inquiries were being reported in order to accomplish collusive bid- ding. Undoubtedly members could inqprove their position with this information at hand without resorting to collusive bidding. Such reports would throw a light on the volume of work in prospect. If they sho'A«d, for example, that a large volume of work was pending, members would be careful Inot to contract to capacity for low priced work and a stiffening of prices would tndcubtedly come about in shorter time than might othei^vise have been the case. The other features of the Eddy plan for this class of manufacturers have been adopted in their general outlines. Variations in the detailed work- ings of the plan are of course to be found. The procedure in vogue among the Pressed Metal Manufacturers may be regarded as typical. Copies of bids are mailed to the office of the cortimissioner where all bids are arranged in a file accordlrjg to the names of the prospective customers. If within a period of two months no other bids are received on the sairie contract it is assuDied that no conpetitive bids were made. As soon as the records show that two members have quoted on the same contract, a report is made out on a fora provided for the purpose, showing the names of members quoting, the part number quoted on, rate per thousand for parts, and the charge for tools. A copy of this report is mailed to both members quoting, but not to the other members. If one of the members secures the order he makes a report of it to the commissioner, who in turn relays the iriformation to the unsuccessful bidders. At the r^ular monthly meeting a statistical report is read showing the number of hlds which have been ^’Testimony of J. H. Ma.thews before the New York Joint Legislative Conmittee on New York City. N.Y.. Dec. 29. 1920. Record u. 4633. • i" r.., t * '. Ir . ‘ "• -.80 ' . t:. '--r rwoitf ? ,.C ’• « < !f*lt'C7© ' ^"‘ ”' ■ " R> w !B ^ ' vt ;'*''.'I>' :o- ■ '••Ti.Jfs'i >iUSf v,*-’ - ^ r,.*! »« i; -n dny ■ ■r.c'^fT.' -1.'* -/e*i^f? fw^cTf X . ■ i. • ' •! ' .'•'* ■ ’-'"'J .vr ■' frUl'i iXf^ '-i t «X. • b * :r ‘ r i.-r'C IrftJi j^U-ow :.■*:■ iM “wtTnsi^ tAiH ’^* •■:' ■ Ic € i • {.i:v '. i. ' » -aCS'\' '■ 17- ■,■ ■■ • • I.V ■ •■-’ ' 'J-'-ifj nJ irjr,- . rt- -.x*. iT ' '*<'r i ...,; ^-•^'. . . -,'V '■'i ' '‘■aT';"' 5 J3 -e ■ ' _“A-i. *,.' J co'rtrO *r? . i •“c-'i 95 r. ’ * ■ rr> f/>. .* • - ^ . -• '•»•'.’* A' ■' '•'•"it?:l’ri-'C. •■'■■■ .0 C' b0Si.."\ : - . \:.‘ i'N T . • '• - "*■'' ' -'i'* I • i :^i 2-r t} i : : '-'J* 'J ' -J '■' ' " "' ■■■'' - *. 'rt. -! ' ' '-> ci-i*' • ■5''"- .' '■ ■■''■■ ^ - _ .’ , »• : 3-jt I- -j / . ■♦ i '•'; J .7r 5 »\. - :. • i. if' . 0 ., .X ■ '"rr I '. ■ I' ■ • ••’ ' JJftsTap:.' o« -rp ♦ /- I :t# 'K. . J c: r Tvoop ”/• ^ i.w 'SC* •.e-'oriv* *r>'^ '- ■ ’ * ^brxi^ aj: :i .'cd , ■ ’ '. ’ ’xr 0 i «>;■ * - LCt 4 -: 9 . -J r, C 1 f '■ ‘ '* ■ j clitfa o ■' S ’- .'•'? • •* reported, the ntanher which are competitive and the nxunher which are closed. In the case of the National Association of Finishers of Cotton Fabrics the members report daily as soon as made every quotation, written or verbal, giv- ing name of customer, description of work, quantity, terms, discounts, "and all inducements, direct or indirect." Each week each member files with the secretary on a blank prepared for the purpose statistical information as to "quantity of orders in pounds or yards and the number of days work ahead". The secretary classifies the infoimation received and maJoes dally and weekly reports to mem- bers, sending the summarized reports to those, only , who have contributed infor- 2. 3. 4. mat ion. The Eddy associations make an exception to the general procedure of reporting as illustrated by the cotton finishers and pressed metal manufacturers where bidding is done on contracts for governmental or other public bodies. Where work of this kind is involved, bids are not exchanged because these bodies will accept only one bid from each bidder and that bid must be delivered sealed 5. and is to be opened only on a specified date and hour. An interesting deviation from the plans characteristic of the Eddy associations is in use by the National Bottle Manufacturers' Association. In this case an exchange of information is made only upon the request of some member. 'H.B. Tosdal, Open Price Associations , American Economilc Review, Vol. VII. No. 2, June 17, 1917, p. 343. ^’Ibld. p. 342. 3. Eor facsimiles of a simple card system in use by manufacturers who bid on con- tracts, see Aupendlx, Exhibits 4, 5, 6. 4. Eor an account of the reporting system of the Bridge Builders and Structural Society, see Record, U. S. vs. U. S. Steel Corporation, Vol. II. pp. 797-803. Eor a general description of the Eddy reporting system, see testimony of J.H. Mathews before the N. Y. Joint Legislative Committee on Housing, Dec. 29, 1920, pp. 4630-4636. Ibid. p. 4634. >«.a- ‘ 9* ■ -r ' 1 ViP', ' ' ’ ■: !Xi ~,v.J •" §ti #r vTi’ r»r 7 ^.'r' Ij jrjaa -»r^ .•ft I bA-riic[f.': r *- .LJ »■ ,■ Lpf ' ? B:‘.rrO':^ at tfli t’- , . ^*f., -,-y 4di ---fj-' *■ - ' «•'-■- : -. ^.r ■[f ’ •■i' * "Tj ^ *;» " ,;ic..:i ■■:» L^'TOT^-_ iL-tni:-;-- -'■ ^ -IbnM . r. < ■ r,^. - f^v,U::5- ' ■ T •!■ *■''. n • ^9^.* • ‘J r f f r,v/ ltb%. - • ,,I.'.‘*: ‘ ' ' t.. •" ‘ - -» . ..rf'”'' T'' ' 'i*''' - 'i'a'’ '. . iHijb «A "' I ■‘Oil f*:* <. ■ ,' - r : : ; t . t -u ••rvCjt? ’ /'rwuiJ t I f : i - 1>" ; r :■ ■ ; i:. ii-'b sr ' - - : '.i :,f..’ t:c : •»' 'er:i f;^ : ;■ .-C*-'; 4?' * T' f* 9rt; ’"7 ©. r:^ ' ’£ I:»cie; ' . U L ^ z^rrCri^ .tjioIlSi' , 0 ! ■* r, •■ -r^j'Vri Ir ; P - -0 f* « * - ■ V ^ _..'4 n«-' ,:^ .K.H” Th /••i ' ^ ,'^’X - ■ ' i^l .:iK .? .bifi"' 'i a*v ''1 aTS^i *f- ' 'I ■ ■ f- ^ '^■ ' . ' .1 w • ‘ r 1C' M ,,f ' ,, :£; . ' . av .•- .i ,inc-w^-' . ■» .%• '.^,’-»*ir». • .-'i T -•'V 'h .-V5iv* -.-I bI' ' l-'t-V /5 u n> f V * ■' • : :t..i .** . . .tlcl"‘ i 75 The member desiring the exchange of information fills out a specially prepared form. He wants to know two things: first, what prices and terms have been quoted on the contract in v^ich he is interested; second, vho the successful bidder is and vdiat prices and terms he has made to secure the contract. The customer's name and address are shown; a description of the contract is given; and the bid made by the Inquiring member is fully described. Upon receipt of this inquiry, the secretary sends out on a prepared foirc a request to every member for information bearing on this contract. Members are asked to state, first, vihether or not they have quoted on this contract, and if so, what terms weremiade; second, \«hether or not the order was received, and if so, on what terms. Members reply directly on the forms. The secretary compiles on another' prepared fonn the information received, and mails it to the members '^o have made renorts in response to the inqxilry. The result is that these members secure the following information about the contract in question: first, a full descrip- tion of the terms made by each bidder reporting; second, the nama of the success- ful bidder and the terns that he made, including price, date of ship ments , freight allowance, and any other inducements, direct or indirect. The only name disclosed by the secretary is that of the successful bidder. The names of the other bidders are designated by letter. Only the secretary has the key to the 1 . lettering sjrstem. This offers one illustration among many that might be given, of the secretiveness that persists among members even after they have joined hands in an open price association. They are not willing to disclose their names for fear that a competitor mi^t work them an injury. 1 . Tor sample copies of the forms in use by the National Bottle Manufacturers' Association, see Appendix, Exhibits 7, 8, 9. e ;r* a ■: ' * ailtr . ' . . 3 ^ V • t& H “3.^ 'COQi c..^4«aL ' " ■ .-v - T * i ■> * :r>r‘: sr'y *lo ‘ : ' 'O®' tHJ .fcoi* • ; ■ ■ • ■^“'T S -■• ' '■"■ ,L«a^ M0 «i-.-- «L- 0t4 , 'T* ■ -'i;. iBEj5 ‘ \ ■ i . , V .: c.'^rii itlz . . . _ t . 7 ** r-f': .':’*?•is»^* .<■-- - . r * 5 ' * >■ «v.‘- t • I 'vv *T[ ' 'r; i 'I Pi;k» ‘ ci- T fr-. . •■ ’■ •! Uce^.. • ' .f'.L.a' 5-*J .. «• ■ .‘s^ :,' ■ f.o. ' *f. ■•; c •jc" - 0(1* otoiJ circ*^ , <■' ■ I • ' • , • . , ,' ■ • ?•; ^>)c' ck,^c- ■■*..■:' ^ i ’, r , 1 ■' 3 > >e r>*r, , ■*;• . f r 6 \n ' ‘ ' '.r, J nttfitio’ I. '' , ■^ '“ . ■> • '.Lr.; r : .'>’■"■■ *i ■" Lu j , ■ -.ij'rrcXI^ '-■■ ,-'-r- - -T .zf'Mu'i. »-# .. nL v V 3i. , o ’ \;c fc ‘'-•r I i’l'i '■•<’ • f7c.’.l;iu ie*^?cj f - • . - ■ ii, *'S'l*'C'fIl WTp 47t''l *:■'•• «? . tio^rr^a T~ ■V ■ yctus f i3«j #AU -- '■'•• ■‘■V' •/.’ t ' ■ ' V . 7J1 'r< ' ot l-ij . ' ,o» > I V f ."r - .‘""2^3 i 't: • IT 3 * •-!■.■ ’.'r ■ OiiJ^ i ■* 'TcC Ijs . ■■ , •> , ■' £ ; ! ! /ic7 . • * — I - • ■i ijif ^ • 1 :r i b ' i. ■-. ’ *4 '•T ■ • I 76 EEPOHTING AMONG MANIIFACTUEEES ^^0 SELL TO JOBBERS AND RETAILERS The biasiness facts most cormonly exchanged among this class of manu- facturers are those relating to prices and terms of payment, production, orders, shipments, stocks, purchases, manufacturing and selling costs, returned goods, cancellations, advertising and credits. Some of this information, particularly that relating to manufacturing costs, orders, purchases and credits, is also exchanged among manufacturers of the class Just described but the practice is less common than it is among the class that sells to Jobbers and retailers. In order to make prices, and trade and cost statistics comparable it is in^jerative that the goods be closely graded or standardized. It will accord- ingly be found that an amazing degree of standardization has takem-place among manufacturers who are members of open price associations. Of course standardi- zation in many instances was begun long before open price work was contempla.ted because of other numerous advantages of having standardized commodities, but certainly the open price movement has greatly accelerated progress in the direc- 1 . tlon of standardization. A few cases are found vfeere open price work is beirjg done in a limited | way even though little standardization has been accomplished. Some industries do not lend themselves to standardization because individuality of style is sought after and is a strong factor in competition. One of these industries is the textile industry. Open price associations in this field, notably the Woolen Goods Exchange and the Ehit Goods Manufacturers of America, have endeavored to overcome in some degree the difficulty involved in securing conrparahle informa- tion, by having members file with the secretary samples of the goods each manufacturer is marketing, with a price tag attached to each sainple. Members 1 . For a good example of standardization see form for reporting prices in use by the Society of Manufacturing Confectioners, Appendix, Exhibit 1C. 77 are then privileged to come to the office of the secretary to view these sainples?" A ■unique method which aims to accomplish the same pur'oose is in ■u.se among chair man\ifact*arers . Each man-ufacturer mails the secretary a photographic reproduction of each style of chair that he has on the market and indicates on the face of the photograph the price that is "being quoted. The secretary pro- vides each reporting member ’with a copy of all photographs. Members thereafter inform him of all changes in quotations and he, in turn, instructs the member- p ship to change the price indicated on the photographic plates accordingly. ’ Of course this plan is not entirely satisfactory because the photographic plates give little inkling of what the q’>Jiality and workmanship may be. Many open price associations confine their reporting to a selected list of products. Newly organized associations find it most expedient to limit their price reporting to one or two products beca-use of the difficulties that are al- ways to be enco*untered in getting the work on a going basis. The products first chosen are those, usually, which are the eaaiest to standardize and the most com- petitive in character. After an organization for price reporting has been built up, it becomes relatively easy to add other products to the list. The members of the Woolen Exchange, for example, began reporting (July 1, 1916) only on staple men s wear and broadcloths; these goods were the most competitive and were s'uf— ficlently uniform in grade to enable price comparisons to be made. Soon ■uniform cloths were added. These were followed hy a considarahle line of women's wear 3 fabrics and toward the end of that year several lines of f.ancy goods were added. Members of the American Hardwood Manufacturers' Association began reporting one species of wood only, namely oak, which ms most widely produced. This was in ^'Textile World Journal, Jan. 13, 1917, n. 60. 2 . For sample copy of a photographic plate, see Appendix, Exhibit 11. 3 • Textile World Joume.l, Apr. 8, 1916; Jan. 13, 1917. vs"" 1917. By 3919 practically all the sonthem hardwoods of any irnnortacce were being reported. Some ind-ustries probably never can be standardized sufficiently to permit all of its products to be reported. It would seem almost inpossible, for example^ to introduce price reporting in any comprehensive way in the dry goods trade, vihere styles are almost innumerable. Among the class of manufacturers viho cater to jobbers and retailers the greatest differences ;^revall as to the amount of Information that is exchanged. A few are so open in their exchange that each member kno’vs practically all about the business of every other member. (This, of course, could only be true of some of the smaller associations.) Others do little more than exchange price lists. The reporting system may be the simplest imaginable or it may be extremely elabo- rate. The Ohio State Millers' Association, for example, only requires its mem- bership to fill out a card once a week, Indicating the sales, output, and pur- chases for the week, and stock on hand at the time of reporting.^* All that a small group of lumbennen in Mississippi do is to mail to their statistical bureau in Hattiesburg a typewritten carbon copy of the orders received for the day.^' The secretary sends out at irregular intervals a mimeographed statement of the sales reported. No other iriformation is exchanged. In contrast to this, the plan of the American Hardwood Manufacturers ' Association called for, first, the filing of a price list at the beginnire of each month, second, a daily report of sales, to be an exact copy of orders taJsen, third, a daily report of shipments, to be an exact copy of the invoice, fourth, a monthly report of stocks, classified hy grade, kind and thickness, fifth, a monthly production report classified hy grades and thicknesses, and, sixth. Inspection reports. The secretary, of course, ^ Reporting Plan, American Col. and Lumber Co. vs. U. S., Record, Vol. I. p. 81. 'A sample card my be seen in the Appendix, Ibdiihit 12. 3 • See sample copy, Appendix, Exhibit 13. 79 1 compiled this information and mailed it to memhers either in the form of reports 1 . or incorporated as a part of a afeekly hulletin. Enough has been said at this point by way of illustration to indicate the wide range of difference existing between associations as to the amount of detail that members report. Eurthsr illuatratians will arise in connection with the succeeding discussion of re- ports in use among the various associations. Eirst will be considered reports in use in the exchange of price information; second, those used in recording cost, trade and other statistics. Open price associations do not all follow the same method of report- ing prices. Each of them has sought to work out a method v*iich would yield the maximnm returns with Ihe least expenditure of energy. Most associations, ho'w- ever, can be placed in one of two great groups. In one the practice is to ex- 2 . change price lists either between the members themselves, or through the medium of the secretary. Ibis procedure is s-upplemented by the reporting of such tramsactions as involve prices made at variance with these price lists. In the other group the practice is to exchange price information based only upon actual transactlom . The associations which have chosen the method of filing a price list and reporting only varla,tlons therefrom have usually been those vhose products command a price which is stable for a conparatively long period of time, as is the case, for example, in the woolen and knit goods lines, or the furniture line, liiere certain prices are announced at the beginning of the season and remain apuroximately at those figures daring the remainder of the season. Obviously time and energy are saved in avoiding the reporting of numerous 1 . Eeporting Plan, American Col. and Lumber Co. vs. U. S., Record Vol. I, pp. 82 - 86 . 2 . Little information is available as to the prevalence of this practice. Mem- hers of the National Photo, Engravers exchange price lists among themselves in small groups in certain localities. lol transactions where prices charged are Identical with those shown on the :prlce list. On the other hand, not being accustomed to report all sales, members are likely to neglect to report such prices as are made at variance with those on their list. In order to avoid this contingency to some extent, as well as to prevent misunderstandings as to '.vhat may be the active prices, some associations provide that each member must fils a new price list at regularly recurring in- tervals; others provide that a new price list must be filed every time a member issues one to the trade. ’ associations that are interested in products for which the market is a fluctuating one are likely to line up with the group ';ifoich requires its mem- bers to report actual transactions. The other scheme would not work well where the market is a fluctuating one because a price list issued one day might be obsolete the next. But also in this group there are associations vdilch at- tempt to secure maximum results for effort expended by eliminating certain transactions from their reporting system. The Linseed Crushers' Council, an open price assodiatlon operatii^ under the direction of the Armstrong Bureau of Belated Industries requires that members report only carload sales. It is not felt that sales of less amount have any material effect on the market.'"’ The Leather Belting Exchange requires its members to mail copies of all invoices to the secretary, hut only those above $60.00 are listed in the secretary's 4. report to members. 1 . 2. 3. 4 . Reporting Plan, Fnit Goods Manufacturers of America, Textile World Journal May 19, 1917. Reporting Plan, Constitution, Society of Manuf acturlng Confectioners. Bill of Complaint, U. S. vs. American Linseed Oil Co. st al. Spaulding, W.V., Experiences in Cooperative Competition , u.6; also Tosdal, • R. , Open Price Associations , Am-erican Economic Review, p. 346. 81 There seems to "be very little variation in the plans of those associa- tions v-vhich provide for the filing of price lists, fis previo-usly intimated they are filed either at regular or irregular Intervals. The Knit Goods Manufacturers of America require that price lists be filed at least once every three months, and if price changes become very active members are urged to file price lists more frequently. Usually price lists are reported on specially prepared forms. Price variations are to be reported as soon as made. Prepared forms are not so frequently provided for this purpose; quite commonly this information is simply conveyed by letter. The secretary immediately relays the information to the other members . Variation in practice Is greater among the associations that require reports covering nothing but actual transactions. Practically all of the lumber manufacturers' associations require a daily report of sales. In the case of the American Hardwood Manufacturers' Association the members' daily report showed all sales and cancellations made that day, and these reports were to be exact copies of orders taken, and to include all sales, large or small, as well as all special agreements of every kind in reference to price, grade or terms. The West Coast Lumbermen's Association requires that all be reported dally and they roast be consecutively numbered and be submitted in affidavit form. Members of the Northern Hemlock and Hardwood Manufacturers' Association sign a weekly statement to the effect that they are reporting all sales that have been made during the week. Members of the North Carolina ’^Ine Association axe not re- quired to si,gn an affidavit in connection with the submittel of daily sales re- ports; they do not even sign their names, but fill in the number by viiich they 1 . Constitution, Article 10, Section 7. 2 . Peporting Plan, Record, Ajnerlcan Col. and Lumber Co. vs. U. S., Vol. I, p. 82. - ■ • £ I i: V - 0 c: , ^ '- ,.irr 'J “cl .'. r .5: ; i ■;{■: ; ; : ^ •^‘ . .'.t. J ' <# ;.:i *.*t-I ' . ■» . r i' /- :&-tCqr~ *- »i"l0i -■■.>-••*/ «•- ■ «''r~i>r::r ■'O': Xn''!'.'0‘5f yr .^;r*> * -r •. ■ . -6^4c.I • ■ ■ . . siidaSil* -^*-* .•nc Ur/:- « ' iTr'!ffJs#»l4‘ru . ri.- T, <^-C . C - •'“ ’. C'.o ■ :.* TC^itl': ' '.' ^ir-> ^ r Xcovbn - •: ;t£?r s;-* r ■- *•'- *i. ■*■' •3Jt-‘ ' -^ , ■^.3 J! j 4^.^ ' ^ ' ■ 'iC, -i*.'." iroXft Jfj». ' ■■ ?C&i r' - •• j -j; • v-3 lo v?-Jr€i:'' ' i~fi X i« .-:• fed-. • • f.f« '::r-v-ol!taa -•^oO j_-t ■ c^'y'■■ ;-'v:- V.tfty ^v. ’OtJa T.^'i ^'-i' v Si-'- '■JiC * *’ ' / ; .Ui:',/...-*. t:u. /rit; ri^icU' '' i. >cr. .r/. 'Xa -fh'* ‘ * .•■':' ■■ r^;-* ' UU- 5;'..'* '■. -arJfrU:;o'i . '- ^ ' ^ •■• r" ; • ■ ■. s.X j.'vri'i’ •'I't'l * O'* • * ff*.- . n ^ - ■■;•:: f- . r •. -tT' i* i ■• •X* -V I t .. ’ I i*J " .‘o.t oh xcrfi ;BiJ'4t5.: .» \ *¥ i . '.‘.I- • r : .ro3 rcUi> A ■ < .^1 'lresented by a code ntuiToer. The use of the code number does serve a purpose to the other members, however. In case conditions surrounding soi® ijarticnalar s ale seem to any member to be un- reasonable, he is given the privilege, in some associations at least, of taking tne matter up with the secretary. The member comnunicates the code iromber to the secretary, who in turn will communicate with the mianufacturer bearing this code number, and without divulging the identity cf either the seller or the in- quirer, reports to the inquirer any special circumstances which may have sur- , , 5. rounded zne sale tending to explain any unus^^al conditions. Secretaries do not al\mys report each individual sale even though members may have done so. The secretary of the West Coast L'ombermen’s Associa- tion is furnished with a daily report of sales, but the report tliat he issues show's the total volume of sales, the low, high, aiid the "prevailing” price, covering a period of three or four days at a time. One secretary reports, See copy of sales report. Appendix, lichibit 21. 3 ♦ Bor instaiice, jsmerican Hardwood Manufacturers' Association; National Chair i/an-ofacturers* Association. 3. Steel Barrel Itoufucturers' Association; North Carolina Pine Association. Bor instaiice, West Coast Lumbermen’s Association. The National Box and aiook i^anufact-^ers' Asscclaticn report shows no names of sellers, but Indicates the numoer of sellers vdio have reported. 5. ^auldi::!g, W.V., Experiences in Cooperative Coimpetition, u. 5. 6 . > -u See copy of report in Appendix, Exhibit 22. 85 monthly, a list of;i”rj.ling prices that Iriave ‘oeen quoted in the r:a.rlcet”. The secretary of the Steel Tool Society reports only the total number of oounds of each id.nd of steel sold at each price. A similar scheme is in use i:i the Master I)^'-ors' Excliange of New England. Finally several associations provide for the contingency v;here man-ofacturers sell both to johhors aiid retailers oy getting out sales reports with two sections to them, one devoted to retail prices, the other to wholesale p.rices.^‘ lu wij-1 ce seen from tne foregoing tl'.at the exchange of price infoxma- ticn is a mnst important function of open price associations. However there are those viho contend that if cost systems could he standardized so that each ffiemher might ioiow his costs, there would he nc need of exclianging price informat inn. Those who malce this assertion apparently are act-uated hy the theory that the proper price is that oased on cost plus a reasonable profit. Itiany manufacturers feel, nowever, tliat because of the recurring waves of prosperity and depression to which the industrial world is subject, they must in time of prosperity create a cusnion of profits witn which to ah sorb t he losses which come in times of de- pression. In other words they xaust at all times seek to get the price that xe w conod lens will pei’mit them to secure. Open price associations are there- fore not content to limit theiractivities to the exchange of cost information. It is conceivaole that members mi^t be able to secrure the maximum price consistent with icarket conditions without exchangirg information about prices, if statistics of production, orders, shipments and stocks could be assem- bled, compiled, and disseminated in such a way as to be representative of t he whole industry, and at the same tin^e be intelligently acted upon by each manu- facturer in the industry. Hut because of the many difficulties that sW.d in the T. ~ i.to^acturers‘ Excliange. See copy of report. Appendix, 2x- 2 . fhis is done oy the Knit Goods llanufacturers of America and Tool Steel Society. 86 “ way of achieving such a goal, associations have "been content to arrive at ai; ap- proxirrate estiinats of the trend of the uarket hy talcing the easier course of simply exchanging information about prices, iliany associations have as yet at- teuj/ted nothi]^ more. Associations which represent industries in which the num- her of cora^etitors is conparatively small succeed best in gathering trade sta- tistics, because there are a smaller number to be educated up to the valujs of taking the time and trouble to fijunish these statistics for coopilation and dis- semination. The plan of the American Eardwood lianufacturers’ Association called for a monthly production report, but this feature of the plan had to be abandoned because members either did not have their bookkeeping so ordered that they could furnish this iiifonration, or they v#ere unwilling to take the time andlarouble to 1 • do so. In discussing reports of trade statistics, costs, et cetera, considera- tion vd.lx be given, iirst, to those which, when considered in relation to each other, throv/ a light on present and future market conditions, thesebeing reports of orders, production, sliipments, and stocks; second, consideration will be given to imports of costs, and to reports of items v,hich are elements of costs, namely reports of credit information, purchases, advertising, and v^iges. This will com- plete our review of the main feat-ares of the reporting plan. As oftenas not, associations require members to submit their x’eports of orders, shipments, production, aid stocks in combined form, and these are then sucmarized by the secretary and issued to the membership in combined form. Sy bringing figures of orders, production, shipments, and stocks Into Juxtaposition on one form, a bird' s-eye view of the general trend of the market is secured. Of necessity a report of this kind is very general in its p'or/iew. If a product is divisible into many species or grades soiiie or all of which mve a conpetitive narket all their own, it is probable that a combined report wo-uld not be satis- i7 ~ Gadd, F. E, , Eecord, American Col. and Limber Co. et al. Vol. 2, p. 1107. 87 factory unless it could be issued for each species or grade, for a cocibiued re- port could of necessity not sliow, for exaxaple, the orders received for each grade, or the production, shipments and stocks of each grade. In as much as the cocpeti- tive sit’oation for one grade might be entirely different from that of another, it foilows tnat a combined rep/ort in vvhich grades or species bjavo no place might not be the iiiost acceptable. On the other hand, the work entailed in getting out sepa- rate reports, one of v/hich, for example, might show the volume of orders for each grade or species, another the prodruction of each grade or species, another the stocks of each grade or species, et cetera, might be so great as to maice it im- practicable ”00 adopt the system of individual reports in its entirety. Tne North Caroliiia Pine Association loas foundldis use of a combined form to be fairly satisfactory because its members are interested principally only in one kind of lumber, namely the pine grown in the Carolinas. But even in this case the report is deficient because it does not concern itself with the various grades of pine, nor with the various thicknesses in each grade. In an associa- tion like the Bardv/ood itoofacturers’ Assoclskion, representing a membership that produces aiid iramets moretliaii a dozen different species of hardwood lumber, each one of which lias several grades, all of which have several different thiciaaesses, it is imaiiifest tliat a comoined report could not be used with success, liembers of the North Carolina Fine Association report each Lbnday on a specially prepared form the total volume of orders for pine that have been accepted, the total ship- ped and tne total produced during the preceding week, all measured in feet of luiiiber. Space is a Iso provided for recording the normal output per day. It is specifically stated that t>ie figu.rea submitted 7/ill be held strictly confidential, iTo signature is required, each reporting member merely inserting the number by which he is identified in the secretary’s office.^' On the following Thursday each merriber reporting is mailed a printed Nummary of the figures that have been 1 . See copy of report in Appendix, Exhibit 24. 8 £ roported. This shews the iran'her of mills reporting, the totals and avero^ges per mill of orders, shipments, production and normal pi-oducticn, the percentage re- xationsiiip hetv/een, first, orders and shipments; second, orders and actual produo tion; third, dalpments aiid actual production; fourth, orders and noraial productioh; fifth, shipments and normal production; sixth, actual production and normal pro— duction. Furthermore the percentage to normal of orders, production, and ship- ments is shown ^rapnically oy tne use of a form of barometer originally used by the Brooicmire Economic Ser/lce to picture fundamental business and finaiicial con- ditions,^ Finally the orders, shipments, production and normal production as given oy previous reports running back over a period of three months is shown in columnar form, thus enabling a coimsarison to be made from month to month. Statis- tics of stocks have no place in this rexjox't . They are collected and disseminated only about once a year. Some associations apparently prefer to substitute in their combined re- ports statistics of stocks for statistics of orders. One association issues a monthly statement of production, shipments, and stock, in which the statistics for each are shown for every month covering a period of four years. In addition each member receiving this report is given his percentage of production, ship- ments and stock to the totals for the association. Since figures are lumped, those of any single concern are not known wC any other single concern, but, as just indicated, each member is given his proportion to the v/hole. By comparing this proportion month by month and year by year, every member can deteimuine whether ..e is getting tne share ofviork that he is accustomed to get, or mors or less, and ne can determine whether he is carrying too heavy or t oo light a stock. The rTational Association of Chair I»Ianufacturers does not atteipt to gather aad disseminate statistics of production and stocks. I.fembers are asked See copy of report. Appendix, Exhibit 25. C • Sab^, E. w., Eeports on Cooperation , Ho. C. C-7. 89 to Bubiriit a monthly report on a specially prexoared form showing in dollars the total shipments, total orders received, total cancellations, and total unfilled orders for each of five different chair groups conroosed of dining room, "bedroom, and office cliairs, rockers, and miscellaneous. With the report members are re- quested to transmit a check to cover monthly dues, based on a percentage of the !• i total shipments reported. With these data as a basis, the secretary issues each month a graphic chart called a "Monthly Experience Chart". By means of graphs the trend of orders received is indicated not only for the whole of the present year, month by month, out forttie corresponding months of the year pre- ceding; in the same manner graphs are drawn to show shipments made this year, shipments made last year, unfilled orders this year and unfilled orders last 2 . year, all by months, and in terras of dollars. In the Sales Book I'tonufact’nrers’ Association the secretary issues a monthly report showing, not only production and order statistics, but the number of quotations that have been filled at variance with price lists and the number who have sold below their price lists. Aside from the notation of the special quotations filed, and the sales below list, the following information is given in columnar form: first, percent actual quantity production to normal; second, percent actual value production to normal; third, percent actual quantity sales to normal, fourth, percent actual quantity books sold new users to total sold; time required to conplete unfilled orders and contracts. The arrangement is such that ttese data appear for each member, but members are designated by number only. Below these data is a comparative table showing this information 3. by averages for the past year according to months. Production and shipment statistics are frequently combined in one re- port. In the lumber industry it is customary to issue a monthly report of cut See copy of report, Ai^pendix, Exhibit 26. ^*See copy of report. Appendix, Exhibit 27. •See copy of report. Appendix, Exhibit 28. Ati? ht'i. ".OC'r r.t ur:A xUUiot^^ - — :. 1:U’ - *;'.* ' ' ■ . •• •■ ‘ ^»Ti»c>6r «i.s:*xo ' " : .« vV . - '....'-I’ V"' . -: -' 'j^zsm' l i^:}0 tt'l'zlb OTil :to«® t - .it ^• » 'XJ» 8 *1 "i -'r ."ICr ' • f i ' 1, -_;r A A«t*< ,8nt/I> ^:. r i r.:, ,i-:-:vooi .ri t‘ 3 or ► - .fit' . ,;^. ; V . • ^ ' •' ' *;. £T:J Aji’ •■ ' ‘*^-1^ iir; i.-'i ■■ ' ‘ ■H.'.'ii e- : r.ieii a,S5 t*:-' ': •r;r->3 y.i*/ • « .-fin/.' v,2 rfrr't ,w*^ ttiifn •i\ 4 • . . * : ittr, ■ * "-isMo l;_^. •JoamH:.. Ifl i'Jt'iv •■•i ^ .. ' ri« ,'1*:'- . -..-«i ■ ■ ■-■• ■ *'■ • ■•■'‘" =•'•• '• ■•***' ^' -- -« • c ,,ri;a::.iv -.■.i-!.' Lit* c tiottf.': \Xro- ron .jdiwoi- J-ic.-i xMwt. . .’iT» .'f/C'-: ?v * a.i-jli. - , e- ool-v* ?1*1 b!-’ '.Z'.'T 'ji-ji < • : 1 1 1 la cV)!t^sU \ . . . \cln' ■; .-■. ','4 .a V , 'if v-i»^ to.*« laoljr^c., , , .,':l . . . .T- .,:. . , :.-_U ti?4S^' « - - .*;:ca / --•:<. .-i • ‘ :A,.vr- ' 3i^tc- -’-i* -ro JL'.t- ..•'.‘-r-:c *r ’ A“nc'^ o,^ hvsLf — f .•: tt.w. .■ i 'V ,i&ctoc t/.'j-i.A •■" ' ®‘ ■ - ': •• ^ •’ "- ’i' !lC 1 V* ili.'ii. . -'i' *Uir^ Jaa - wc.in '«? .'• ‘'*'5 *-■ - *•■ :: c» >. : .aT^wv •• * '•’ ' --*•- , 0 . -.1 '. . ■ - . . ** - ■• - Off • v’'^- i- ■■~•^ '■ . • V. 11 .'- 1 - •:. i . :.. irLivlt:^ *• I* vi V'V?»LfJfTV ^ ■'-•i * ■- • ; . ' .Vi' ,i c'.- 5 -v :,o ^ -ii. i- '■I ib-- 3 T.O- i*. \^A - : . ' ■: . i. . i . ”-$^-1 t - ' '.* J *i v . :,- ITS*P?» 'B* ■:•--• ; M 1 i; u w. i ■ 1 I j ' • ' . , -oi ?£7:iSiO^» ;v/ is&u. v I'.'jAa 'io , n .'. X' • . ' "■< ■< - ■’' • .-•:;^.x >r./ V- t - <. . r: \n/. o . " •rc. irt 07 ^ . liiX •’^ -^.v. • - TT . ' 1 r I* 1. : : i r,x •- :^ ' X : : i . ... .1 c A . _ ' - X : ^ V r X;. c I * i I ar _'. , K;i# . J - c ^JVr.v. . ■ ‘f " • JW ■■ • •■ ^ t , . V ■0 ■% ■% « Jl 0 !*■'’• .Cl> r 5 L‘ k IV 91 every th.ree inonths the Tool S.eel Society issues a hiueprint which shows diagram- matically for each kind of steel the total vol'ojne of orders received in pounds 1 . for each rionth of the preceding three iDonths. The diagrams show' at a glance whether orders have been increasing or diminishing. Statistics of production are us’cally assen'oled w/ith other statistics in a combined form. The Drill and Eeamer Society, however, does issue a form based on the percentages of operation as reported by the membership, showing the av ei’age percentage cf operation for Tjhe month as compared to no real as well as that for the month oreceding, together with the increase or decrease in percen- 2 . tage. Stock reports nay be very simple, as in the case of the Sa3.t Prodiicers’ Association, vihlch divides salt into but four grades, or they may be very com- plex, as in the case of the American Hardwood I.hnufacturers’ A^ssociation, v;hose membership produces from fifteen to twenty different species of luniber each oitb of which is divided into several grades. Furthermore each of these grades is divisible into several thicknesses, lumbers of the American Hardwood I/anufac- turere' Association v/ere required to submit a nxinthly report showing the totals of all grades, ihicknesses and kinds, and this information was redistributed monthly by the s ecretary. The secretary’ s report showed only totals, the ejum- 3. titles in the hands of individual manufacturers not being Indicated. Several A of the other lumber manufacturers’ associations distribute monthly stock reports. The block cb«irt is used in this case. See copy in Appendix, Exhibit 29. 2 . See copy of report in Appendix, Exhibit 30. w • See copy of stock renort, Auuendix, Exhibit 31. 4 . The Horthem Hemlock and Hardwood Manufacturers’ Association began reporting stocks in 1914, and the Yellow Pine A^ssociation (now Southern Pine Association) in 1913. t *r> 92 As early as 1913 the North Carolina Pine Association inaugurated a scheme which was calculated to prevent the narket from heing unduly depressed by the presence of suiplds stocks. Ivfembers report their list of surplus stocks to tne secretary, who in turn circulates t he list among the membership for the pui^ose of enabling members to buy up surpluses before having them thrown on the market to depress it. If the limited information available may be taken as axi index, ex- change of data dealing with purchases is not very prevalent. Probably it is as mch to the advantage of meet ers to have reports of purchases as it is to have reports of sales. They caii lose as much money through ignorance of conditions surrounding the purchase of raw materials as they can through ignorance of the market conditions surrounding the sale of their finished goods. The Salt Pro- ducers' Association exchanges information every month as to the number of tors 2 . of salt purchased by mern’oers. Members of the National Pox and Shook Ivknui*ac- turers' Association oxcha"ge information ri»nthly relative to purchases of box lumber. The quantity, description, price, f.c.b. uoint, and the concerns from 3. v;hcm purchased are given. Usually the conmlled reports of purchases submitted by the secretary to the members do not give the member's or seller’s names, or any details of the purchase, but merely states whiat the articles are, the epuan- 4 . titles purchiased, and the prices paid. Tliere appears to be little interchange of informa-ticn bearing on the cost of laoor. The workers themselves have, in many quarters, throuxgh their T. The American Lumberman, Oct. 24, 1913. u. 46. 2 . » » 1 See copy of report, Appendix, Exhibit 32. V • See copy of report, Appendix, Exhibit 33. 4 . Naylor, E.H. , Trade Associations, p. 26S. - '• ’'VCf-c i V: . «■■*- J ^k’ ' ' . t . ...n S :, , It*- v‘ .,•■,. c - -.^ .. •■ .. ' \ac:5 4^ 5 < ::'r : r . »*S 4 « -:■-’ - j*" V- laoor crganiza-cions oTstalned .score exact inforncation as to ;vages and working corir 1 . ditiong than have their eroployers. The National Association of Box I'an-'afactu- rers exchanges information once a month as t o the hourly rate of wages paid for the various classes of labor in use. The rate paid for overtime and the munber 2 . of hoiirs per day that factories are running are also given. The work done, not only by open price associations, but by the ordinary trade associations, in cooperative advertising is so well known that it scarcely needs to be mentioned here. Suffice it to say that associations are doing a greau deal, not only in the way of popularizing the products which thej^ sponsor, but also by determining the relative merits of the various advertising media, amd effectively removixig such abuses, for example, as ’’padded” s-abscription 3. lists. The interchiuige of cost infomcation Is a very vital part of open price work. It is done on the theory that ignorance of costs is greatly re- sponsible for the ruinous cutting of prices; that when members know their costs they will quote prices intelligently. llr; Belt, Chief Accountant for the !Ebderal Trade Commission, in an address before a group of hardwood lumber imanu- facturers, stated, "It is generally admitted that ruinous prices are due more to the fact mhat manufacturers do not know vidiat their actual costs are than to their desire to sell at prices which do not yield fair returns on the money in- vested. " He further stated tliat the Federal Trade Commission in its work had fouitd that a majority of the business failures wrere attributable to poor acccrcsnt- T. Garside, A.H. , The Value of Statistical Reports in Business, address before tne^annual convention of the Ehit Goods I.!aiTufacturers of jimerica, !,!ay 20, 1930, o See copy of vra,ge report ff-ubmitted by mem'oers, Appendix, Ibchibit 34. O t Babson, R.W. , Reports on Cooperation, C. C-11, 4. Gaunt, E.H. , Cooperative Competition, p. 28. 94 1 . ing and inadeqmts "business information. In order to con^r^ars costs, it is necessary that all m.emhers have a vuiifonr. method of fig-aring costs. This does not mean that certain cost fig'.ires are to he imposed upon members; it means that they are to use their own finires, hut in arriving at those flgares the same method is to he used. In order to get 'uniformity of method, it is, of course, necessarj' that the association take the initiative in '.vorking out a system of uniform accounts sTiitahle for the industry. Us*::ally a comrrilttee tslien from the mamhershi-c is put in charge of developing a sj’'stem. The conmittee generally hires a cost accountant to study the industry and to do all the detail ^^york. He sometimes visits the ulant of every member of the association in order to learn wherein methods of operation vary and wherein th^y are alike, so that a system may he installed which v;ill he sufficiently flexible to he adaptable to all plants. It is generally found advisable to mame the system as simple as possible, for members will not be prevailed upon to install one that is so intricate in its operation that they \ cannot understand it. Once having established costs on a conparable basis, members are in a position to intelligently discuss them in meetings and through the medium of the secretary. For several years the exchange of costings has 2 . been going on among lumber manufacturers’ associations. A common method of exchanging -costings has been for members to submit cost sheets sho-vlng costs ..or the leading items of production, whereupon the secretary has averaged .. 3. t..ese costs, mailing to each member reportirg a statement of average costs. 1 . Address before the Hardwocd I.'anuf acturers’ Association of the United States, Jan. 30, 1917, Am.erican Lumberman, Feb. 3, 1917. For copies of cost reports submitted by members of the Forth Carolina Pine Association and cost _stater.ents su.bmltted by the secretary to the membership see Aopo-ndix, Exhibits 35 and 36. '* 3. Air-erican Lumberman, !,Iay 1, 1915. 95 A forr. cf activity iri v;hioh all of the aasoclations or^.aaiaed oy llr. Eddy are engaged is the interchange cf credit information. Other associations have made little progress along this line.. No donht so little headway has been i:ade, first, becatise of the existence of credit men’s associations, to which most members probably belong; second, becatise of the fear of the average business man tnat conpetitcrs \rill find out through such an exchange v;ith v;hom he is dealing. Credit men's associations are made of non- competitors. Of necessity spich an association coti.ld not furnish each member with as intimate a knowledge of a customer's credit standing as ccr.fld an, organization made up of members in the same line cf trade. &j,ch a vital matter as le.aming how mch credit ’:ad already’’ been granted to a crastonier could not very easily be ivSi-Sx ualnea. oy a credit association imide up of non— competitors; bu.t the secre- tary^ of an open price association cc-'ald give this information because he has probably req;aested each member to advise him how much credit he has already extended to each cf his custonjers and r.hat the credit limit is cf each customer. One Open j^rice association ashs its members to cneclc such of the following as are applicable to each of their cu.stomers and nail the form to the secretary, whereupon he bulletins it to the other members or refrains from doing 30 if the reporting members so req^aest: 1. Accounts overdue. 2. Eefuoed statement. 3. Hefused to accep^t delivery. 4. Took excessive discount. 5. Slow pay. 6. Draft not honored. 7. Note or check ^pretested. 8. Transferred real estate. Closed by sheriff. 9. i* • • ■ *7 « • . 6 li- •%. » 96 1C. lias sold out. • 11. Has re^jnested extension. 12. Ju.dgr.:ent entered against. 13. Has had fire. 14. Has made assignment. 15. Is in 'bankraptcy. 16. Condition improved. 17. Account satisfactory. CO • Cancelled order without authority. IS. Betumed merchandise y/ithout permission. 20. l!!ade unjust claim of shortage, of condition, of (pmlity, etc. ‘21. Deducted discount to v/hich not entitled. 23. Account collected "oy attorney or agency. 23. Account paid hy installments. 24. Has given chattel or real estate mortgage. 25. Has given hill of sale or t rust deed. ' In addition inerribsrs are reon.ested tc give the name, address, a.nd ■business of the customer, the period of time that the customer’s account lias heen on the hooks, tiie maximinn credit extended, and the uresent condition of 1 the acco'mt. 1. This form is in use hy the Cotton Thread !.!anufacturers’ exchange. E^W •W -\ >a ’ . V-" • . -.rMil ' i-.:. . te f. '. 97 CHAFTZR VI TEE ADVAITOAGES AED DISADVA2TTAGES COIEJECTED WITH OPEN PEICS WOKE The plan of this chapter vvill'^be to consider in the first part the advantages attending the operation of the open price S 7 stein, and in the second part, the disadvantages involved, first, in the attempt to install an open price system; second, in the operation of snch a system. In both parts, the aim vdll be not only to discriss the general advantages and di sadvantage s tliat inure from the operation of the open price association as a vdiole, biit to pay some attention to the particular difficulties or benefits flo-^ng from each phase of its. work. Be- cause of the newness of the open price movement very little data have as yet been accumulated vMch might throw any light on the attitude of buyers, whether they 1 oe engaged in biuying for resale or in buying for purp)Oses of consuir.pt ion. Pro- baoly insufficient time iias passed for sentiment to be crystalized, one way or tile other. The writer is therefore constrained to write this chapter principally from the point of view of the member of the open price association, although not entirely so. Some discussion will be devoted to an elucidation of the point of view of purcliasers. AEVAMTAGES Erom the point of view of the member, all benefits of open price work may be said to be derived from the operation of t^wo factors, namely, first, the b'oilding up of the sjjirit of cooperation; second, the intercliange of information. Soma secretaries have expressed to the writer their opinion tliat the development of the former element is the more important. Probably neither one is more im- 1 . •The benefit to the constoner from the conservation of timber due to the opera- tion of the open price system is discussed in cliapter Vllo Pii* 143-156. ’ -n / x^_ %H v,T.i ' V'CL\ -'^- :• r * .7 ^v'’0 0 r^rt • *• *"v 0 'i'.: ^ r^w- " '^•‘ .'.rro?vi^ ^ . j i>,-J c* ^ . , ,‘r • i & . --'■■0 ,.’’:.v.vTri t . |^. ^:nv ^ui 1 ,"iro:.ift ;-4 ‘ ,-_ | * 3 Ov* I I 7) .'■ !-*■» ..' ... - , »- i' r;:20 •--- noiJ-'*- j •jV ■-c>a i' . - j ..Ld " < k-i ..«»•■'■ tip lo 3T. ^ * : .’c-irV - 2 1 -, -7 » Vjfc.' ivr.Z^.4.- — ^••- r . : . • t, 'i .'> . 1 4.C' ..... .....a. i.:j !.:- ■ ... i . ;: 'Ir.f- .'C:,' • . ■'. '50 '■ il •:• V. ■ ■* - - :■ ■J OV fi •• J " xV ^0 •T^i^ •1C* ■’'• 4 1- 'r: ‘C’>i lo r. ' c.;r i- - aw^o. • 16 . JUr-- -X -- v^^r•:~x ^ -•■... •.,* • : . •-•V.'-' is* '*.•'■ .— ' "'i Os ,'!: c» * ’- .U’ • • .OcI-3* 98 portajit than the other* Ahont all toat can he tiMthfu-lly said is that there niust he a ceroain degree of tne cooperative spirit developed before menihers are will- ing to interchange info mat ion fully, and freely. A concrete illustration of the attitude that is developed oetween competitors hy the preaching of cooperation, hy frequest contact in meetings and the lilre is afforded hy the testimony of Mr. Snith, President of the Union Steel Casting Company, in the Steel Case: Q. "Now what is the difference, if any, in the attitude of competitors in your line toward one another from the condition that prevailed fifteen years ago?" A. "Vfe are honestly friends now. Then we pretended to he friends, hut were the bitterest eneraies. " Q. "Can you give any illustration of tliat?" A. "Yes, sir. Perhaps a year and a half ago or two years ago v;e were in difficulty in malcing driving wheel centers for the American Locomotive Company people. They comralained about it, and I personally w^ent there. I knew wliat caused them. We had to use anchors to carry the core. I found out what their complaint was; asked them if any body was furnishing driving wheel centers without that difficulty. They said the ^ratt & Letchworth Company of Buffalo furnished them without the hard spots. I went to Buffalo and bold Pratt & Letchworth Company of our difficulty and asked them how they avoided it. They showed me a new kind of anchor they had, which did not make hard spots, gave me samples of them, and I got the saiiie kind and had no fur- ther trouble. ?Mle I was there they told me that they iiad some difficulty with the sand, that their castings did not clean as ’^11 as ours, and wanted to know the trouble. I, of co*arse, gave them all the help I could and told them tliat they were not grinding it enough, and stayed with them for about half a day, and 1 . Kecord, U. S. vs. United States Steel Corporation, Vol. 20, prp. 3058-3069. 99 they got better result sfrom their sand, and we had no more liard spots in our whee] centers. ?/e visit each others’ plants for the purpose of improving our condition, and have no hesitancy in helping each other when we can.” Obviously where cooperative efforts are directed toward muttial helpful- ness in improving industrial processes the benefit rsdoinids not only to the com- 1 cetitors involved but, to the consumer. ^ .4 A good illustration of the cooperative spirit developed in meetings is afforded by the following extract taken from the affidavit of a hardwood manu- facturer belonging to the American Hardwood I^Ianufacturers’ Association: "The fall and winter of 19 IS found us with a large ac;cumulaticn cf stocks on liand in thoroughly dry condition, and we found. that it was difficult to move them at the prices^ie were asking. This condition continued through the earlier part of 1S19, aicd in spite of our repeated sales effort, we did not se- cure any business for Red Gum as well as some other items. Therefore at a group meeting at Memphis, when market conditions were being discussed, I fcand that my competitors had been selling their Eed Gum freely. I advised the group that I had been unable to move our red gum and that we liad an accirmlation of the stock above normal. It developed that my competitors had been able to move their stocks because their prices were considerably lower than ours. Shortly following this meeting, owing to our insistent efforts to place before the consuming trade of the country our red gum stock, we commenced to receive a good many inquiries and this, in part, as a res''uLt of the fact tr3,t our com :eti tors 7/hc were at the grouu meeting where I stated we xiad this stock, informed their customers that we could suDToly their needs. * * ^ fact that these group meetings develop 1 . For an account of the growth of the cooperative spirit in the New Heiford Open Pries Association, see Journal of Corrimerce, May 1, 1915. . ^^0 1 :<% V - •*'. 4 OJL •'.i ♦H•^: , • ^>t c: v.a »^•^o^i»■t^, . t .1 -: : • '3 • :ii b .-. lo i*r,.i^i -* . i '. A . :..-■ ^.Ic '^Ia- oirTj. ,; ' a .v.'iiwoXXot ■ t ■> r . - “’ ■* ■■-'*’ ■ -C.‘ ’I.;. 1 ( ' ^ .i. o .Arurolt ;!Pr i' ' e^r:; _ ‘ '.-■ : z: _±:\L‘r)’t\c’ 'v.- ,i.' :.: V . c-' 'i aat;.o?< :'c r - ‘.-'rJnia .v>r i7ii. ;r» a i-"' . * ti: f .?h ■ •'5< " I *: -.4, r. •: v .iv : q .tl-'T “to- - . - i * • ' jlaw •x'fv: V -'rTPi 4^^ j. .^' • ‘ iroi* cfft-rain ,■? a- ^lirtos: 'W: .-vv-i - Ti -T **: ': 3-0 9 V-; £/“-■< f ,'S 3 Tii.iT . ^ci 4 fv^“'L :I > - 1 C. r.r 'e ■5- . -- ' '.c. ■ ' . .‘.Or iJti. .v t r' • .’4i| * -i .^. . ; . ■" l-.'l ■•*J oJ . •; ;■ : L-'. >..:,■ o' ' ‘a ’i’.. ■ " *:t/' ■..■ao ;r..^w *c - ■.■■'c\ .. J_ ' '- ' '-"Sj.-qc’: ci. 1 .ihi-. h. jk ■ ;, •I'-. 30C r:,' '.3 .‘•.'•i.v :> ': -'ocra i: id.‘ 1o ij)T/o.'w.w c. ^ y-zi'i° c^O 1' • >!«J Bri l 100 a spirit of good fellowship, whereby my competitors are willing to advise a buyer that a common competitor can furnish stock that they do not haopen to 1 iiave, is of great value to me.” I Members intercl^nge information in order to loam as closely as poss- ible ail the factors that have a bearing on the raarivet for their product. If they lack knov/lodge of the market they are prevented, first, from properly re- gulating their business in conformity with bp.siness conditions j second, from securing the highest price for their product that narket conditions v^arrant. benefit from 'the Interchange of iru’ormation, because of the fact that the large tion for himself through his salesmen and by other means than is the small pro- ducer, WX 10 in many instances does not even have a traveling salesman in his employ. This is strikingly brought out in the case of the smll mill owners who belonged to the Affierican Hardwood Manufacturers* Association. Mr. Boyle, attorney for the Association, in his argument before the Supreme Court stated tliat of the forty-eight letters which the is^^-ager of Statistics of the associa- tion received, commending open price work tliat ms being done, all of those tiiat indicated that a better price had been received in one instance or another as a result of the operation of tlie open price system, were from small mills 2 without a sales organization. iiumerous affidavits from small mill owners, tairen in the case, point to the same conclusion. The following is typical: In one sense the small producer may be said to receive the greatest tt As an operator of a comparatively small mill which maintains no Weiss, H. B. Eecord, American Column & Lumber Co. vs. U. S. Yol. 3, p. 1667-! 2 , _ Argoment of l. C. Boyle, in tlie 9u.preme Court of the United States, American Coluirn & Lumber Company vs. U. S. , Oct. 21, 1920, p.68. U. S. Yol. 3, p. 1667-8. 101 sales force, he fovoid these reports and letters of great yalue to hio;. Previous to belonging to the Association he was largely at the mercy of the wholesaler, to whom he has always sold the bulk of his production. Before joining this Associa- tion and receiving these reports, in June 191S, he sold first and second quartered white oak to wholesalers for $88.00 per thcmaand at the mill, or $105.00 per thcu- sand in Boston^ For which these wholesalers obtained from the consumers the pre- vailing price of $250.00 per thousand. This condition of ignorance of conditions worked a hardship on him and was of no benefit whatever to tlie consx'jning public, the wholesaler reaping all the profit on the transaction. " That a small producing mill without a sales organization cannot under present conditions, intelligently do business unless through some association or other means that keeps him in touch with market conditions. In his orjinion, the Open Competition Plan has been of great benefit to the stall producing mills and 1 lias worked no hardship v/hatever on the consuming public. ” Mr. F. B. Daoclt, a small ndll owner, gave the following sworn state- ment : le received the sales report of the Or-en Competition Plan and found these reports of great use in keeping him informed as to the trend of the market, j-his information was of value to him in enabling him to gauge the worth of his lumber, ♦ * * + ♦ ^ *. infoiuiation contained in these sales reports was of special va,lue, for the reason that his firm travels no men and has no sales or- ganization, and unless ne had access to these sales reports he would have been ooliged to have obtained this information at considerable trouble and expense, or else ha/e depended entirely on the statements of buyers as to the market value of his produ-Ct. In that vay these sales rex^ortswere of x-^rh-ctical and financial Brief for the Appellants, American Cokurnn & L^'ornber Company vs. p.68. U. S. , Part 2, 102 1 value to him. ” In another sense the large producer profits perliaps just as much as the small producer through the operation of a system tliat ma;:c:es his small rival a more intelligent competitor, for the latter is then not so lihely to "spoil” the marhet, - at least so nms the argoment, - and in so far as price cutting is due to ignorance of the maricet and not to financial instability or other causes, it is probably valid. A small producer can do more d^Anage to the marlcet than the volume of his production would seem to give him the power to do because he can make qp.o- tations e-^iiivalent to many times the value of his production. Furthermore large prod'acers are learning- that little consolation is to be sought in the fact that competitors who quote inordinately low prices singly because they are not posted on market conditions, usually go bankrupt, for in nearly every case they are re- placed by another c rop of small, wealc, competitors, who will also "muddy the water. " The large produ-cer feels, then, that the only remedy for a situation of this kind, short of combination or consolidation is to educate the small com- 2 petitor. It might be inferred from the foregoing, that because of his facilities for gathering infonfiation, the large producer derives little direct benefit from t?.e operation of the ooen price association. It is tree that he may feel no need for price information because of reports receivedfromi salesmen, but he can leain 'Ibid, Part 2, p. 93. 2 . Journal of Commerce, Jan. 3, 1816. Mr. 3elt, Chief Accountant for the Federal Trade Conmiission once said, "The best pi*ico tonic I know of is an educated compe- titor." Address before the Hardwood Itoufacturers’ Association of the United States, Jan. 30, 1917. American Lvimberman, Feb. 3, 1917. 3. Many manufacturers of hardwood stated that they felt no need for sales reports because they employed salesmen who kept them in touch v/ith the market. See Eecord, Aaierican Cclnmn & Lumber Co. vs. U. 3. Vol. 3, p. 1508. iu:iB 4. 1 »• 9 V. yv ^ . •f iC ■ter r I ' t ^ "OC . - io X 1 ' ' X 0 3%1 • “ \ * , arir:g 1919, at least, members of this association placed more emphasis ^•Dickinson, C. C. , Eecerd, Vol. 3, o. 1?1Q; Static, W. Ik, Eecord, Vol. 2, p. 12S0. "^’Dulweber, B. E. , Eecord, Vol. 3, p. 1555. 'Z '■"GlernL, E. C. , Eecord, Vol. 3, p. 1552. ^‘Eecord, Vol. 2, p. 1064. 110 on the valiie of the s^ock reports than they did on sales reports. The reason for this v/as that in 1919, prices rose so fast that sales reports were not receiv- _ 1 ed in time to he of much value as a grdde to the trend of the market. The chief benefit of stock reports lay in the assistance they gave in determining what kinds of luiuher to manufacture and the grades and thicknesses. Ivir. H. S. Weiss testified as fellows: "I have fovmd this report of invaluable assistance to me in determining into what particular thisknesses and grades to ciannfacture our logs. This is a problem that is continually con- fronting us because o’ar profcct is not, as a rti.le, sold until it has been manu- factured and conditioned, which is possibly an average of six months after the material is sa’ved. I h*ave found that in the past, that in the absence of knon^ ledge of stocks in the hands of my competitors, that I would instruct our mill to saw a certain thickness, only to find later that the market carried a burden of these particular thicknesses, and it was with great difficulty that they could be marketed, whereas consumers were in great need of some other thicknesses thiat 2 we could have manufactured. ” Mr. M. B. Cooper testified, "that when the monthly report of stocks reached his deic, he invariably checked it over with a view of ascertaining as to wlat grades and thicknesses were piling up and what grades and thicloiesses were becoming scarce, and oftentimes he lias changed his sawing instructions to 3 the mill due to the information obtained through these stock reports. " It may be remarked in this connection tliat this regulation of output to conform vith the consumption demands as revealed by the stock report not only results in a benefit to the manufactiirer himself but also to the consumer of Itmaber, for it leads to the contiientration of prodtiction on those grades and ^’Eecord, Vol. 3, p. 1633. Weiss, II. B. , Eecord, Vol. 3, p. 1655. 3 . . Cooper, Ivl. B. , Eecord, Vol. 3, p. 1645. Ill thicl-niesses for vvhicli there is a heavy deniand., instead of the production of grades and thicknesses for which the deinand is light, thus preventing an undue increase of prices for such grades and thicknesses as are in demand and at the same time avoiding an undue depression of price of those grades which are net in demand. Other manufacturers have stressed the value of stock reports in de- termining whether to hold or sell stocks on hand. In writing of his opinion of the Open Competition Plan, ¥x. H. B. Sale said, "We h^ad previous to the United States entering the war, a customer who had talten our production in Qa.artered V/hite Oak strips bv.t since the war his business has so materially decreased that the amount of stock required' to meet his production has been very small. V/e are therefore hunting for a market for such strips. Of course we co*ald dispose of these to almost any manufacturer at the ordinary going price, bu.t have held them for approximately ten months. ?/e vTOuld have had to dispose of them at a loss or sold them at the going market price. We examdned the stock list carefully and fomd Qtd. ?/hite oak Strips in the hands of manrifacturers to be less than normal and therefore continued ccc.oting on inquiries the price which we had®t on them as the price at which \-;e could make a profit on these strips. This "Drice was in excess of the reported going price in the Open Competition Plan, bxit we were quite satisfied that before sufficient additional production could be put ucon the market 'that the price would come to approximately our price on the stock. This arrived today as evidenced by the duplicate of our shipuing order mailed 1 you. " Since the Jkierican I^rdwood blanufacturers’ Association did not issue regaxar production reports, there are no data available which would show how mem- oers might have used information pertaining to production. However there are data 1 . Sale, I-I. B., Becerd, Vol. 2, Exhlb. No. 1132. 112 to show in the case of other Imiber associations what has heen dons vdth these and other rei:crts at meetings, with a view of pointing o-nt to memhers the trend of niarlcet conditions. It has heen customary with most associations of mnufactur- ers to have a Liarket Conditions Ccm':''ittee or the Secretar:/ raaks a rep'ort based • on a comparison between statistics of stocks, production, orders, shipments, et cetera, which numbers might use as a guide to their prod'ixction policy. The following extract taken from the Secretary's report at the midsv.mmer session of the Horth.em Hemlock and Hardwood Ivlaiiufacturers' Association hell in July 1S12, gives a clear idea of the various advantages flowing from a consideration of the different kinds of trade statistics in relation to one another; at the same time it is typical: "last January there was 12 per cent more rnsold hemlock limnber on hand than on January 1, 1911.- due to the vei^’' heavy hemlock prodvction late last fall, while there was a slight decrease in hardwood stocks. Taken altogeth- er, the Jamar^r 1st (1912) reports showed an increase in hemlock and hardxvood stocks on hand of 10 per cent over Janvaigr 1st, 1911. The extraordinary move- ment of k-''mbsr in the last six nx>nth 9 of this year, together with cnl 3 ’’ a normal prodmcticn, have reversed these figiores, so that on Julg^ 1st there vn,s 4 per cent less unsold hemlock on hand than on Jv.ly 1st, last j;’ear, and 28 per cent less •'msold hardwood on hiand than a 3 /ear ago. Taking hardv/ocd and hemlock stocks together, sold and nnsold, tlie totals reported by 4d concerns was practically the same this year as last. "Turning to our cat and shipments reports, from an average of more than 70 firms during the last t^ 7 elve months, however, we find that during this period hemlock shipments h^ve exceeded the cat by 13 per cent and that hardwood shipments have gone be 3 rond prodaction by 7 per cent, iralrlng a total excess of shipments over cut since July 1, 1911, of 10 per cent. It is especially inter- 113 esting to note that stock reports show 45 per cent less No. 3 unsold hesalock on hand July 1st -this year than on July 1st, 1911. Moreover there has been mch moro effort on the parr of buyers to contract stocks aliead. TTnlle large blocks of heialock are seldom contracted, nearly three times as much hemlock v/as sold ahead as on the first of July, 1911. Moreover, at this time, 60 per cent of the total hardvvood stock on liand is sold, while a year ago only 50 per cent was sold ahead. More lumber was shipped by the Association members in T.iay than in any other month covered by our records, while the June reports show but a sli^t de- • crease from the higla maric set by the ?,^y shipments. A s^jmriing up of the reports by the same firms in the corresponding first six months of this year and last, indicates an increase in hemlock ci;-t of 11 per cent, and increase in hardwood ■ shipments of 41 percent, a decrease in hardwood cut of 13 per cent, aii increase in hardwood shipments of 50 per cent, making up to date this year a aeorease in total cut of 2 per cent, and an increase in total sliipments of 37 per cent over the corresponding period of 1911. There is no doubt that the total hardwood production in 1912 will be less than in 1911, and so far as can be determined the same will be true of the hemlock cut." DISADVANTAGES The disadvantages connected v/ith open price work may be conveniently grouped 'under the following heads: first, handicaps to txie installation of an open price system; second, negligence of members in tlae performance of obli^- tions; third, deficiencies in the reporting system. The two chief handicaps to the installation of open price associations 1 . American Lumberman, July 27, 1912. 2 . ' *A short account of the uses of reports of costs, purchases, labor, credits, et cetera is fo\nd in cbapter 5, pp. 92-95 . iJJll fo 114 rray "be attributed to a disinclination of business men to aff iliate themselves with such an association and to the obstacles offered by the nature of the in- dustry to be organized, blanufactu.rers be deterred from joining an or.cn price accociation for a number of reasons. A dee;, seated distrust and suspicion of his conroetitors may suffice to keep them away, or a rai scon cent lor. of the ciiarac- ter of the association, or the expense connected therevdth, or a foar of arcusing the hostility of customers; or of c-oming in contact with the long arm of the law. Sgealcing of the difficulty of installing an open price association, a pioneer in the open price movement says, "It has always proved exceedingly difficult to es- tablish, because sruspicion, jealousy, and doubt in tho minds of competitors must first be done away with. **♦* + ♦♦ number of cases the has been ^ . 1 tried and then dropped because of the r.arrov;minded attitu.de of rivals.” As previously intimated this tendency toward secretiveness has been particularly ncticeaole in the textile field. The explanation given has been that tills busi- ness depends for its success to an ■'onusual degree upon the individuality in the goods produced, cojupetltors oeing therefore reluctant to show comoetitors tlie product of their looms. Ml sconce ■■•t ion of the character of open price associations is tho rule ..ather than uhe exception. It is extremely diffictilt to convince a prospective member that the open price system is not a price fixing scheme. If he is aiixious to control prices he may become a member with that end in view. There are nearly always some members of open price associations who are constantly tr^/ing to use the association as a means of stifling competition, - attemxjting 1 . Gaunt, E. H. An Open Price Plan for V/oolens and Worsteds, Textile World ounial, A r. u, ISIS, p. 1709. Ja'.rnal of Co.-meroe, Lay 22, 1919. € k;-' 1 "' -i: . .• . .4^ •' . U -• 1 S^.y w X <1*4. r j» •• (“> ® ^ 0 ? ■ . ii.-: J ’ 0 . * 0 . Ji: M .'»i .’ "S-b '. I ■ ^'t,d i"jv". ' •■ -;•> ' ,•»■ ^ »• »-•« ^ w A :i .1 v:;rt w -i . ; :» a I j ^ j ! I — #• < ■>. • 4 <-' s»: J to oring a'Dout agraen^snts tliat will just avoid tbs Sberran Law restrictions and 1 still go-a^e profits rndnly. Undou'otsdly thsse aousers of the opsn price system are its vvorst enemies. Business men who aim to oe strictly law abiding,, olservii'^ as they do, the -mlawful activity of these lawbreakers, j-amn to the conclusion that all open price activity is sta:j.ped with the same illegal ch.aracter and they are not easily pers-.in.de d to join. This is parti c-olarly true if their exper- ience with price fixing plans has been unfortunate. One member of the An.erican Hardwood lian-afacturers’ Association expressed the feeling of this class of men when he wrote to the i^nager of Statistics as follows: ’'Oi;.r experience wdth various price fixing plans in the early days were humiliating and costly, and for that reason we stood off from this Opsn Coiipsti-. tion Plan for some time, but we finally went into it, the exact date -we do not 2 remember. ” The expense involved in belonging to an ojjen price association will prevent sorme business men from affiliating. The cost of rcnning such an associa- tion as estimated by Bab son’ s Statistical Organization is modest. They state that the cost of organization began in one case with a fee of $3000.00 for co'cn- sel, that the first expenses were rather large, but that $700.00 a month should cover all exp^enses. Of course this was v/ritten in 1915 when the price level was considerably lower than it nov/ (1921) is, and the figures were urobably 3 given for an association with a membership of not more than tv/enty-five. iJot- v/ithstanding these circoimstances, the pro rata expense cannot be considered -on- c5u-ly laeavy and u,r6bably is not a serious drawback to spread of the open price n • Journal of Commerce, Dec. 14, 1915. 2 . ITigh, Ti, H. , Becord, Aiueri can Col. d Lum. Co. vs. U. S. , 1127. 3. P-abson, B. W. , Bsports on Cooxjeration, C. C-3. Vol. 2, Exhib. ‘To. 116 iiiovement . 'Ihe fear of arousing the opposition of b-ayers is, in soBie cases, at least, a powerful deterrent to the spread of the cioveioent. In the textile industry, in particular, this opposition has assujred fonrldable proportions. In this field the opposition iias been inspired either by the knowledge on the part of buyers that open price n^ethods would prevent them from making further profits as a result of the ignorance of sellers, or it I:as been inspired by the feeling, fostered, first, by the s ecret methods pursiied by seme so-called open price associations, second, by the indiscreet tallr of certain members of these associations, that they v/ere being made the victims of v/hat amx'unted to a conspiracy to maintain or raise prices The follo'ving extract taken from an editorial vyhich appeared in the Journal of Comuerce, December 14, 1S16, pictures the sit-’oation as vieveed from the standpoint of the buyer wlac feels himself victimised: "Fnat has occurred in cer- tain trades is this: the mamifacturers have laid certain cards on the cable, but they are hiding every detail of the game from the buyers who are their customers. This is a violation of -the open price spirit and gives ju.stification for a sits- picion that things are not in accordance with tlie law. Statements to tiie effect that no violation of the lav/ is intendcdvill not convince buyers who feel that they are entitled to know most of the influences tlxit affect the value of the mer- charciise they want to buy. "Within a short time certain ma.Tafacturers who are in trade organi ca- tions h-ave done considerable boasting as to what they proi^osed to do to buyers because of ‘heir new allegiance to the principles of the open price movement. A doubt exists as to wl:ether these manufacturers really know v/l]at aii open price association car- do and ho-w easily their membership in such a body, taken in con- 1 Junction mth statements of the c’*na,racter indicated, can latid all hands in jail." X « Journal of Commerce, Dec. 14, 19 IS. ===== 117* The attitade taken oy ^he llauional Association of Pnrcliasing Assents to- Y/ard the open iDrice movement is indicated in tlis extract talcsn from a letter re- ceived by the wx’iter which follows: "The question came up indirectly in our last convention, when a proposal was made that we organize a bureau to report the orders placed and prices paid by cur members in various localities for specific corarcdltios. After irature dis- cussion aitd later consideration by the Sse c-.t ive Committee, it was decided that such a plan offered prospects of violation of the existing laws against 'onfair competition and the matter was therefore definitely dropped by our association. "I am reasonably confident that there are no associations of purcliasing agents engaging in any way in open price work. On the whole, the viewpoint of purchasing agents is opposed to s'och association activities. The real function of the open price association, asv/esee it, is to permit prodocers to clmirge I’or their comri.odities not on the basis of their production costs or real competition values, but on a basis of all tltat the market will stand. Naturally purchasing 1 agents cannot be expected to sympatliiss with this viewpoint." Tear of Government action is perhaps the most powerful deterrent to the spread of open price work. In tlois connection, I.ir. Belt, Chief Accountant of the Federal Trade Gooinission once said, "As a result of the conflict in the past between business men aiid the Government, many business men have become suspicious of cooperation and are led to think tint because some forms of cooperative effort liave oeen condemned the Govemmnont was opr-.osed to all forcis of cooperation, nif ort'onately as a result, some are rel^ictant about joining Iheir trade associa- tions for fear that they would be censured by the Government for meeting v/ith Boffey, L. F, Secretary, National Association of Purchasing Agents, Letter dated Feb. 11, 1321. 118 1 , 3 t I'.e i r CO ra": s t i t o r s . " A furtlxer deterrent is due to the waknese of the voluntary association. The indiscreet remrks of one or tv/o rr.em'bers inarj Involve the v;hcls association in <7 litigation. The nature of the industry .my be such as x; o mite it ozceedlngly diffi- cult to do open price work with any degree of success. There may he too many different articles or styles or grades; or the competitors my he too n’^uaerous and widely separated. Ivn. K. H. hernett, Secretary of the California U?holesale Grocers’ Association writes, "Tith ray vdiolesale distributive constituency open- ness of price infoxuatlon is impracticable, " by reason of "the great number and variety of articles handled, the nurcliase of fluctuating uossihillties and quality 4 differences." Members of the Pennsylvania Division of the National Association of Hosiery and Underwear Manufacturers once discussed the practicability of adopt- ing the open price system bu.t tlje project ms abandoned as sentiment vjas general that the great variety of styles and grades characteristic of the underv/ear indus- try wou.ld require too complicated a system to make it of any value to the members. The J\merican MarGivood Manufacturers' Association found the effectiveness of its ’,voru exceedingly impaired because of the great number of competitors in the liard- wcoi industry and because of the fact that tlxey were for the most part isolated from one another. The industry, in 1912, comprised between 12,000 aixd 15,000 1 . ^ ^ Belt, R, E., Address before the Hardwood Manufacturers’ Association of the United States, Amex-ican Lumbemm, Peb. 3, 1917. 2 . The attitude of governmental bodies is discussed in chapter 8, pp. 188-193. 5 . . . Tnis matter is discussed in chanter 4, pu. 50-53. 4. - / ’Letter dated Dec. 20, 1S2C. 5. Ei-monthly meeting of the Pennsylvania Undeiv;ear Lhin-'afacturers ' Dlvisicu of the national Association of Hosiery and Underwear I,.anufacturer8, Jan. 13, 1017. Textile Uox’ld Journal, Jan. 20, 1917, p. 35. ^ 'i ? \ ’ >i. -rr. ^ • : 'll -r‘.'sa*eiS*-- T. ■ r e 0 *:< : tA'' ‘r- cw Ov* . . O. . • ; ► i. i. f - . 2co:. . ' *-®c. :^. 1 «: Ic •&* A J > If ; : ■ii I f> rj 1 .• i > - f. '4 ' * w’'j • 0 •i 1 . . - , ^ r .ti ji jc . ■ .*■ . jt. 1 ' -J ■ •- ■ pi% .V* \ \n 119 inde-^ender.t -units. These -units -»vere scattered over practically the entire United States east of the Mississippi River and v/est of the Mississippi in the States of i.lissc'uri, Arkansas, LOt-Asiana and Texas. Effective cooperation between all 1 of these -units was well ni^ lir.p0 3sil-le. The national Bottle I.anr^act’arsrs* Association foiund it impracticable to adopt the open price sj’-steir- in its entiret 3 r for the reasons, as expressed by the secretary tliat, "The open price plan can only be snccessf-'illy operated -.mder certain conditions. These ccnditicns re^pudre a concparatively small membershi-D - a fairly large -unit of sale - and a -uniformitj’- of prod'ACt. In air case v/e have a rather large membership, there being about fifty si'bscribers to oiir special f-u.nd. T’nere are a great man^/ "me dinm and small sized sales so that the volume of b-iisiness to be recorded v.o-ald be verjr large; and finally we have a wide diver- sity of interest airnng the members. Some members are malting only one class, others are making three or four, while othjers malie all eleven classes. Eeca-use of these conditions we feel it would not be a practical plan to even consider the operation of the open price plan for the main association. " The nes^igence shown in the performance of obligations is of sufficient gravity to lead some perscns to believe that the vcli-ntary form of association rr w is deemed to failure on this score alone. This negligence is chiefly marked, first, bj' poor attendance at meetings; second, by extreme laxness in fri.mishi-iig 1 . Gadd, E. R. , Record, American Colrmn and L'amber Com"an. 3 »-, vs. U. ?. Vcl. 2, p. 1008 . 2. Stevenson, C. R. The Eliruination of Unfair Competion , Address delivered before the Fational ottle Mom.-ifacturers’ Association, lay 1, 1920. rr • -Ir. Aiu.strcng of the Am\strong Bureau of Related Industries voices this opinion. ’■T : i 12C the rervv'.ired reports to the secretary. laxness in furnishing reports may he due either to carelessness, indigence, or a deliberate resolve to withhold certain kinds of info rrrat ion. One cannot read the accoirnts given in trade Jcurrals of open price meetings without noticing that secretaries are constantly hewailing the failttre of meirhers to attend meetings. Of the 320 members whc helcnged to the ihrerican Kardv.'ood LlaCTi’acturers’ Association, 120 never attended a meeting and 50 attend- 1 ed h*::t one meeting. The Arrr.strong Sureau of Related Industries has sor^ht to insure better attendance at meetings hy imposing fines on those who absent them- selves or come tardy. Secretaries also are constantly?" admonishing members to be more prompt and regn.lar in submitting reports. In this connection the secretary of the ITorthem Hemlock and Hardwood llan'ji’acturers’ Association writes, ”7/e now have about ninety members, and of these, abo\*t fifty are reporting their sales and these are the only ones which receive the information in the Sales 3r.lletin. It is open to any of the others whenever they desire to report their sales. If this requirement were not mde, it would be very difficult to get any of the 2 firms to m*ake the reports." The secretary of the California Thite & Sugar Pine I.'IanT'ifactum'ers' Association v/rites, "Vfe have never yet had fifty per cent of our members submi statistics effective the same date and those received are never corrmlete. Pith regard to prices, w© liave requested members to send in to this office copies of their orders to be tabulated and returned to them; at. weekly intervals. At the 1 . Argum^ent of L. C. Boyle in the Sapreme Court of the United States, Amierican Column & Lumber Co. vs. U. S. c. 34. 2 . Swan, 0. T. , Letter dated Jan. 4, 1921. 121 1 present time a'ocnit five ont of forty-eight are doing this." In one of their meetings, the secretary of the West Coast L-> 3 inber l/Ianiifacfarers’ Association said, "It is to he regretted thmit we cannot get all the mills to report within reasonable time. ****** of the reports for as far hack as October 1912 are not in j’-et, and ?;e are still working on them. 2 We ’nave sent as high as six reqy.ests vAthx)nt receiving any reply." I'lr. \lm, J. liathev/s, counsel for several of the Eddy associations ad- mitted 'oefcre the Lockwood CoTi5''^.ittee that memhers did not always make a renort *7 to the secretary of corrected hide. There is hardly an open price constitution, coming v/ithin the notice of the writer, th^t does not tal:e cognizance of this negligence in reporting, hy providing t’nat memhers who do not frdnish informa- tion Bh.all receive none. In addition memhers of the Zhit Goods Lhnufactr.rers are required to sign a statement reading as follows: "I hereby agree that I i^lll he responsible either hy personal attention or delegation to some partic--lar person in my employ to see that any and all quotations, prices, rebates, or any other condition covering quotation or sales vdiich differ in any way from prices, con- ditions, etc. , on file at any tim,e with the Association are fom'/arded to the office of our Association vdthin twenty-four hours from the time such changes are made. I further agree that this agreement is binding as longr as mj’’ mill is a 4^ 5 Eegnlar Ivlemher of the Knit Goods ^manufacturers of Ar.erica. " 1 . Smith, C. Stowell, Letter, dated Dec. 3, 1920. Ihis report was made in 1913 at the :>!^rch meeting. See American Lumberman, April 5, 1S13. 3. Testimony of Win. J. llattiews, Record, New York Joint Legislative Committee on Housing, Dec. 29, 1920, p. 4635. 4. Amsndr.ent to Constitution, Textile World Journal, T.!^y 17, 1319. 5. Eor other instances of negligence in reporting see, American Lumberman, Eeb. 10, 1917, Nar. 29, 1913, Nov. 2, 1912. ' A ^ f ' ■ rn'* - 4 j\ * • 1 ^ . • , * * 4 r, '• ^ -. ? 1 r2>. V* < 122 In some cjo-arters, at least, members a_3pear to be intentionally de- ceiving other members about the nature of their transactions. This is done by omiting from their reports any lo;v sales or exceptiorjil iiscoi;nts tliat may have been made. This abuse is of a most serious character because it tends to under- mine the spirit of confidence and trust that nmst be developed to a considerable degree before much progress in open price work can be made. One open price secretary informed the writer that dishonesty in reporting is very prevalent, and is to be ascribed, he thought, to the fact that members are ashamed to turn in reports of low sales. In the textile industry complaints frequently arise that members do not report discounts that have been made. One imrcortant textile manufacturer is quoted as s&ying, "I do not want my fabrics filed ?/ith this Association. It might ce different if ;’’ou could get the whole truth from all cormetitors, bict do you thinlc that sellers a re going to tell the five per cent 'inside' they are giving John Jones or the ten per cent that Tom Smith gets? To be sure they will report the open market price, but. it is just these private terms that make conmetition so hard in the marketing of wool goods, aiid they will oe jusu as much of a factor whether there is an open r^rice association or not . " In one of the meetings of the I.^ichigan Hardwood Ifeinufacturers' Associ- ation the Secretary gave vent to the following vigorous language; *'In this connection it is -vvell to state that certain members of the Comnlttee have know- ledge of sales made by a few members at low prices that have not been reported to the secretary. Wo one is obliged to get the list prices, but everyone lias a moral obli.gation to report all sales. There is absolutely no other accurate way 1 . Textile World Journal, Aug. 12, 19ie, p.20. 123 to determine the market conditions, and it is a distressing com- entary on the loyalty of some of our members to say that this comrrjittee mast "gumshce'* * around the trade for x^rice-sale irifcrmation. Any meirher sacrificing stock does him- self and the association less injury ' 03 ^ franl^ly acknowledging the transaction than he does by ccvering it up. Aii 3 ^ member v/ho -persistently covers up such transactions may justly be sn^^ected of tr 3 ung to take advantage of other mem- bers who are not only trying to get a fair price for their goods but who also, when necessity constrains them to- a sacrifice, rmiloe aieport of it to the Associa- tion, thereby putting all members in a position to know the real conditions. Secrecy will ultimately reflect more real inj^ery unon the culprit than ucon his 1 associates whom he 1 -as misled by his silence.' At the time when, rath the help of lb:. Eddy, the old Yellow Pine Asso- ciation was being reorganized into vshat later became the Southern Pine Associa- tion, it was brought owt in the presence of !.Ir. Eddy that under the old form of association the practice had oeen to send to the secretary copies of all or- ■lers, but tnat very soon it developed that only a few of the large operators O sSiit j.n this information, and that they reported only the crea-ii of their orders. Cogi-iizaiice of this abuse is talcen in some constitutions. One consti- tution, for example, provides that miembors who file misleading information ;vill .3 be dropped from membership. Another means often resorted to in order to en- courage honesty in reporting is to not show figixres of individ-oals in the com- piled reports issued from the secretary's office. The reporting system is in many instances deficient because reports American lumberman, Oct. 23, 1915. O • Ibid, Pec. 20. 1913. 3. E 3 /-iaws, Society of I/IanvJ'acturing Conf ecti oners. Sec. S. 124 are eitiier iiiaccurate, or obsolete or the Inforrnation contained therein Is not comparable. Some secretaries have frankly admitted to the writer tliat mem- bers are not as caref^-iJL abont siibroittlng acc-ca*ate reports as they shonld be. Oftentimes the fault is due, not to carelessness but to an inadquate system of account keeping which malr.es it nearly impossible to sr’.bmit anything more than mere estimates. If the industry is such that -//ids and sudden fluctuations occur in the price of the product, it is fcrond difficult, if not impossible, to sales reports in the hands of members in time to be of any value in gau.ging the trend of the market. This is particularly true if the membership is large and wide- spread, as\’©,s the case with the American EardxTCCd IvJanufactujrers' Associa'cion. decause of the vast number of reports of sales, to be arranged and compiled, the IJanager of Statistics found it impossible to mail reports to members oftsner than once a week. The reports came out too infrequently to be of use as a guide in (quoting prices. This v;as particularly true in the latter part of 1912 and the early part of 1920 when prices for l;umber rose almost daily. Considerable testimony was given to show the obsolete character of these sales reports. A few of the more representative statements are as follows: Kr. J. T. Holloway testified, "As to the ^les Report, affiant says that under normal conditions this data v/cuLd be of value in that it Vi/ould give a mill operator an understanding of the market tendency. Hbr/ever, lunder the abnormal conditions that have existed for the last four or five months, the Sales Reports are practically of little value, because v 7 hen thej/" reach the mem- bers they are from ten days to two weeks old and the date is such -cast history 1 that it is of no practical worth. 1 . Record, Ainerican Column & L-omber Co. vs. U. S. , Vol . 3, p. 1551. This affidavit was filed liar. 9, 1920. 125 I'lr. S. A. 'Jilllaais said, "Affiant states that he has alv/ays carefiilly read the sales reports issued "by the Qx^en Competion Plan, hut he has fo^ond that they report sales as of ten days to t?;o weeks past, and that they do not reflect the present condition of the rrarket at the time of reading, and conseqixently the benefit derived was exceedingly limited. It is the opinion of affiant tliat any l-jinher producer using the prices reported in these sales reports as a guide would have in the majority of cases in the past few months at least have sold T a. his lumber for $5.00 to $10.00 per thousand under the market." G. W. likerts testified, "In reference to the sales reports affiaiit desires to state that he considers tlxat the sales data exhibited hy this sales report is from one to t^vo weeks behind the current market, but, affiant states that he does consider the reports of value as indicating the trend of market conditions, but that, in so far as being an accurate guide as to what today’s prices are, they are of very little assistance, and this as stated on account of the rapid changes due to the enormous demand and the lade of hardwood 2 supplies throughout the country. In many cases it is fo’cnd extreriely difficult to get products so standardized as to malee reports of sales coitparable ; hence their effectiveness is very materially diminished. Sxich was the case with reports of sales issued by the American Hardwood iv'^iufacturers’ Association. The whole lumber industry has made tremendous strides in the standardization of grades yet the specifica- tions laid down are not so severe but that there may be found differences in the (jaality of lumber within each grade. These differences are enough to detract X . roid, Vol. 3, p. 1639. Affidavit filed liar. S, 1920. ^ « Ibid, Vol. 3, p. 1633. Affidavit filed Liar. 9, 1920; see also Vol. 3, pp. 1530 1553, 1539. * jUiLn ikSMHIl 126 consideraljly from the value of sales reports as is indicated "by the f.ollovdng testimony: I.Ir. H. G. Garrett said that, ’’the difficulty with reported prices lies in the lack of tuniforriiity of grade in hardwood l^uiriber. As a concrete exacrple V affiant states that in the grades of lumber, he has freqi;.ently fo-jnd it cheaper to pay some raan-ufactrerers from $10.00 to $15.00 a thousand more for the so-called same grade than others 7/hose lumber, though of the same alleged grade, is really 1 of inferior q-nality. ” ' One firm wrote to the Tanager of Statistics as follows: ”’fe are young in the hardwood game, but find more or less manipulation of grades, and this re- duces the value of the price information, as a mill soiling #1 Oak at $26.00 at the mill may act-^mlly be receiving more money for his stock than some other mill, 2 v?ho has accepted an order for a National grade at $28.00.” iTne list of disadvantages here reviewed is s^afficiently formidable to malie it appear tlmt the fate of onen erice associations in some industries, at 3 •least, is somewhat 'uncertain. Probably all of the disadvantages na:r.sd are not apjplicable to ail open nrlce associations. Ilndci/btedly the larger associations find themselves more Imrassed in this respect than do the smaller ones. In the opinion of the writer the most serious v/eaknesa of open price work as it is con- dactod is the exhibition cf a lack of good faith among members, displaying itself chiefly in an attempt to deceive each other by filing misleading information. This attitude is undoubtedly a heritage of the old cempetitive regime. Irr.b\’ed as they have been v/ith an antagonistic sr'irit toward one another, venting itself in falseness and trickery, it v/ould be a matter cf s".irrrise if this feeling shorkd 1 . Pecord, Yol. 3, p, 1722. 2 . rilliams, S. A., Pvecord, Yol. 2, Exliib. No. 1154. 3. The uncertainties attendant upon the doubtful legality of open price work are reser/ed for later discussion. See charter 8,. pp. 161-175. 127 have died ovt in the short s-pace of the nine years in ’vhich open price work has "been in onlstence.^ It is thought that as inerhoers oecctne troly educated to the advantages accruing from open price 'Aorh and con'.e to realize that this work cannot thrive in the presence of falseness, deceit and laxness of perfcrnance of duties, they vdll drop the practices which nov/ seem consequential enough to threaten the very existence of the open price institution. The OTjen price movement is still too rrrcch in its infancy to warrant one in casing predictions of its success or failure on any data so far accromulated. 1 . This statement is made in 1921. i.l e*u^*»lft m?ff 1& f^a-Ca *!sr:J '-fri^ >4t^ ^aiS ^>:cir - art « ■ • ■ i ’'4^ ..w* ««i5d^ *Tw£r;ac.;5& J«a^' ai rl lri[:o*il *•-!'. -i ia a^,*3U;^ J^at ^ ,i«*ricl£l Xo y^&at«c a.-f^ rxij'oYi'siij^ .-fJ milix'irif : 'iw x»S/ £SJ:>o ttl Sffs%azr<^i^ adi .'-Olfa^i*;^! #r ~iz-rm^lx» '■- ' ' i ’ir' t^.o^c a i*i Xo ■•. t-.>i:oitoi ^ ,'^icxia iti oi' v^Mctlri t'tiKiacpt oc* - - .(r XSa ‘ - H . - Y»X 06 dWsX' .;ser tr} fhM-i Vt 128 CH.^TEH VII CPSII PRICE ACTIVITY IN THE liJl'IBER lEPJSTHY The wealth of data disclosed hy recent ■G-ovemmont Investigations into the l-Limoer industry’- talcen together v/ith the vast amount of evidence collected in the case of the United States vs. the im-.erican Hardwood llannlacturers’ Association renders it possidLe to get a view of the operation of the open price system in this industry such as no other industiY?- has yet afforded. 1 . In another connection it has “been pointed cut that open price v;ork in the luihber industry is almost entirely limited to associations of manufac- turers. In a survey made hy the American Limibernan in 1917 it was found that twenty-seven associations of manufacturers were in existence at that time. The highest membership of any one of these orgsnizatlcns reporting v;as 892; the lowest, ten. There was an average percentage of fifty-eight members to one hundred eligibles. The average age of the associations \me 8.85 years. Twenty- tvv'o associations were organized previous to 1917. Of the twent j’^seven associations two were orpranised in 1889, one in 1891, one in 1S97, but all the 2 . others are less than, twenty years old and seventeen less than ten. A few of the more unimportant associations appear not to have operat- ed open price sj’’stems, but the leading ones have done so. The recent investi- gation of the Federal Trade Commission disclosed that all of the principal regional associations belonging to the National Lumber Ifenufacturers’ Associa- tion have been doing open price v/ork. These are, (1) the Nest Coast lumbermen’s Association (nanufacturers of Douglas fir lumber) ; (S) TTestem Pine I.hnufacturers’ Association (manufactu- 3ee Chapter 1, "Prevalenca of Open Price Associations", p. 3. 2 . American lur'csrcan, June S, 1917, p. -iC. Tirn rers of wasterr* wliite and yellow Hortliem Henilocl?- and Hardv/ood manu- facturers’ Association (Lianufact’orers of hemlock and hard woods in V'isconsin and -upner Michigan) ; (4) ?/lchigan HardTOod Itoj-facturers’ Association (manufac- turers of hemlock and hard woods in the lower peninsula of Michigan) ; (6) North- ern Pine L!^ufact'!U*ers’ Association (manufactvirers of Minnesota northern pine) ; (6) North Carolina Pine Association (manufacturers of North Carolina pine); (7) Georgia- Florida Saw Mill Association (manufacturers of short leaf yellow pine lum'oer) ; (8) Southern Cypress Association (man^ufacturers of cypress lumoer) ; (G) California Sugar and YJhite Pine Manufacturers' Association (rrian-ofactvrers of sugar and v/hite pine luiiiber) ; (10) Southern Pine Association (manufacturers 1 . of yellow pine lumber) . The only important association of manufacturers doing ouen -^Tice v;ork that is not affiliated vdth the national organization is the Aimerican 'HardwDod Manufacturers’ Association. The sole connection that the national association has had vdth the open price system lias been to receive statistics of various kinds from the regional associations, TJarticularly those of production, these oeing sumn'arized and the s-ommaries distributed to the lumber manufacturers throu^ the regional 2 . associations. The Am^erican Eardwood Manufacturers’ Association offers the only instance where an association has been organized to do open price work. The other lumber associations 1-ave installed the work as a departmental activity. ITo doubt the followers of Mr. Eddy would assert, and with xcuch trutn, that the lumber associations ai*e not true to the standard tjrpe of open x^fic® association, because most of them have attenm>ted to To more than merely inform members about p j'/t » .r ' - » ,f !; .*-«l . t- :o *. t ■ ‘"‘-red 133 The o"bjects, as shov'/n hi the section of the constitr.tlcn added in 1905, \ 7 ere ”tc secnre a full tinder standing cf the conditions snrrovnding the Imaber Eoarhet in the territory covered hy this association; to adopt tmlform grades for the inspection of Ittviber; to prorxte -;;!nifor:n customs and usages among manufactu- rers of lumber; to procure and fitrnish to these members such information as may tend to protect them against unhusinesslike methods of those with whom they deal, and sv.ch other information as may be foroid for the benefit of members; and to propose and carry out st'Ch other measures as tiaj'’ be deemed for the welfare and in the interest of manufacturers of lumber who shall bo members of the assoc- 1 . iation. ” This association v/as one of the r^ioneers in classifying lumber into uniform grades and sizes. By a system of rigid inspection the association was able to enforce aroong iuanufacturers of yellow pine its rules pertaining to grades, sizes and veights. bhat is more important f rom t he point of view of open price ’.TOrk is that these inspectors, employed hj the association, kept the central office infonned as to the actual arrouiit of yellow pine in stock among miembers. In addition each of the members furnished the central office vdth re- ports of stock, lumber manufactured axxd shipments made. Thus the secretary knev/ the amount of lumber being manufactured, by v.'hom, the amount being sold, by whom, and the amount of stock remaining in the hands of each respective mam^“ facturer. This information was disseminated from time to time among the member- 2 . ship by mail or at meetings. The feature of the association’ s- work which probablj’- is of most inter- est to the student of open price system.s is its price activity. Here is found Eeport of the Conmlssioner of t he Coairt, State vs. Arkansas Lumber Co. et al., 15S S.W. , p. 152. o Ibid. xj. 154. ■ V -s> . i-' It ‘ao? ^ o^L- ■ -• .1 i .It ned^U •tn i - -A’. . . hA f. VC 44 # f f. ■?r^. ‘ti.v » V- i ' i ■ ' « ' > r. ,' I • ^4 ^ \ 1 . U - ■/ 134 wliat is vrido-ubtedly, aaaon^ I'uxnbcr associations, tbe earliest instance of the is- snance of orice lists. From its organization in 1890 the association issued 1 . price lists to menibers, and to the trade. They were published in hoohlet forr. to 1905, and subsequently as a narket report. The work of preparing the list was done oy a coirrdttee until 1906, when it was turned over to the secretary. In order to aid him in getting out the pice list, members were requested to submit, occasion.ally, reports of sales. Another puitpose in calling for these rep.or-cs was to determine if members were observing the association price list. The_pro- cedure followed was for the secretary to mail to each member a sheet, v/hich was a copy of the price list in force, v/ith a blank column at the right of the column of prices quoted. The correspondent in ansu/ering, if selling or offering at the figures contained in the Tjrice list, would malts no change upon the sheet. If there were items which he had sold that v;ere lower than the list, he would insert the prices at which he Itad sold or was offering in the space in the blank column 2 • opposite the item; if higher tlian the price list, the san'O method was en^jloyed. ^ith this information as a basis, the secretary would issue his price list or ^ • discount sheet. The new prices na::.ed were us^^ally ’'boosting" prices. V/itnesses for the State testified that v.lth the iss'jance of a carket reuort, the dealers 4. had to pay the prices named therein. However members of the association did not all abide by the prices listed. Those who were not financially strong felt impelled to move their stocks quickly by cutting below the list in order to get ready cash with which to meet obligations. 1 . American Lumberman, June 22, 1912. 2 . report of the Coirmissicner of the Court, State vs. Arkansas Lumber Co. et al., 159 S.W. p. 156; also American Lumberman, J'one 20, 1912. 3. Heport of the Commissioner of the Court, 159. 4. Ibid. p. 159. •Wfe % • o: : ^ - --■ .V- II J • ;-«c - ,-rc ' ^ .. ; i J ■■' - - ' -i-r ^2 : - • 'if ] ' ’'■" ' 'ii \ • ^ :. .J; 1 • , '"Si] .-xv:«t, ,_■ r: ,.. _-i .. • *r.\, 4i- i^njL , 1 ^ * M !■ V ... i .5* tSi 2 “I -'rC- .; 135 1 The'jaart fo'jiid uienibers of the Yellow Pine Association guilt/ not only of fixing prices to he charged for yellow pine luiuoer, but it fouTid theca guilty of 1 . the curtailuient of output by agreement and concerted action. The reports of urod’oct ion, sliipments, and stocks were a ready instraiiaent witn wnicn to conscrt” na.te this conspiracy to curtail production. Concerted action v/as secured at meetings. In 1904 a resolution was passed to the effect that each member sho^Lld curtail his output thirty- three arid one third per cent for a period of ninety 2 . days. A large ncmber acted in accor'dance vhth che resalution. The -monthly re- ports of cut, shipmecits, and stocks received by the secretary were used as a check in detenrlning how well members wore co'nplying with the resolution. After the first period liad elapsed, a second period of curtailmant of ninety days was 2 . recommended with like res-'ults. A 3 late as 1912, three or four years after suit load beeai brought against members of the lellov/ Pine Association, they continued to exhort each other to cut down production and 'ooost prices. The cnaracter of these so-called "experience” meetings is prett'cy clearly shoviin by the f ollowing extracts from their round robin discrussiont "Thirds are looking fine for a good year* a business if we do not get in a hurry for crar golden eggs and kill the goose crnrselves. I cai"^ say as a general rule for iiy Tsjcas brethren in the Itimber business tl.at t hey are not tak- ing that step, fbr the last 60 days I have interviewed every travelling roan in the -machi-nery and supply lines and every luifcermai'i coming into the office, and 1 . 3 . Suit was beg^jn in 1908; final judgment was rendered in 1914. Beport of the Commissioner of the Court, State vs. Arl-cansas Lumber Co. et al. , 169 S.T/. p. 150. Ibid. p. ISO. ( t i 136 up to tlie prasout tii.ie I ha.vo not found tX single instanca of anyoody increasing bis prodaction. If that policy is followed I look for a better year than even 1 . that famous year 1907. l!hr> F. G-. Dickimn said, "Mq closed orders day before yesterday for ex- port which v’dll run us to Septeirber aaid we are not going to nm nights or over- 2 . time to miake tl^at up. " i.Ir. S. K. Fullerton said, ’’Lly experience is much the saiiiO as others who 'nave ^ooken, I think the tide has set onward and upv;ard and that prices of lumber will steadily advance. . . . After hearing the talks here I thinuc I will go home ana get ovtX sales manager to put up prices about $1.00 a thousand. I do not seevhat is tiis use of realizing that this situa.tion is on us unless we caii take some advantage of it. I see my friend Johnson sitting here and I ex- pect he will put his urice about $1.50 in order tjo save some of it for a 3 .^ 'nigher xorice later. In handing dov.'ii his decision, the judge draw a line ox distinction ce- tween proper ai.d im'^roper price activities and incidenta3.1y passeu judgmei.u in favor of open price activity as conceived 'oy Oxt. Eddy and his followers. This is the only r*ullng tliat iias yet 'oeen made 'oy any Sj,ate court oearing directly on the legality of exchax.ging infonriation about past tra-isactioiis. In giving his opinion he said in part, " A price current may be issue under t'ne lllssouri Aiiti-trust laws, but the list or comm-ilation ought either to be comiplled and promulgated by an indifferent or wholly disinterested person, or if corfaplled and promlgated by an interested person, it ought to be honestly and fairly compiled; it ou^ht fairly wO represent current pi’icas as 'cased upon 1 J- • _ ^eech of Ell Wiener at r*? in open price activity. See c-xiaoter I. nn. 4-5. ^ 138 intense. Earljr irx 1920 its riieirbersldLp corcpriued 3o3 liaxvafactv.rei’s, who o^.oratQd approxinately 455 oat of aii a_.-proxi:oax;e total of 9,624 udlls engaged in i*ardv;ood uanafact'.'-.re in the United States, and cacir oatpat was aboat thirty-three a;id 1 . one third per cent of "Dhe total prodaction in the United States. This association came into existence Janiiary 1, 1919, as a result of the an'a,lga.ration of bu^o associations of hiardv/ood cianafactarers, the Hardwood L^iafactarers’ Association of the United States, with headquarters in Clnclrciati, organised in 1902, which orev; its membership in the rtaln from the eastern part of the United States; and the Ane dean Hardwood Llanafactarers’ Association, with headquarters at’ Ivhmphis, organized in 1917, as a consolidation of two smaller groups, which drew' its i;*6inbership almost entirely frcmi the southern part of tihe United States. The f.vo smaller groups were the Qira Lumber Lianufact'orers’ Associ- ation, orgaixizsd in. 1914, and uhe American Oax I.^ufaCb'Ui’ers’ Association, orga..!- ized in 1916. Each of these swa-l pt'oups did open price Vvork from dicir inception. The open j-.rice plan opei’ated by the American. liardwood idmcfaciurers’ Association since Jai-uary 1, 1919, was that adopted by the American HardiTOod liinui’acturers’ /-r w t Associatioi* of die United States, I, Arch 1, 1917. Tlie reason for the amaigmA- tion was tlAt these uvo groups, to wit, the hard,700d Liaiiufacturera’ Association of the United States and the Aicerican Hardwood lAnuiac v'urers’ Association, had an inberudngled membership, a.id were doing more or less the same cixaracter or work. It was thought t’-iat by avoiding duplication of .vork much expense could be saved JL the njecHoers. ihaerican Luu.be rmian, larch 15, 1920. An account of t lie open price work done by the Gum lumber lanufacVurers’ Associ- ation may be found in the American Luxaberman, lay 23, 1914. For accounws of the organization a.xd operation of the America-i Oax lanufacturers’ Association, sec Auarica:'. L-umbeiuaii, iTov. 14, 1915 and Jan. 27, 1917. Siark, II. V/., liecord, AL.erican Col. and Lumber 'Co. vs. U. S. Vol. 2, p. 1249. C-add, F. H. , las cord, Vol ' > !■' . 1100 . I • ■* •AfUJI Hl.J-JB \ t -linj : > - J. ♦ • V “ — ' V u t a C-" - r «• L » r ^ r 4 ^ Lh r^n . t t w •y . • % U.' f Z-Ttf » f ♦ ' ( ( . / 139 The objects and puipoaes of the American Hardwood ^feui-ufacturers' Assoo- lation, as expressed in its constitution, are ” to secure a full understanding of conditions surrounding the Hardwood Industry; to adopt such measures as will pro- vide for uniform standards and improved methods of manufacturing and marketing Hardwood Forest Products; to acquire, preserve and disseminate information in con- nection therewith; and to generally promote the interests and welfare of Hardwood 1 . manufacturers. Membership is limited to manufacturers of hardwood forest piroducts. Each member is entitled to one vote, and this vote must be cast in person or by an authorized representative of the firm; proxies are not permitted. A majority vote of the Board of Directors is sufficient to elect an applicant to membership. The Board of Directors has the power to expel any member for cause, by a majority vote. I^on being elected into membership, members must pay an initiation fee of $26.00. Dues are gradmted according to the volume of production The rate of dues are fixed by the Board of Directors and are assessed annually by a Com- mittee on Assessments. They are payable in monthly installments, and any member failing to pay any Installment within thirty days after it is due, is subject to 2 . suspension. The officers of the association consist of the President, First and Second Vice-presidents, Treasurer, Secretary-Ivlanager and twenty^one trustees. The President, Vice-Presidents and Treasurer are elected annually by the member- ship; the trustees, every third year. The Secretary- Manager is appointed and has his salary fixed by the Board of Directors. The latter consist of the elective officers and trustees. The Executive Committee is made up of the President and six of the directors. The latter are appointed by the President at the annual 1. Constitution, Art. 2, Becord, Vol. 2, p. 1293. 2. Constitution, Art. 3, Be cord, Vol. 2, p. 1293. r-.'S' •X . c . . ■ , .. !■ j •;■ i- Bjor.; ;'o tuV -■■ -* ' ■■ ■■ '' 'csi ni ir., “ ” '' •■ « '■ rX 'zi.u.ij i. •:• i * ' - • . L* ^ ' ■. ^ ^ V* - ’= ^wVv\?CLi^* i,‘Yju> -i- •’ {? j U- -1 JhSXA t-'?': Ovi U.'‘r : ;. .n C •..•!: 4 l^i:,'v i>,t ik 4 i J / - 'i.. i. '.^ c v’ 5 - ;.’•>■:, >.• S, ■ . .l:o 6 « i . .> 1 : ■: 1 1 , ^Vn ^ r ■-■ i., -U'.i: Of L&jiu. ;; I . i.„: ^ '. ’V 0 r~ 'nT.. * T«,: .V p r 1. - A ^5 •• iiL-? ■JOi’^WiWl' ‘ ''v ,r. ■• ,'I 0 or '. T i 7 :n.' -, ' ... I" ... . , ^ J ' 1 ■«c, . ; : i: .i'J’t.v .. i «tri3.*i':i ~j ! ■.' .. .■ \v -;C ioi ■ '.:‘Cv >r u’ ^ a. " : "M.-iia *} U-.:. 4 * ■■ « J ' W <• 2 f'.‘ ‘ '•■ :.l ’. i ••)»•: f*f. '.yr: »:' _ ,v~ ;;i if T ’'O:^ .' .' | ■ ' I. 'i . ,' i ■ •*» M, ': ..• :A.fjr •: ■ ..; -.- ■„'. Jit." .' . i; -TA r-.? \xri:. y-:.r i l.i: .ylu.i', m'vsi^A r' * . . . . : ■vs. 14 , *. , I . I-SI. -i.'. C': '.' , '■• ■ ?i - :';3 ■-* ‘■ 1 ' Y.r In^Ltdr. .' 'i ■ 1 ■■’r -.■•i' -tjiV , :-i'{ ew? -■-:£ fti '-**■' .'iy.:'Vi- yy - 'i j ij' vJj;: c*:. ,y--T .. : c ,„-i ii’' • eu!(tf x'. ■ tl '.■:./ :3 , '..v 1 s. :• J f tirrirtC ■ J ' «. ' 4 /Oa -ai' . r*: ■;'i.''.:fef:j v.^ I.. ,- ^riVi.' coi ■ i\ J ?7<5 ariJ "io ‘ ; .1 ' v : ; ' oi. *:.• U-. .., . j sJ ’:. a •:!/:?> ::r io \*;.ri' 'i i . ■.tii,'" ; «'R CJ'. 1 i-.'J. 'v- c-'‘^ "i' i i .r.^i ’t::} r r.i> :-J ■ : ■ .' r r ;• i :.; tcj .’. *■ :■ r toctfii' -a. . 1 * Id».loQ •<[ . ■ -f. o^i .•■■ - ifih:.-., ..I’-! r .-.i I'-rav .i'? .;TCi: .■ Ioobb.' “i (y:j[ , . ■■ ■:. . " -r‘ t*«i VT ' '■/.’Tf J... i,.:;' 1... t.fC/3^.'' -•^arw '--n'l*-. fvr-'v v't' .r* • .* r.'Lv ‘j ...t'i'fr ' .'la j 'Lw ,X'!>a i:i'i b.:v.*(£'’ Jr'^- •■■.•’: rr* *.. ,'/'.v jj •• f\Q a r p .lj| • a:'.' .■'* ' : iLiu P./ -'ll t.a ,ioL ■ •jxr:::'' " t -'zJ‘* ‘ ■ 1 ..i • r- u'iSiu. !,*-• .:'i' c < :■ 1 ' .jjo: i.l v 'V '• ■• . .’ . ■ I c. *, ^ ■ --v. 4 i .■^_ ■■ ‘ '‘■ji.T^i ■*' ■ rt-'wir, . j- < ' * , u . vo.c^, ': ■ ,j-a 09 i ..OJ^y “ .-..''A;- .ii,v7;37' Xi** Jt-irr J J >W 71 «», • 4 ^» , •vr.iM ■ j si- OCT oc tir j if ".Tirpw. C'i - T ViO»-’u{ ,t ;; • 'i .v;, ,■-, ”..u, xl« j J aji. £j.o lit lirtr ' i"w'CK. :':’* 5 acri si : ,n':‘^«a«r v sr i " ^-: .V,,' ,- - -V7> ,6 . lA t ' £Ji jiJT'sV - - ,.' "rO': 141 Arinml and monthly meetings are held, and special meetings may he called oy the President or hy a majority of the Board of Directors. At the annual meet- 1 . ings officers are elected for the ensuing year. In addition it is customary for the president to review in a general way, and the secretary more in detail, the work accon^plished hy the association during the year. The monthly meetings have been held hy groups in the various regions of production. These group meet- ings have been held at Cincinnati, Ohio; Menphis, Tennessee; New Orleans, Louisi- ana; and Little Bock, Arkansas. They have been held at ■^ese points as a con- venience to the members in attending. In order to have the discussion at these meetings proceed in an orderly and systematic manner, the Manager of Statistics was in the habit of mailing to each member, a few days in advance of t he date of the meeting, a questionnaire containing a request for information bearing on 2 . market conditions as related to the hardwood industry. In the light of the re- plies received to the questions, members present at meetings would discuss the various subjects developed by the answers. The minutes disclose that these dis- cussions were free and open. Outsiders, including corqpetitors and buyers, freely 3. participated in them. At practically every group meeting manufacturers and other people not members of the Open Conroetition Plan were present. % If one were to make a summary of the chief points tliat usually came up for discussion in these meetings, perhaps the following would be representative: 1. The class of customers from which most inquiries and orders wore coming. Answers to this question showed what industries, consuming hardwoods, were most active, and served to guide members in determining on \idiat kinds of lumber to accentuate and diminish production. 2. The length of time that it would take members to ship out total orders on hand, working under normal conditions. The answer to this question _ Constitution, Art. 6, Record, Vol. 2, p. 1296. 2 . ^^Gadd, F.R. , Record, Vol. 2, p. 1101. Gadd, F. R. . Record. Vol. 2^ -i^.I104. 142 obviously disclosed the amount of unfilled orders on hand, indicating whether hus- iness was good or not. 3. Tl^ie total production of hardwoods for the past month. These data when compared to normal production showed whether or not there was a tendency to accelerate or slow down production. When considered in relation to the size of stocks on hand and volume of orders, it was possible to discern rou^ly whether the tendency was in the direction of overproduction or underproduction. 4. The total present stock of hardwoods, sold and unsold. These data wl^n conpared to t he normal stocks on hand, and taken in relation to the volume of production and orders, were criteria of t he probable future trend of prices, and also served to guide members in formulating their production policy. 5. The condition of labor as conpared to thirty days ago aiid the causes for any changes that mi^t have come about. The efficiency and availability of labor, of course, had a direct bearing on the quantity and quality of production. 6. The character of the car supply as compared to thirty days ago. The answer to this question obviously revealed with what dispatch shipments were going forward to customers. 7. The character of collections as conroared to thirty days ago. These data revealed the financial conditions prevailing among customers in the consum- ing Industries, and reflected to some extent the general financial condition of the country. 8. The number of mills, if any, expecting to shut down; the length of time they were to remain shut down and the reasons therefore. The answer to this 1 . question revealed to a degree the future trend of production. The reporting plan, as inaugurated by the Hardwood IvJanufaoturers’ Asso- ciation of the United States in 1917, and taken over by the American Hardwood Ivlanufacturers’ Association In 1919, provided for, first, production reports; 1, pp. 104-223; also Gadd, F, R. f Record, 143 second, sales reports; third, shipping reoorts; fourth, stock reports; fifth 1 . price lists; sixth. Inspection reports. Reports of production were to have "been made to the secretary, month- ly, each wood being classified according to grades and thicknesses, and the secretary was to have sent to each member, once a month, a somrrary of the pro- duction for the previous month, but this feature of the plan had to be abandoned because a siifficient number of mills did not turn in reports to make the infor- 2 . mation complete enough to be representative. The sales report, as originally planned, was retained, with the excep- S' f©w minor changes. Members were required to make a daily report of all sales and cancellations, and these were to be exact copies of orders taken and were to include all agreements. These reports were conralled and issued to members weekly, in printed form. The plan, as it originally stood, Involved publishing the names of customers, but this was discontinued as it was found that some of the members objected to publishing the names of their customers. The sales report mailed to members, as finally evolved, showed for each kind of wood and grade the date of sale, by whom sold, the number of feet sold, the thickness, the destination by city or territory, the delivered price made to the customer, its equivalence at a common gateway, such as Cairo or Cincinnati, and the current average of sales at these gateways. The puipose of the gateway price was to put all prices on a common basis for coc^arison. Comparison of the actual prices received was not possible because of difference in freight rates to different points. "ProJecUon of prices to their gateway equivalent" 3. put all prices on a common basis, thus making them cong)arabl 0 . 1 . 2 . 3. Gadd,F. R., Exhibit 12, Record, Vol. 1, p. 82. Gadd,E.R., Record, Vol. 2, p. 1107. See cop.y of sales report, Apaendix, Exhibit 21. ir'v, Aal- /'?x2;'; rs?si^£ fo^xc;.., W-. ■ c>'’ /•/.'i i' :r* C ' 4.v'- -rof*’ f5-.i. j 2' fe- ;. n,-* i ' 10 .';;.:.. i al "1 j,v e-ii. / r. .i .1!!“ |. . ./ 4 .k - . ' ' V * 0 arf-.,o'/- •e..* K':ou ’•• ■ .-n. • ?"* . ..u“v ^X/.' I"* 'TO'': ft! ... f'i ; iC* .- rfc.»- r> ’? II ' • 1 •• « -f ' ‘ s i .n:v Jo. : ij;''? ,., ; ir. ,2:i<:: 2 ; i-Tj ^:0 'i^< -.'.r;: >i- ,‘oi*t'!tr» ju cno s .' .1 J/ Xi‘. -''- lilCf 0»J * ■• ■' ';'■•■ iTO I r tiC /I ex''? 1 f . ., 0 -i ...».', I 'j ' • li X iU.' iflOi ■>' j' . ; f I t: t I I. z-^Ut: I (•■ . f. » .''fc-. .V. f • *»r «• f • 4 ...,ir..rl « -zuA T.r.:- n^t'.rfqta'rr ri,.- J C.Txrj or •. ! '.J U, JC-.^. C vC C.,i C'Xf:'-’ «. i. ^ t 2 ’C OT-" .- 1 5 *i? .■•i wi .-. {;■ .;. .; *. • i'.’i.' ‘.V’ 'i .4. , Ji '• ->i»V •. : &.-1 I-iH'::!. . 2.‘ t i'.'»r air r ,-j;i ,iv\1u- c 'i;') f rirv,,.- ^'j • '. , ^ r. .'■•* m;: 1' i', I>1.' '.t-v.r PO-C'.'.xteC ■):■ jro.v ' -C.:. lo'i. J[ , v2^\<' r i-clx® »?:' .' ..-r-.i-' 1-2 •■:. r 'ii , */ rr 1,- ^ r.' i 5.': s;.' -v ■ i»o«- ^' ■:/ ■ . ■ ' ~ ,r/icii\-.c^ •'■.■ r. .' .'.■.•-2 j«c(:'. crC'# ,>*‘#5 .. '-C .t-'i ’ • 4 irr->-‘i 0 c-, 'V:- ■ ,■ j.'-’. r.- r:*> ,r re: I vi:v» >c •■*x.v. Cl' ; Is . '• ■ »■■' i '■ !H' J ■- 1 ,S . '. ■- ».) . :g' OSi.'.v'.'JB v- ■•■.'i,*'0''"a4^ V:1 ®ori . .... xt:.. e-j-'o '--il .•'in.'-/ •o'^: r c- .'■jo 'fl-’-' 'i'. lifi Ti.x' ». •,■ ■' ,:■• '.I f^Halaao-. io,i er,-. X'?vi coi 1.0: Ir£':i /jttirio* ai#i I "Jo .mi .tot' ■0''.*' ... .•.'■’.ixolti 0/, t . '.1 'id'. .. r'.'J.’ i inXYMfiC 9 k •'>’ ' .e -ii.' ,••.'' i! Infirm Brrytmm 144 Having members mal^e reports of shipments was a phase of the plan that was never put In operation. It was found Inpractl cable to do so. These reports were to have been made dally by members, and were to have been exact copies of the Invoice. They were to have been summarized by the secretary, much In the same way that reports of sales were summarized, and mailed weekly to members. Eeports of stocks were made monthly to the secretary, showing the amount of stock In each grade, kind, and thickness on hand the first of the month. Three columns were provided. The first two columns showed the total stock on hand both sold and unsold divided into green and dry. The third column showed the total stock of each kind, grade, and thickness sold. The secretary cos^iled all reports into one report, showing for each grade, kind, and thick- ness, in separate columns, total dry stocks, total green stocks, stocks sold, stocks oversold, stocks unsold, stocks unsold for the month previous, and the 2 . increase or decrease in stocks unsold. Price lists were to have been filed by each member with the secretary at the beginning of each month, and any changes of prices were to have been filed as soon as made. The secretary was to have sent out each month a summary of these price lists showing the prices asked by each member, and any changes reported by members were to have been immediately transmitted by the secretary to all members. However, this phase of the plan was discontinued because many members did not publish price lists regularly, and the information was not suf- 3. flclently conrolete to be representative. Inspection reports were submitted, to the secretary by inspectors who were einployed to check up on the grading of members. This report to the secre- 1. Gadd, F. R. , Record, Vol. 2, p. 1107. 2 . See copy of stock report. Appendix, Exhibit 31., 3 * Gadd,F.R., Record, Vol. 2, p. 1107. * ^ " i ’ J'-ii'f.,: f,/^, ;T x,-". .;v' •/ 4L’V&.*r •' ■>*■' '•' ■■ -' " •' " ■.'tt. 'iJi , :'«L.' I* • '-rc 'i.' X J: el>i^ iMOO':' ©Vl-/ .?? v';?w ^ v:f I'iATc.-s :’:.ar o* AV'-.' . ’ •. i Sfxl .'i,. •.^* '^,1. ■•.• , ^ ur, &*u$v '; , ."v' t?*;- :i%d.. v,,^* acgjMT^ - f 1. ■;i. r x ^ t.v'i'^f r o-ftT. ^ , t t v ,> V ^ -iki • .14. f V - ? f r. < f ■.I-'. Vr t ,. a'oo^i .1 • MO ^ '■; i t P i . Jy-i.j #"i", .V arr!..:-! nor*: • "t *. • ^ • ' - 4. * t ijriifi £,i • ■ . •-'0 :'0 •roSsjt •fl , f - . V - 1. r ^ •Lsit^of ■■-' ’■fp !■ aw©:% : ■v-ra « - ' ■• ■'! P.ro ojvi a ;$‘au‘ ' J.’"! ILr ' r 0f‘ !CI& 1 .'V»» .Xil 1 ■ : ■. r:c :.l ivL’oa.’' t- O* ii' f SX 'X. ■’' '^^ r. 0 ■' • ’ , jXCT“r" v:- « ':r ?.*fi - -■ -' ■ ■ t ..ctv« C. ' . r ' r f*j , •" *% jo i"!: (S. : \z.‘‘ ’\f ^irr ■ . % ^ A K p: I’i*T ^ ■•'T- ■ . X y-v: ,r: > or. ■- .0 ; . . ^ # vA ■'■®A tT' L Z' .* .-/) >-»*t '/Vi , .-’.■ L-,: .rrhft.'i ]*fefn i.-'- Hi: 'Zjtc r:>S i-'* ’r t::; •c*'-? - -..li ZtCt-fz.- i, : »4^-' :'*1. t'C iv.'ij 'X> jbti'ific.Cl,; rj.' .'Ti'i i,rl r s..r o: v'ar. . : :. lo r.J iTftWo 'Jlw ^btocy. ,- . • •'.. ,xl!:si9€i,A ^Jztoc&'i ■•‘cO.te'lQ .?Cii' . .. -v . ,;i»0 145 tary showed the grading of the various mills and also the association inspector': grading on the same shipments. It was relayed by the secretary to all members. The purpose, as e^ressed by the organizers of this plan, was not to change any member's grading, but to furnish each member with a "basis upon vjhlch ho can conroare his prices with those of other members, thereby making the price reports more intelligible and accurate. " The remaining feature of the plan was a market report letter vdiich was to have been issued monthly by the Committee on Beports and Statistics. The in- tention was to have the committee give its idea of the market and to incoroorate 2 . a general analysis of market conditions. However, the work of getting out this market letter was turned over to the secretary. He did not mail out the letters monthly as was provided for by the original plan, but issued them at irregular Intervals. They were written on a groat many different subjects bear- ing on matters of business interest, but in the main they were an expression of the secretary's understanding of industrial conditions as related particularly to the hardwood industry. These letters seem to have been the chief cause of t he action of the « - - 3 . Government in filing suit against the members of the Association. The conten- tion of the Government was that they were written with the purpose of inciting members to "boost" prices, and that a conspiracy existed among members to effect this end. The writer, having read them, inclines toward the point of view that these letters did little more than point out the actual conditions of the mar- ket. These conditions were such as would inevitably have led to rapidly rising i. “ ^ Report of Open Competition Plan, Record, Vol. 1, p. 86. Ibid. p. 87. 3. For an account of the Hardwood case, see chapter 8, pp. 157-160. i !»' ' 't/'-: X A I ^ »■ tttU : .' V iji-y £.- - - i -* I 'I 3 C.*f< ■? V t j ■ <■"5 ■^ -< ■ ' V" ' - ’l»drrr. Ct'O ii V - 1 r.-* ^ *f • . « - • i.. j • ^^ -‘iS 1 1 1 -^'i:i- : * -wiJr i ?*:o«l ■’-'» *£<•?.( '! 2 » 'M t'> i» f t-’ lo ’:i.rcr.i .> .r .■.>r - -^hr. <' _ • xlicffsoo -•• , ..etjy ^ ■' ■ - * ' ■' - .' ' . *i 1 i u'. ft^v, ,-:-i,-*'rH^ -■ ' , 10 - • " . *:/■( tr*t^ X x-a • • ■'■ S.t ' .' '. . ;- 1 vr:*;.- I "■' ■ -•• : 1 r r , ,. • ' ' ‘'' ' ’’ 5 -c:. .. iy /, •, ■ ,hj^ ^ ' " • ' ■■ ■' ■ xj-il h . ;. -f '-3 ^ ' t lo aitiVn .t \'v <^ '. .:•: 1 •‘■^ .‘f;lC(i? '^•f ’■•‘“.i' -op^ . ,' « ft* A ^ fcnp ^ _ .. fr f h 146 prices, irrespective of any conspiracy that my or may not have existed. The follovd.ng quotation taken from the report on the lumber industry, made June 1, 1920, by the Forest Service of the United States Department of Apiculture, de- picts very succinctly conditions as they prevailed early in 1919, the tine that the Government alleges the conspiracy began. ”Tho termination of the war foimd the lumber industry with depleted stocks. Production during the war had been much less than normal on account of shortages of labor and equipment and embargoes on transportation. A large part of the lumber produced had been taken by the Government for war purposes. Daring the same time, the normal construction of dwellings and industrial structures and the use of lumber in many manufacturing industries had been greatly curtailed. Following the war these pent up demands were released. They caught the lumber industry not only with its stocks short and broken from war conditions, -but unable on account of labor difficalties, lack of freight cars, and bad weather in inpor- tant producing regions, to respond rapidly with increased production. Aside from the general causes affecting prices of most conmodities, the ejq^ansion of credit acconpanied by cmrrency inflation and the wave of speculation and extravagance, an "auction'' lumber market would no doubt have resulted from frenzied conpetltion of buyers to obtain the limited stocks available, wholly inadequate to satisfy current demands. "Under the combined influence of t he general conditions making for high prices and this situation in the lumber industry itself, prices rose to uiprece- dented limits, in March, 1920, average mill prices in the South and West had in- creased 300 percent and more, over the prices received in 1914, and average re- tail prices in the Middle ?Jest showed increases ranging from 150 to 200 percent. In the case of the hl^ quality hardwoods and other specialized products, the average advance in eastern wholesale markets was from 200 to 250 percent, and the T r - a i y:..t- z V' f vi.^* 5 s wcc7 .> l|, ... ^ , . j ,L i.:. ■■ at’A'.' T:..' 'T >i c ' I C l! | -r t'srzrj S.-r *k> v^toVTj. Cr*.Ir^r ■ *. ' , *} ; E>r'IV"*^C v4H>'1.0'V X'* I' .-.:-v ‘-.I.' . ► *!c c i : ”Ilo. !■;. ;itr« '■rsct JiO T'/'. ***».yoti flu. r fiiC'.'J .'-C'XW -iT^ '-’-■? A. iUi lE'-A' ‘ .' ■ -h; u-V *';■ ; ' •,,'f', c*rH ’It* ‘- * ^ “luid?^# £tfij 9 . 'j;{i X'-H^r- "r. . ,ii - — tT'' •; •'■',> ■ f. '•'3 . no firwf K".: .:eciir:;- 1 ’ I ''■■•'•' :i :%:.• fc;^r : in.'/i XA-iOi:; *lW « ni/i'ti - '».^ ■ - i-jy:./ T 0 ¥ ’>!it ”CK^ 0i . ■?.: i,,gu J',,. •- IC* O .• . .' mil .’ ' if* M ■-'* ' ‘o«if=’. 3 ' .. .w i‘ :,,«<•: ; >o.>r'< r-n • ' *'■ '* *' » * 1 -• :i*, , iTC> ,• :o ■;•;• ; ,,;~i j;i- :n,-- t, crrcr. *M to: i'l j>wg.'t;®0 — ■•■'I3«#li ilW ■- . j ■ . ' 'll • ,;■ .jij : C'i-ie cyx^? Xiuj 'SIVt/ 7 \ ■», x-' - “iic.!. .TTC’to-- P ^ J j.i- , m': 1 L-. .‘ oT I va.ii I Ijy'Vty Jf C *\.t::‘; '■** 7.. : j(. t, f ' p.1 v ,*.'■>.• 44-, y<; vf.- i *’"■’%«% K=. ; . 'i- ■ *tLr •; ^ J c’> 7 €. 7 ' ir: ^ ^ •' t'i'.J-: ,;; .-.i 'TcCfep'l ' T- i ni j 74 v- i* « *•, 7 . Ij- ■Vi J/;v’ Iv.ri _«c J l,f»r .‘t-T Ij’Xb ®3gr.i . v/. ,Ci;r'i f?tT?.; ; : - -^•: •• .' - rd ! cyl9t,trr i •' rr ,?- 7 i.C.A f .* .r/fiOi-s.-’ i’../, X,:"‘i' . I .. J 0 : C'dl. g)ui'^ -i*; Js«tuif, .n,-.X;;.. ,-arf bo^,:.r£- io... !■ ..tfO, .bru; vin-.r.. jo ..-4 ,•' •-Y JO' tiCllO^i Stffi V ,#7'.'’'.'' .' — *nV • fc* J 4> . • ■""■■' '■’* *■ '■■' ■ ' ■■3-» .. «-i;- . ,,. ,* -sa..-, «... {C ,..'....i..„ xo:»i.-;u ,;rj rc •a.'4tcv,-lu- .'iun iXira.-!„ ^sili j^.-.v ja«n- 7 ,r« i -..floe - (*;;rjfi5yr Ttj Jji; • *''‘ ' ■' ***'~*’‘^ '\, fci^J f-f- . ZKitf 4 to'! .-ntcriv , ^^,*7 ♦r’CVi--:j <\il-'VS £: . ' ‘ -w,.. *' ** - «*»... 4 ■J' I'iT' O ■ T 't ^ *■ .'j .'.-Jtfce.. y' t-i ■.••;,■>. ac' j i;- j®-. %i sSi-^vi ivK bV ■'■-»■ ■ ’ .■ aoDi-:- •■.'fir !:C' rc^n* , . **• ■'■’•• •:- 03 tV. I" ia i ‘ / 4*v#x ;iV ui:--,ft' >0 .^r .-j, . ; , . , ® ,„.,r^ • * I. 4.. *- - ■ tp-'. ii^.- t leao.iotxc « 7® i. - ~;ro*7 \ " ‘ ..rue^zr?T .1 j .'vrr S7-' .. ,; ‘io *x/C’,-5ar.<, r, . “ ^ tjcr i#« t"“' , .r-’- ' ■% . .( ^ ■:.-L7ctnvx} 7s.::;ii^ ^0 .^•D.JjJ-r -.r/ '/ J f ''' . /> '•. *^T ( 4i .* .W ' , . . ^. -VI . , {>*>><, f-.-.?-- •:.... ,0X »r '■ :?r IStui '«■- rst' j[Sf C-.. • ^,-5 . '. •••: • rjuf . . Ji .*y -"P ^ .v .,.^.' .... ^T>'lc .'®'?'5’ T**/ ^ , V 148 to 'understand what incen'ti'vc there cculd have hsen for prod'ucers to coni^lre to raise prices when b-uyers were willing to take their stocks at any price, almost, that they cared to designate, even at times offering a higher price than produ- cers were quoting. From the standpoint of avoiding prosecution at the hands of the Gov- ernment, at least, the action of the secre'tary of the American Hardwood Itaufac- turers' Association, in interpreting statistics to members in such a way as to elucidate to them the course of action that their self interest should lead them to take, seems indiscreet, and is so regarded by the Eddy association secretaries. The la'tter appear to be caref-ul not ■to do more than convey information bearing on actual transactions, leaving memberefree to come to an Independent decision re- garding 'their price and production policy. There is no evidence that the secre- tary attenpted to Influence members in their price and production policy in any other way tlian through these market letters. Neither does it ^pear that this association has been guilty of issuing price lists, with the intent of bringing abou't -uniformity among members in their price qucbations, as have most of the other 1-umber associations. The failure of the secretary to secure all the data from members con- tenplated in the original plan illustrates hov/ very difficult it is to operate successfully an open price plan where the association membership is large and scattered over a wide area of territory. PUBLIC AND ECONOMIC ASPECTS OFTHE LUlffiER IIHUSTRY IN THEIR RELATION TO TEE OPEN PRICE PLAN There are certain serious evils at-tending the production and distribu- tion Of lumber which exercise a detrimental effect not only on the best interests of manufacturers themselves, but also on tliose of the public, in their capacity ^ , ' ■ ■ * •'■auF |)i ;i'X(iJ»A(f'C,* ' ^ , CX': \,A li v'-* Jofjif A-» /V- I - k. *x *.v ocf err>v» '-j.-- •«. -^.--- . 4cr *t .':.ii^«5 •p. -•. ..-r _ . ■ ■• ,»- .. os i -Zi:o'x»is sads ^ ’ '^ Oijp nt’infvr » 1 ' >' 1. ill, «jA fraf - .i r . , ^ , ■..— i '■'jSk^ ^ •* riil., ... . - , Vs*w j? ari' .i-‘ »*i ■ •&-T .;.; t z ' "*■* '■j * v ■ *C. .-» J ri:.li0£f Iw e6'4.-.oo «Cfj of utt^bhjgj... vrv^roo «a:ir c>'. ., • J> c * ‘ ^ . ■ * ■'• ■ . w. ■*• j 0 ; j *<(*?’ •''- .::cir i;i ;.Toi. 5 -r . - X .V -WO ••' - -z 2 ,i^t: .r^ . , ■-Cos ti : noiVa .--.»' o; •'oi - .f "'n.^ *. f t . '' ■ “ . nl v>x;,i ti-!: Xfui: X 3 -? i* c«CX i . -r-'-ri -. ^.* • • . -V i «. ul.v; • * I , . • j ^ - ^ . I ,*v»«, *.v,7 ..iJ^■^;^l :io -v:Jii;..j2 cw:. ji,*o^aci ^ *'* >.»;.. ^ JIj* • ? f>' 'L t'.*'’ ■ "r* '» 1■^^ ' > -. ■ ..Itocca a*e(i;.^X a^xfjo -- «'•<■<• it'Jtr.on .. : 10 ^ OJ .1 -; .-1 -ijir ...;, ,.^, -x..-i 3 ,iv, „...;, . '■^ c->, ,.,;x .. ■••:.- t.i;..i. lOTO [j 2}i'" 'i I7.V''.' H'l^li:? VI ':zY,v:ir.:7 -3Si:^\j r:'.05r;aA d:;V'i;.:,;;? t , . ■ ’ ' •' Svi:} - ili>n#v‘„- .' Irj, ai/oi*;?o "■■'■ " '■ ' XA?^f«rlv;^afc .« *2-:. iq . a»'>'»w ■ i- o,i.t ^0 tfoor./ no oti^ .oOVlts^r.^v. j ca-;.v*04ixx-. 149 of cons-umers of limber. The aim of this section will he to discuss, first, the character of these detrimental influences, and second, such remedies as seem applicable to the situation, giving special emphasis to the role that the open price plan can play, perhaps, as a remedial measure. The chief evils associated with the lumber industry may be traced back to two leading sources. One finds its fountain head in the feverish speculative activity in timber lands that has gone on in the past; the other in the charac- ter of the industry itself. Disregarding the forces tliat have led to this snec- ulative activity, its result has been to build i;^) an e 3 a 3 essive burden of timber investment. Excessive timber investments have created a need for meeting cur- rent charge 3 the re on. In order to secure the funds with which to meet these charges investors have been constrained t o produce as much lumber for t he market as possible, with the result that the lumber industry has been built up beyond its needs. This close alliance with timber speculation, has made lumber manu- facture ”the tail of the dog, existing not as a business in itself, conducted on its own merits, but solely as a means of getting rid of timber vhen speculative 3 . interests dictated. ” Excess mill capacity, taken together with the burden of meeting obligations to pay interest on bond issuesand principal on maturing bonds have been a pressure forth© steady running of mills which has led to periodic over production. The character of the industry itself, by giving rise, among manufactu- rers, to a. strong spirit of individualism, has had its effect on the production and distribution of lumber. The nature of the industry has been such as to iso- late manufacturers from one another. Sawmills have been numerous and have been T. Some Puolicand Economic Aspects of the Lumber Industry, Eepoirt No. 114, by the Forest Service of t he Department of Agriculture, issued^ Jan. 24, 1917, Gadd E:)diibit "A”, Record, Voi. 2, p. 1177. 2 . Ibid. p. 1181. lls • ,« 0 f. tci ■ -Sn. -S. -j.. _-i <5 ft,,. ,i . ^ '^r ‘- -4 ..... . a.uv.. - '" ' ' .’■ ^ •-« , ]u£ti axz r.ftlq, *»!•: ?;*Ai:rooq. j , "^■ -- ow^ c'r qh - ' oj,; ijj-fj ^j| ,- ^ . j •‘°® xx/vixjx' ' « > *^i • ' —> »*■’’*• %r** ’■ • - Aic-.J 0 .- i«I Vv 4 J. «.-•♦ tttu-yA «TJ ».-,• . ,• ■, ^ ‘ : ' -f 3 - . .,1 r i-rft q-y c*«£,ae. o.-tl .X'iviJSA ^r:x*ix- Ij ^ * W • ~ M II *'"* '’■ •Vjfc « 3 l X,.fC'fTj=^» ' ' J. • ' ■ ^ T. K. BViyftoc,u - .in%aai'^ 4 vni --- • ^ ‘ *** • J»* 1 Sa * M* &U 1 / * A / T » iJ.T X '< o' *i;'d^ 3 ^.' ^ ». ^^ ». -- 3 T 3 .. .j,, f, • i'i^ ^9/ .jr- £tOf^d t i •. ^-- -r J . - * _ atf-- *«. , ' -— .. s^« 4 i;-:.., . .-•->.t:*.-:i «.;8 -lAcfftrrx do:v »or 4 .i^ •■ > ' .‘^ ft&Oia ?» .vX,£iy 4 J ,x/ ! ••.’ x>e?oirl-o 5 ,"/.ei»ai /I** c is- i/i . ,• ‘ ; , - . e.. Jj. .vU.-, , . lo ■;'• it e*/4;jii.i-o®,^e .-.‘ti'r t*.' .-j.-torf oo .*«»„, *ri -, - .. . , ir>- „ ' -j y! Lot fc/,xi di'lH.v( >0 tr.i.- -5 v ‘ ' **^ ,So*l S-^X^Xjj Xf”" '■"J ■'*£’*•"? Arl-* “■• - 4.1 I C -6 ,. to£fx :c .- ji r... ,.-: i.,,- !i^.t t • Vm. * ” ' ^'-‘ -■ - ^ - ..u.- 1 » « 44 ,c.v.-,. 4 » ll ' j -> 0 ? ,f:irr 'J ■ • -f - ^ ^ a« 'z -’iixrr ' xrawf -* ^ -f f ^ ' ,T. *;,;i:-X -./t 'll i ,rv- .r,j- v-f;;’ ■' "'I ■ -„■■■ •>■' ■,., .. ,. ,■- I - '■' ■ ' • • J -- . li' 150 spread over a wide area of territory because timber is spread out over a wide area, is of great weight and low value and can therefore not be shipped long distances to be manufactured. The very ^irit of self reliance and independence fostered by the rough, physical conditions characteristic of the lunber industry has carried with it an element of v/eakness as well as strength. Not beingwLlling to submerge their individijality to the extent of acting together in a common program, manufacturers have looked askance at aasociatedactivity intended to better conditions in the industry. Such associations as have come into existence have been sponsored chiefly by the more progressive and intelligent class of producers. They have been very distinctly in the minority, in consequence there has been a lack of common understanding concerning t he situation in the industry. This lack of co- hesion in the industry has been further accentuated by the fact that the lure of speculation has drawn into the industry men from different mlks of life differ- ing widely in e:j5;erience and point of view. The lack of common understanding concerning the problems confronting the industry, growing out of the failure to cooperate, has no doubt had its influence in bringing about periodic overpro- 1 . duct ion. One of the best illustrations of this diversity in point of view is the manner in vhlch the various producers have copedwlth depressed market condi- tions. Some operators have met the situation by curtailing thifcir output; others 2 . by running double shift in an effort to decrease cost of production. Some alleviation from the effects of overproduction might have been secured if operators only could have known how to widen the market for their product, but, engrossedas they have been in overcoirdng the difficulties with T. Ibid. pp. 1179-1182. 2 . Ibid. p. 1182. 'iiii If r [~ I " I m i pB umi !■ 1 1 I r^,, lo' ,f»r:A. 1 f o> y. 51- iv s *i’:tc-. 4i;%; iaoira ti ■x»v^'':*l 'io ttl h: ;« i*vo ^**1 ,[» ^T.o r '.'«qqi4a stf J*;s j“.?c : -'oi «aX J^risiow 5Aa*ti,, .Jbeax;^ox-.li.T:jo!a trf sK-fJ y(cf ua* axfi*Cifi3iix jLojc f s; ll«e ^hi lt>^.-'is.r ar^'i \'i!}9iri::xJ "it d,'z>S nh*« aa:?! ^sill^i.^x * ic ai 'to ; s.t> i ■. •.=? r.JlJc* 1o vrrcixo ow x-’iXAC?tlvii£'X an’^ .Ti iCoijiirrc-L ’xsJj-o-i o 3 vlti4*cLcip \ Id ;(£iaX s as&rf MadJ sOH-jTfocaca cj. .^^2*vca.ic! set* ffx ateef -oc- Tfjwl I. ir.r . 5'- i -r.j ni ccXjacXXj j gxtlxiTSfaoo 3ffi2iii*jai*6/s/ acaapKos ■fc :> o'xiri trf ^ tts’i t:lt \o xs^ficf liuX 7.7Jariai t:ii ai noXaad - .ijYzlJi Yill lo £:iriw?r«ns1:lii> trml fyans pxfai ngii*, ..i i ncffircoo 'io afexfti jwti . v^-^v lo .^w'iox feat ®ca:?‘i7e:x o rrl XsJbfe* -inX i)“ car '2 j!! 1 lo ■t-'-o rani»^’i8 tVcr-i'Sf^ici Xf ^-jX^np7^nr>o liX^Xjfc'iq gr i:.y’iOy^i*nloq al x^Xsi^vxr «i;ft lo £nDl^'iT:J»y7iri Ati ; lo tb.r:-c L»«e®;q*>Jb iI^,^/fe®qco evx ' vlftpipfe'n-.' ftcroKcv od^ .arixar c2 ifiitrrjaai, ts'fJo ;.^r '*r,a liPri: ' r; • XI 2i»*7.vo vef ir tsii ima oved «tct«i®qo s£bo 8 ♦•ncX;. -riCiiJoxrfeio^rr 1o xsoo &«pf** 2 Ci«Jb o.t rrs cl JtXna ©i ;urdi) .-TXa- T aaod sviid titliiabcnqTtro V-' id$ icmX tffloS 'iladi /lo'* tdC • -o S- : lo *. a . to^ h^i- |l »»c/ ^.0 trzi^'J^h -c ... ^ O.: .,vn^J;.rt--^3 »x,or»M'' -v* hn^4^ -. .r . r .-f,- '^^ ' " ic v TO v.-:& loi > 1 2 ■.zoqi in \lclz-- r,^*V * * V . ’ i> V 1 ^ f' c“ J ' “•■■tr'» ^ . ^'Ok ♦/,.■.•/.'» - •' ■•■ •f--- iriv.i^..-. f «£.- •. j'-.u-i lo noi.- • "“ - "" '-"^■•'■ ^'' ftrl.'xt o? tfXTjisc l 2 ‘ :^\ri ‘>iZ> t£tcijjs4’x orf ? ’tr .fc.iox^j :-r^: . f siX c. nryW ^ ^ ’ SUz^ « z.t bpHr^-yt *>d ,1- . . :.f.oX • ijr v4»ri> jv.j’i?- ’i *, « i 4.i' * vrii:-f -- .;*i « w 1;? . v -ii-OT’'.. .t. lo ^^iltdiihrJ 7 cr hni^rr^'! />.:.; :_•:«.- ;^vi*r'a “i-'i tr*... r *1 ■\^’ r L-.. i c • i f Y- ■•'<•'• 7 c" TO.’^'*'., i -? not^ . axirl aoirX .r: 53^0 --L-.r .i.v7 .,J i T ‘ •_ •; .rr .vc^f ' I Uz: >' t ;• luxiV .-ri .« ;4C.-'u:J*-i _. ; ^ ,v Yo ftV,xrxfjI* | 't X7. •„ Vi., ,, 4 . . , ev... ... X’i',-afc 0 CC ^ .V ... .t,j. ••fiX* ,. ; i»i - . 'ii ,>‘^..7 3Js.;\{f ^ fi... .. ,i... i' '.i. rv: -. r t ^D.'lv 7,. : .,..4 .T . ^-;7.7 M£, ): ' . « •’ .< >'i. _v#.i.-. r ,j -*^ . r ;■ r - ^ 5 * x '" * ^ "i ''‘^l^ ’* *5- *. • rf'* - r- ! — ♦• ^ *'•• ,> *• »^ •*■ - j>>» •W" w w.' ^ jii. '.xu ,i r*-. IS; ^ * ’.^ '*" ■* ***"*^.' • T -•<•.- X- eK . ., ■ . ' .;-;i\^>';/' 4ii p i;.’: Btf ' f .' >■?: ?si7,i^f*: > - f"' ;.i.-. *f.. ,0 T.rr.j,75«; ,,-v. -.;.;i„.,... , ;. .,V ,.t . ■,„. .r.i: -- 152 1 tion of Batail Daniber Dealers has written the following: "I am rather of the opinion that this method of stabilizing market conditions will one day be insisted t5>on as essential to economical distribution and stable market conditions." Vihen prices fluctuate severely buyers are -uneasy lest their competitors shall succeed in b-uying their req[ui rement s at a lov/cr figure than they have been able to do, and in consequence undersell them. The public also feels the effects of the -unstable conditions resulting from periodic ove introduction. With amdical decline of prices many financially embarrassed operators feel impelled to lower the cost of production by dumping an increased output on the market. The economic demand is not such as to warrant this increased output; 1-uinber is therefore wasted. Further waste is brou^t about because of the fact -that on a declining market it becomes unprofitable to marke-t the lower grades of lumber, the result being that they remain unutilized. In his argument before the Supreme Court in the Hardwood case, Ivlr. Boyle, attorney for the defendants said, "If you have a declining market in this industry, as all of the members of this court know, it must follov^ that when you get to the point | where production cost is equal to the price paid, only the best part of the log will be brou^t to the saw, and as aieault millions upon coun-bless millions of fee-t of timber are wasted every year, because they cannot afford to bring it to 2 . the mill." Of coiise the public has to foot the hill for this waste. The remedies for the situation that confronts the lumber industry as pointed out in thexeport of the Forest Service may be s-uimraarized as follows: 1. A more adequate supply of capital for the purpose of properly financing opera- tions. 2. Eeductlons in excess mill capacity. 3. Mere efficient equipment and technical methods. 4. Better use of raw material. 5. Better merchandizing of __ Torrence, Findley M. , Secretary of the Ohio Association of Eetall Lumber Dealers, letter dated Dec. 31, 1920. 2 . * Boyle, L. C. , Oral Argument before the Supreme Court of the U. s* i American Col. and L umber Co. vs. U . s « , O ct. 2 0, 1 920. ___ ^ j-y-irti, : -arfy.. ‘a _-iv, . j j*. J-04 'i:,’jo:r2c -■' ■',; . .. i jvii&s** no ^ -: - - • v^-e< - - ii. ..x3V- *i9£t^ZU^X e^cil-^ C*.^ »j A . i. T ;,t( 'i ■i.' J,. » V •-.iu:, .-^^-t i-e-,: :w >. i if ^ ■^iw'^!^ i>ii‘^rrj : ,'e«*r^. - ' - J 'I roti^iKi.- . oa'.rre*i.:?t ir/ ,■•• '• ■' ' •■ ■ '- “- v*‘ 0 owSjs, 0ui7 ■’•;'■'■ 1! ■• i :.-.- •. . 'X ''C oiiboi'i4{y-^r?*T^S W •'■:..-r:f or i\' ?oii. «i lior-l nlrcr:>or w. . ‘<3>^ij.:i e/‘ ., .r^o j,- J. .4. v.*f V... V. .• u.' J 21- ‘J‘: Zi'''. X:i si -r^dniz L ioor*f:o t't»a=-:afa t^Ld: Cu^.zi^r- -i* »i:^:--y:yxy^ t»ao: ■: ..: .'i. 3 "-lat'u^b « /o e ?rol ti,. ' ■“ » . *> • L’."-.. i. . ■ ..i,,-,:.!v. , „* iAJ' :'[o' ■6lsfv9’i i^-'S .nocfo?-' 'VO *|-f Cl -6.^; ,j i.‘;,< ’•I.-; . :;■ ■ / ''x-rei*! “fCif.-,' *i- ji'1'1 ..4; i!l - ■■■._ ’ . V, ' 4;o^ ^1" -v .0>i> 4 -4 - 3 '/ y.d.y, OT :zw is.\ u-'’'-. j^.-; „C‘Io^ inr^z yl .-roaDf i'^.roo jii'jlw ‘ ' ' " ■ '“■ ^^d.' r}g ::QOt : I, C*'-'*".:'. v*X€k*(v ^ «i^ X n 5 « r ' I.’ ' ^ «., , 2 - i. ^ ^' ■ . - . i w ; 0^ rXi> ^ I, Jc,i:' i;5 \;:v..^l‘ '..! ':nrz'‘.. :.-; r • ;;, rr=iyj .■ , ;•■ ■ .. ,, , ,. , I vj r."i « J : Jtrx. 'traj. ^> , 'T ‘r ol £» 3 : 0 e'fn- A • '■ . *»j»rv ’0 ; tvutj £0 f/ .'.:.'>i:.'>rb<|tf . . ViX'-. “io ,.t .n-.* ; i.clli:. e'z-d ‘.Ji^rM Jo i'}:l3s,.xcC£t: ~)dj “^.'f f 4 -xc.tr bni^ d 3 J.C «'i ^3/3 ,0'Si ^• r=*-ar --•“*ifei-jA^i^',. - ' -’-4 .mC 7»^'‘a I • • aV^C/: ■'' .-tlV ...: -. 'g gA i lU .8 ^3 -. 153 the prod-act. 6. Sounder methods of accoimting. 7. Current puhlicatlcn of pri- 1 . ces. Thevvork that Itunber associations can do in hringingabout inprovements along the lines indicated above is apparently deemed of considerable value, for the report goes on to say, "A ntunber of large trade organizations seeking the last word in the efficiency of each department would undoubtedly benefit the whole in- dustry in extending its markets, eliciting its by-products, and developing stan- dards of efficiency in all branches. Jind t hey would unquestionably benefit tlie 2 . public through improved service. Following this the report proceeds to name and describe the functions vMch such associations may properly undertake. j\ja»ng these prominent mention is made of the gathering, compiling, and disserrdnat- ing of trade statistics: "Current trade statistics necessary to keep lumber man- ufacturers informed on the condition of the imrket . . . include data on the voltime of orders, shipments, and lumber stocks on hand, the prices which a re being paid for various grades, special demands for certain grades or products, the price and supply of conpeting materials; in avord, the information needed to keep the 3. lumber manufacturer in touch with the market which he supplies. " Then f ollows a brief in defence of open price work: "This activity of associations does not involve man\ifacturers' agreements to curtail output or fix prices. Such restraints of conpetition would be facilitated by the statistical work of associations, but they are totally different things. The function of the association is to give each operator individually the facts which he needs to conduct his business in- telligently in relation to the changing conditions of his market. This function 1 . Report dated Jan. 24, 1917, Gadd, E^diibit "A", Record, American Col. and Lumber Co. vs. U. S. , Vol. 2, pp. 1190-1195. 2 . Ibid. p. 1195. 3. Ibid. pp. 1197-1198. "TT ‘ ' r 154 is doubly necessary when the market is at a great distance from the mills. "There is a clear cut line between these services to individual opera- tors throu^ an open price association and activities in restraint of trade. With adequate safeguards the xmblic should encourage such forms of cooperation among manufacturers as a necessary means of making the lumber Industry more ef- ficient. The activities of trade associations should be safeguarded (1) by the coopeiution and control of a responsible public agency like the Federal Trade 1 . Commission, and (2) by systematic publicity." In a later report on the lumber industry the nib rest Service of the Department of Agriculture makes a rather positive statement regarding t he stabili- zing influence on prices of the exchange of price information, and its conse- quent benefit to seller and buyer alike: "Solely as a matter of information, the current distribution of prices received by different members of the associar- tion tends to unify the rates at which lumber is offered for sale and to make in- creases or decreases in accordance vdth the fluctuation in the market more near- ly similar at all producing plants. The same information would doubtless be of equal value to buyers of lumber, particularly to the small buyers less able to 2 . keep posted upon market fltictuations, if available to them. " No doubt the public would profit immensely if remedies could be in- voked which wDuld prevent the tremendous waste of timber timt occurs when, throu^ over production, prices decline so radically as to make it unprofitable for operators t oatterrpt to narket the lower grades of lumber. The exchange of information among producers, is, as the re^jort of the Forest Service makes clear, not the sole remedy, but it certainly has a very important part to play in elim- T. ^ Ibid. p. 1198. 2 * Beport by the Forest Service, U. S. Department of Agriculture, Timber Deple- tion, Lumber Prices, Lvimber Eaports, and co^icentration of Timber OYpiership, issued Jijne 1, 1930, p. 68. ■ u c'.' r cc-tA^ci. i' :va i^. L :f9>'-‘i/r ■ '■•* n,-, ■. : J.j-^y ih<.:l 07 A Y'.lf'a t'COi'l •r'ik7{^if %‘iJJ. ,f i.'H 7i.1i'rr- ;■• *. .< '. -ta*,: ;* iciJivi ^ CCilO" r.L’/O (3 .vj'K/’trj^ i'XO^ • • - "/.le^'ooo 'io r. ■.'j. :-" s ' • > ^ *< I - •: a-asu/J aii? ,2:;LttC c; 'a. , wi:jQ if^^a V-- tl ^ C-; ^ :.j . •:■ 9r<'-i ■ ’ ; ~ 7,cSt &hf}'lS Ic E«i ,’i t , Cl..-*: ; .P’r ..... ■ .t*; r.^u. Ztiicii':i »X. lo Xo*: *X30'o’ ’C- r-3 :fici ' J...J & -il ^ ..iv-XX*. ' ~. C’i : 'a.J'.'.7 ■ i >4 ijL.,A;-x A o«jie« . XiT --i^A "70 . .lOwtfjhrjsc?^ - ft,'..* ■jl.aX- ft*' I'i-r '.■: •' r ^ ^ 0 u«?siT' TD ♦’■. :?x*:iri J. ■A'i^ _ .a. .Ov?.,A .. Ci: Xi^. i.-.,^- Jn;* 5( li^XJ J*. CK» XcuiuX^ • c C',a.-?r3 :I:, 7.c‘ Ir-tlftcft'.* hci'ltq "Vif ' .■ ‘ . In tk Lb If-mr-m §'tdt ‘ --'■•■’• ..•• TsfeJ i.. i^ct z’ilcL -.A nol- -.. '"i Z'J c ' - 1 ,-*. ► .. ’c.r, a .Jlw c'-itti-'r-'-oi ixJ ..'tf fH?- 'Cj'.. Xat-x : ,gft .‘^nu.irv.'V Iicr/r fjft.fao^ •- » t'i r - .?! ft" • *; j V X - t_ V.C r'.« 4 ^ r^- , .f. .. i P bS .r-f- ■.r‘ : '-jtrE v.‘"' >'i-* ,.n' 'v ■ X.'V 'jj«' i.T’: 'f.xT-r .:.' ;;Si. -J sia y J;;: ; aac,f”:'j: ‘ .xro-A •. Sir « a 13 ,x- ^ Ali^ori^C-.q vnoc'* ■v..ir' .vol, 1 i- - . *■ .: 0«? ' v*»Vi. : .. f ',/(.Xi{3i9.w ;ri ^xrf ' rXc>t mr £ s-'qeC "x^C-.i I j- •i. ->.* •■'. . •. ’. ,,ixX‘»TiftS Xas . -.i- r 4 .4*. s.t.-ji,; r;»Xe*. ;r Xi :;//i _r.:x v^chis'j lad'.:; ./'.ftl? ,r Ait;,L ia. i>i 155 inating unsatisfactory conditions. This is particularly true because it has been found next to Irmosslble to arrive at the cost of producing individual items of || il lumber. In the logging operations, "it is almost ln 5 )Osslble to allocate the cost | to the various ^ecies, although there is known to be a difference in the cost of handling t hem, by reason of the difference in the size of the logs, the relative positions in which the various species grow inthe forest, etc. Even if suchdlf- | ference could be ascertained so that the logging cost would be allocated properly | to each ^ecies, or even to each log, the continuity of this allocation could not | be maintained, because various grades and sizes of lumber are produced from each 1 . j log." Therefore in establishing a selling price for each grade the producer Ims no cost basis to guide him. it costa no more to produce the better grades than it does the poorer, but a considerable proportion of the latter will not bring a price that will cover the cost of production. In order to secure a pro- fit a good enou^ price must be secured fort he better grades to insure that the average price received on all varieties of grades and kinds is higher than the average cost of production. It is clear from these statements that in establlsh-| ing a selling price for each grade the producer has a very inadequate cost basis to guide him. Finding that he cannot use costs as a proper basis for determining selling price, he is at sea regarding a solution, unless he can secure informa- tion of a kind that will give him an idea of the trend of the market. Hence he finds that a knowledge of conditions, such as is afforded him by membership in an open price association is a moat valuable asset in forjaulating a selling policy. No doubt a widespread knowledge among producers of the vital market and trade statistics would go a long way toward eliminating the conditions which are responsible for the maladjustment of demand and supply, and which leave a heritage of economic waste that must be borne by the public. Beingvsell informed, 1 . 2 . Stark, M.Y/. , Record, American Co^l. and Lumber Co. vs. U. S. , Vol. 2, p. Ibid, p. 1247. 1246. •«; ?: ■ t •:5>e -3 -:-'v.' :r.ii ij-i^'c -: »• ;d''- . . ■ ‘ : i.u- ?» . rx'.s ’ ■ ..;,i •■ Li' j.-# : x*.“: ■-’1:-: . c:i f <,vi'«:»;A, o; --.l.-llir; I ' 0-? it :J" eu;l^oZ: r..Y? ‘ n'Jnn\ V- tcoo *..:•• ..• o: ^5 7 ,,ti.oX 6Vi j ^0 . - •; ‘ -a: -■:• jp rcft '\f --;: &*r- t : t ■„ c-a ti'tXvjtiV rt/: .-’c-i/fft .ji an- 2 , 2 no. 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Xli.. .-■: X. .' :>t *, 7' _ ,*»_.j[cau':’.vo lii. ai a ,Si.ia . '' - r a-Ti,-**:..’- c: X-. :‘.em : .tiJiio*: rT .u^tiajur' ri ,tz}.':r^ woX io v.T^7.o e;.* 7 0 . it*; <’•;:. :3a a «' .■*» ''• .'"i^ p*«X 'iC 3 j: .t»s'*r or ;■ TtwiJ rfX 'i.-Aw ce ,»rr*,t.' '-CT'xor. 3: i'sr.’lroa X-.'..'.‘ .' : • :■ 'j Xiao'i ic niwi'j^ . ■>: 'i'ii s.-: ri3 ’To'roau v.;if .=•■£•■ -'n.- . v;,‘'i: 11^ ''■■i-J 4.nT -t- •JU^i r <»V£u’^ F*. ; . :■ . T--' '.I - ivu ‘ ili *••; - .sr-**' ■vi*jS, .‘■-' jFi; -\^ ,aw<. ■ '* ^ 7 ; . .. , sc-i-oai „;Jti ; -- ^ S^‘- ^ -q •i:#il' ■' ' ii ■ oy •i *1 • ':o, .! * i - - XT'j i„4'^ : ^.:a To rr.^ ^ ■ nil -: : : r i.-. f . -> -^la _ ^ • ■ "i iTa ' ~ui; _ « ■ ^■'••- - ^ •■'tlifi(r..iCKJdr ^idL -:‘.'d:, ; :.. c * -■■■■' n*!,? ^J -e : * •■^' c.r vrs, .,., Tl-- rx«J -'■'-•-q nn-o - iT* lo - fy'^Kr^ - » i.nit <1-.- aT .■•i oi ■'-7, 158 District Co-art in the Western District of Tennessee, Western Division, in a pi’oceeding iDrouglit "cy th.e United Ctates rnder the Sherrrian ibati-Tm.st Act, to enjoin them from continuing an alleged comhination to enliance the of hardv/ood Itunher. Tliere were 339 corporations, firms, and individtials in- volved. All were inemoers of the "Open Corapctition Plan” of the association. The alleged conspiracy to enhance prices began in Jantiary# 1^1“, and con- tinned to the date of the filing of the hill of complaint in Dehr’a-ry, 1920. The alleged means of accomplishing ' this conspiracy may he hriefljr described as follows: 1. Compiling and distributing monthly stock reports and prod-action reports. 2. Printing^ and distrih-ating monthly bulletins which called at- tention to a shortage of hardwood lumber and adrAonished mern’iers to enact higher prices, ‘but not to meet the shortage by increasing production. 3. Compiling and distrib-r.ting weekly sales reports. 4. Printing and distributing a b-alletln containing excerpts from commendatory letters v/hich the seci-etary received from members, and v/hich were alleged to have been explanations by members of the roanne-r in which the rex^orts of sales were -ased in enhancing future x-J^ices. 5. Discussing prices at rxicnthly gro*ap meetings ”so as to produce raatual axiproval for high prices received, and mutual oral predictions that high prices would continue. " 6. Compiling and distributing monthly reixilies to qpaestionnaires ’’constituting an exchange of written predictions by the d efsndants that prices X would continue high. ’’ T. Prief for the United States, American Colnmn and Limiber Co. et al. vs. United States, pp. 2, 3. 159 The G'ain attack of the G-ovemnent was diractod at the iiiivrket letters which the Manager of Statistics issued to inemhers at irregular intervals. The defendants in their answer adnutted tliat they were exchanging infonnation of the kind described in the bill of complaint but denied tliat this activity was carried on as a means of accomplishing by collusion the enhancement of prices or the curtailrr;ent of production. The j'adge in the case decided tliat there was "a corarr.on note running through all the evidence,” namely”* increase in prices,’” and therefore granted an irgmction '.vliich permanently forbade defendants to ;a,rticipate in any open price activit^^. On appeal, the case went direct to the Snprorne Court. Hearings were held on October 20, 1820. Apparently the Corrt lie,o not been satisfied 'vith the evidence then presented because there is to be a rehearing on April 11th, 192j^. Bu-siness men who are interested in the open price plan hope that the Court ’Adll give the question of legalit 3 A of the open price pl.an a broad and conrp rehen sive treatment and that some fixed general rules of a constractlve nature will be laid dov.ii which '.-dll malce clear to vdiat extent cooperation may be legitimately carried on. To enter into the merits, pro and con, of the Hardwood case from a legal point of view would lead the writer into a ramification of legal 1 discussion 31 -ch as he, as a iayrran, does net feel competent to undertalce. At all events it is thcuight that such a discussion would lead aw^^ from the real point at issuj.e, namaly the legality of the open price plan taken in n In chapter 7 is a short discussion to the effect that the rise in price of hardwood lumber can be explained bjr attributing it to naf-.ral causes. See. pp. 145-148. 160 the abstract. The reason for this x:oint of view is that the charges Tie.de by the Government against mLembers of the Ainerican Hardwood Lh^nufactiirers’ Association n' 2 Jir he regarded as being directed, not against the plan as conceived hy Mr. Eddy hat against an aha.se of the plan. Statements were made in meetings and halletins which the Government alleges were evidence of a conspiracj’’ to suppress cornosti- tion. These statements were not necessary accompaniment s of the open trice plan. In fact, it is thought that isn open price association under the g-.-idance of Mr. Eddy or his associates would never have allovired loose statements of the kind made the Ijanager of Statistics and msmhers of the Hardwood association to gain currency. Tlie G-ovenament took occasion to condemn the open price plan because it seemed to be the Instrament by v/hich the alleged conspirac;^ was consiarmated. If it v;as so a.sed it ccnstitaped an abuse of the p3.an. Ih*sn if the coart did estab- lish that the alan was so abused, tl:at fact could not be remardsd in the light 1 of a dem.onstration that the plan when not so abused v/ould be illegal. The v;ritsr, ho'.vever, does feel justified in recording an objection to the method employed by the Governiicnt in presenting its evidence, in the Hard- v;ocd case. Isolated excem.tn ~ ■■. ....- w ■ ■ i. - 'f-rj-'J -• ';"■_•■■•' '-"i r-'TJ,. V’i: :fl.’X-r •.■'•*': ‘ .* 4 ^ * 0 ;,i Jbii,. ;i.&: O-lT :iO 1 ©rf.t X/r' 5 !^ . •i’^ XK' ••' ' ■' . ■ .cr-’jnz--. ~X a ‘I ^ ad ,+t.‘ •>..:-'a, ..'r ,. •t’.-ei) "^0 ■ .■ (M-. -.Jivv . ■'Ti*' •. . ; . xriii i zti: ssm :,.-4?x:l^i- 's -7^1 u^^LV/v-ig, r '- ir *^6 »dai::'rm. .Le.'Lf^^i. 3 ,. .S^' ■ \. • 63Vl .’:1 i'.c-X ■ - ■ ■- . ■i.: - ■? *• «t y--v\ ,:i ... . . i - j. 'y r ^v^l■; - ■ ^ , :^'u 4 , ' ■ . war* • ■ • y\ 'i ' ■ r . ^ - ^ _ - . _• . ~Ji. a SCi * " oX 4-. . -•; •r. e .■ fc- » 4 . - ♦ ^ -N .* * ■ 1 . . ' • ■_ ■’ ■■: V?4? £< . 1 :o '- -' .'0 .. . , . \ !/i« : - i TT li ( •v;;j T-.-'i ' - • - ' - ' - • » 'r> •4' ■•' t, j ■ r * '* a, ■ ' 1 ». - ■ ■ .-•• * : ; . ■ • • ■ " Jf;x ' . *V >‘4 ’ - . ^, ' . 1 . .'. “‘ '. '- •. :r' ■"''i*:6r. sw*;-. ..*1^* x: Jt is> *i ’* * -' ** ■ * 10 ti:<: V : . ;'-.v IV- "xi. V • .•••• M sdi-j ' • ’c^ 'i ■ f.r , ‘ . j 3 *■ :-X 8 -/'ij itX i 9 .it . -,’ c: - “ Ar :/i . ■ . y a.» I'J fw'-' - y -■ , X 9 I . i. I*«>«r.oi 6 r. •_/ I’::; •/■■ U" -..i '-CiX.rrq r Z i 3 ‘tfi? . . ■ ‘z'. r*. ■ 4 ''. 'I-'* T '.-'i: al ;>,-'■■* ls~- :* V i'y^'^roT . . - . •c-'.T .f r X. c ...*''. '" 3 : »? 7 :. ■ 7 -'' ■ .'* -’■Ji’! w y.- -yi- ■ : :: .-.j'.:' : ~A * j c.SCiflJb. . ** ^ .-, WTiftlW il'.’* <->T ■ tiUl nM 'U, cOLae r *'/ U*' 'j jB q^: t*w;£c'i-v t ‘X‘ ’■<- . * ' ' ■'s , ■'V 7 J .'OcCf^ .'. i '.'' ■“ 'tnl.. i'. ^ U ~ V V. ••- i • • 4 J 6 u i . - :■ ■ t--; , > i c V I (■ X ?? ■' .’.ow-X’. '.i-'iA ,i 3 S€-r , 0 ^'i , -*- ■ ■ ^v.yy. • ■*> » ' c!j cm 164 report was sent to members of the plan. The court held that his arrangement was not in violation of law. In the case of the United States vs. Aileen Coal Co. et al, it was charged that members had combined to enhance the price of coal by agreement. One item of evidence related to the exchange of information among members re- garding their sales and pricee. In giving his instructions to the jury, Judge Grubb said in part as follows: ”It is the right of every man in business involving the sale of his product to seek to acquire as full information as to the conditions in the market in which he is selling his product as he can, and it is also entirely within the right of persons in the t rade to share that information openly among themselves. Nor does the mere fact that they accompanied this interchange of information with statements as to what eachexpects to try to obtain for his product in^itself constitute such action a combination within the meaning of this Act. ” In the case of the State vs. Arkansas Lumber Co. , the court held: ”If in the instant case therehad been touching this price current matter no antecedent unlawful acts of the Yellow Pine Association, if this association had not for years promulgated as current prices lists which falsely represented and arbitrarily fixed the prices of yellovi^ pine lumber pursuant to the adopted report of a committee on values, and if Smith, the secretary of the associa- tion, pursuing the lawful methods originated by him of obtaining reports from correspondents of actual sales, had fairly compiled and averaged such reports into a list of current prices of yellow pine lumber, we would not say that Y, ■ United States vs. Reading Company, 183 Fed. Rep. , quoted in Argument of Todd, . C. , before Supreme Court, Oct. 20, 1920, Atrierican Col. & Lum. Co. vs. U. S. United States vs. Aileen Coal Co. et al. , U. S. District Court, Southern Dis- trict of N. Y., Brief for Appelants, American Col. & Lum. Vo., vs. U. S. , p. 64. iv- T f . . ■; .i-r i'.’ , . ♦ ■^ . w ■. dj * %*r •! • . / '. T'. ' v' 0; ■> :a : • J.o’? L- I ' n* ri t)!*" i'j ,.: • i; : V : r :■ , ;.• , r^l OC. i i y 2 ’ . Oi/'. ^ J'C ' lev: .^0 .Jn'ji'i ' * VI” ;!j»iWS _ : ' .rt n '. - ^ i . X ' ■•. '.'■ . • -J .i 2 v*! 0 «‘. jO Jr-: • J'T- ’ll' i.r^n ' a.C'.'jIj r.’ *"t * <-r ^ L. .. * ? . ^ . r^nisa -iJUT t r,.z^y. ti*« r.i' V?* 10 fK 9<4 • - • • * J •’^W. ✓> .•^i ,"f:';.t . , . :h:' *v .-t ':. .'~»t ,: ■ •* r' .'•'; .uiJ -\X \z . ■- .‘V' trq 'y i J / i .. ::■ ‘•.e^ »•: i?.‘. ! •c^o • >.> r.. i :■:. . ■ •: iS: r ' .-i *: " f.ii'Tl P.,j j’o ccf. lc'^jvrv-X.-s;.:;,#‘a»t 65>>^.. i' : ' • 4»t-U4»i. ■'•rt JbSJt'J-'-- :v: v. J£&dl :x 1 ! • .‘j iJJC. V - •. . ; ?V ■/ -J. V cr>ij u.!'. . J ♦.<' *J.. ■"V ■; • ■■ - , -'' - :r , -00 ■y.v/' ,:- ,'^fF ;>Cv- 5 ?'.:,-:o^ . . ’^I.' ' - Xm ' ■ '/ ' ‘^ " w J' ^ *' ^ i-'-: .i • % ». .. A I ■ . '‘W*^ , rzr'-^- \L- 'J- : l t ‘ . - li.-c ft^ir . ,j' ' ' “ :/ \aIz r.. Iw* ir bftir 165 Smith's acts or the acts of the association in his hehalf were unlawftil.” In the case of the United States vs. the Eastern States Eetail Inmher Dealers Association,, the principle was laid down that when information is ex- changed forthe obvious purpose of suppressing competition or raising prices, it becomes illegal to distribute such information. The defendants who were re- tail lumber dealers, compiled and distributed among themselves from time to time, lists of manufacturers of lumoer and wholesale dealers who sold directly to consumers. The object in so doing was ”to cause retailers receiving these reports to withhold their patronage from listed concerns." The court held that this object, namely to boycott those who sold direct to consumers, was illegal, and members were enjoined from continuing to distribute this class of infoimation A similar decision was handed down in a case involving members of the Norwestem Lumbemen's Association, i.e. United States vs. Hollis et al, where the pur- pose also v®,s to prevent manufacturers and wholesalers from sellinc'- direct to 3 consumers. The cases here reviewed were brought into evidence by the defence in the Hardwood case in an attenipt to prove the validity of the furnishing of information through the medium of an open price association when the object is merely to keep members posted on market conditions, no purpose of using such information to restrain trade being in contemplation. The Government cited no decisions Involving the question as to the validity of exchanging information 1 . State vs. Arkansas Lumber Co., 169 S. W. , 177. Eastern States Eetail Lumber Dealers Association vs. U. S., 234 U. S. 600, quoted in Brief for appelants, American Col. & Lum. Co. vs. U. S. . p. 71. 3. 246 Fed., 611, quoted in Brief for appelants, American Col. & Lum. Co. U. S. , p. 71. vs. ' T * • i.ct> ■«X.' .s? , - 1 r»»ur-.-7X«t»T«5iaa®*iW 166 n tlircugh tli6 msdiiim of 3 , ’tr&dc &ssocl3.tion< The ca.ses cited may therefore pro- bably be considered representative of the drift of court opinion. The legality of the practice has apparently been sustained in every case. These decisions nay, of course, be disregarded in the opinion which it is expected the Supreme Court will hand down in the near future. EXPOSITIONS OF TEE LAW HELATING TO THE 0PM PRICE PLAN Turning to a coisideration of the point of view of attorneys, a considerable number hold that the collection and distribution of vital statis- tics through the medium of an open price association, when properly conducted, is legal beyond doubt. Mr. Arthur Jerome Eddy, the "father” of the open price plan, was to the time of his death the most conspicuous defender of the plan. Others are Judge Dickinson, who was prosecutor for the Government in the Steel Case; Mr. Elmer H. Adams, of Adams, Childs, Bobb & We scot t, Chicago; Mr. B. K. McCloskey, of Kinnear, McCloskey and Best, Pittsburgh; Mr. Henry A. Wise, late United States District Attorney, New York City; Mr. Rush C. Butler, of But- ler, Lamb, Foster and Pote, Chicago; Mr. Win. J. Mathews, of Wetten, Ifethews & Pegler, Chicago; Mr. James L. Bruff, New York City; Mr. Clark McKercher, | former assistant to the United States Attorney General, of McEercher & Liri, New York City; and W. F. Lehmann, of Lehmann and Lehmann, St. Louis. What is caisidered the most famous exposition of the law relating to open price activity is that which Mr. W. F. Lehmann gave to the secretary' of the Yellow Pine Ivlanufacturers' Association, in a letter dated April 8, 1909. Mr. Joseph E. Davis, Commissioner of Corporations, regarded this exposition of | sufficient worth to incorporate in the volume devoted to "Trust Lav/s and Unfair r. Mr. Eddy died in July, 1920. 167 C5onrpetition” which came out as a putlication of the Bureau of Coroorations of the Department of Commerce, March 15, 1915. The Commissioner describes Mr. Lehmann 1 as "an eminent member of the American bar." As far as the writer's observation goes, expositions of the law contributed by other attorneys have been essentially a rehash of the arguments presented In this document. Because of its importance, as embodying the interpretation put upon the law by a large number of prominent attorneys who firmly believe in the validity of the open price plan, it is here given in full: "* Mr. George K. Smith St. Louis, Missouri. "'Dear Sir: I have given due co nsideration to the matters we talked about on Tuesday and have found no occation to change the opinion then expressed. "'YOU have the undoubted right to collect and distribute the fullest information you can get of what is being done in the lumber field, with all de- tails as 1 0 the amount of production from day to day, the stock on hand, prices asked and received, etc., and every man who receives this information has the right to act upon it as he thinks proper. If he thinks more is being produced than can be sold, he can reduce the amount of his cutting, or cease cutting alto- gether if he chooses, -until conditions improve. Beyond this, however) you can not go. There can be no agreement or understanding between two or more lumbermen to limit their production and there- fore no coarse of conduct from which such an agreement or pnderstanding could be inferred by a court or a jury. If some man should go from one lumberman to another getting from each a statement or a promise that he would limit his output in the future and what each man thus said was communicated to the others, and if this were followed i! Davis, Joseph E., Trust Laws and Unfair Competition, p. 715. 168 by a limitation of the output, a court or a jury would be very likely to infer, despite all protestations to the contrary, that the limitation of outimt was the result of an agreement or understanding. So, too, if one lumberman after another declares that he will here- after curtail his production and they inform each other of this purpose and then act in accordance with their declarations, a court or a jury would be very likely to infer that this was all in pursuance of an agreement or understanding. V/hat is in fact being done, each and all have a right to know. This is no more than is done every day by the market reports in our newspapers. They show, for example, the daily receipts of grain and livestock, the prices received, information as t o the visible supply, etc., and farmers individtially govern thera- selves accordingly. The man not pressed for money does not ship his grain or livestock to a glutted market. The lumberman may undoubtedly get like informa- tion as to his business and may determine his conduct by it. But the action based upon this information must be individual and independent. If he concludes for himself that the market is overloaded and that he cannot produce at a profit, he may curtail or cease producing altogether and for as long a time as he pleases, but if he concludes that ha will continue as he is doing, tmless his competitors will also curtail or cease production, and there is a curtailment or a cessation as a result of any sort of a preconcert, agreement or understanding, the law is violated. The conditions of the trade, however bad; the price of lumber, however lov/; the persistence of luxnbermen in cutting an amount above the market demands; will not legalize an agreement among any number of them to limit the out put of their commodity or to fix the price of it. The policy of the law is free competition and it plainly requires that each producer shall conduct his business independently of any compact with his coni^jetitors. This does not prohibit any -.0 :iiw .:t..r ' .-r^rcal •raf£i9i.'r; . 'i- ; r . I i * : '.i ^^V\l i^ I’l ,r. i'.yj-j' r.jf fiirja, . 'x:- . : ., rl ' * -t ^ ' -'C ?:. r _-«-3 U£iJ ..tg^ v=f.. ■i ^ ,cfrx;UiZr- VC I " .. ^ <'.t' ..aoofd - 4 V* ' £:j - , , I _■. ■'. ;• j q/: ?*. r;*j« *cn t :'««^!!i:i»vXr ■ ' .'-r cji«®rinfi.! - ' ■ t- JtfjeX;. i. vi jf .1 .jTi . I'f yrrirr.i.’O; vi:r: ceat'.lcayo o.* a r.cl - ^ faid 4 ^ 3 - n j :*■ '=« ' X :•-*» . ••ui^■ -Vi w il ■ -jiv iiJ2 , C.X i' rixf* li ■. . . ^ i _ VC J>-,' • , *• ,■ -.' . - '; >.;J ."X - cn: :r.-ir L^t.s Mi(^r.- ■ u*: y- ^ *.r.» s. K -.r-.r i- vol •' -■ '• ■• ' . - ^ , XN ^' 10 / 1 J 6 -? I,i - ,v /■' .*. ;-,!, 8 i ^ a *V£. ’w*» vV # r» t vXlc-Oc :.c c . ■ 7 i.f. . V f ^ «-■ * , ..X .' •fuXl'rs^X V '' ; V ‘to • : , . !“. .'-.y «k, tJi ocv^ i c- j;- ( 4 r J i.iv- avvuxic' ^o ?-c.vvrr*is.A , | [*i <• ‘ 4 : J ' .; -VTc^ . ’^v.’ 1 j ; i;.-:OC X V.'; ;»c-I 'Xi . ix.-j*x ?n- ;xx.i yxvjtoift . jrfj.!i,' ^L^iMfor) i:> 'y'.yvcX:- 169 prodacer from talcing into accomit all the conditions of "business in detezmining his own conduct, and it does not forbid cooperation for the purpose of obtaining information that is useful to each and to allt ' I repeat, however, that beyond the collection and distribution of information as to what is being done, you cannot go, and can not state too strong- ly that any agreement or understanding, no matter how Indirect the means by which it is brought about, falls under the bam of the law# Respectfully yours. F, W. Lehmann* ' " Some attorneys apparently believe that the operation of the open price plan roust inevitably lead to a violation of the law because the plan provides 3 exceotional facilities for the accomplishraent of illegal acts, but, as far as the writer’s observation goes, few, if sny, take the ground that the open price plan, considered in the abstract, is in and of itself, illegal. The practice of members exchanging price lists throxighthe medium of a secretary, regarded in many quarters as an integral part of the open price plan, and engaged in by fully as many associations as pursue the other method of reuorting only actual transactions, has, however, met with disapproval, ^r. Eddy, the ’’father" of the open price plan is among those who declare the inter- change of price lists to be illegal. During the Babson conference on Cooperative Competition held in October, 1914, various open price plans then in operation were discussed and a final coiiposite opinion of a plan which would cover many lines of business was drawn up. Section three of the plan provided tnat "Each member shall, without previous consultation or agreement upon the subject with any other member, make up a price list of net prices or discounts as eacn class of goods may require, which shall be the lowest prices at which he cares to sell, Davis, Joseph E., Trust Laws and Unfair Competition, p. ?15. 2*Mr. Samuel Untermyer, an attorney of repute, practicing in New York City holds this point of view. See Hearings before the New York Joint Legislative Committee on Housing. Record, pp. 4598 - 4666. > *! ■ fv . ' t. . r t ■ ■ r ?• 1 •:o.; - . .:: c < ,i ; ; ■'■ ■ ; ** -i‘r^ - ’'iv'.j'i • ?,*•/ ^?>rA :*J - * * • - / ■ A. S A,r. U.V ' j ^ ^ O * : ': ■ J- -• *.' TT :~> i rrv ; V , . ' 'T..'\" ■ . I'-. : - v' iia ^ :r ‘. .'. « 1 *. ■ ’.. ttfi ■ to. ^rrcq:c -t •* ■ J *; '■ 0 . ; ,*t ^ Si . ■ 0 • , , i - i . r •■A «l ' 1 * ■• ■.' i-v'.; :: 'A.:? i'nXv'T.'^, :\* "v-j-ir: 'Tj, f-yjv.'- ; ■ ?-?i» i , ix ..C-; , -'f - : -‘irrp r • '. n->r»W 1- V.O.T .- «iT j. . ^ . -'' .. ' , I: - *• - .i em- Bx:; \s.r^«a • j i ^ '-f'lfc ioi'anji •• j i i - r* .1 "6^. , j;.'\ • _ T» six ; ;«Tr -»r . • J : - . fit- * _ >•- ... . , ,. ; I rUjJ ' s-r.'i i"*'r-r f ■ ■■ ■ ■ *■; . .,, .ri'I -: --i.^ ii .■' ti. . . 9 X 1 # 4 i ■■■ ■^ ' ir>.- ‘ iji-a : I. i’, . i SU.'XK.-Si Ixj '10 rscv - ,-; ' ,j w* i. ..^ iV> ^ \ ■ ' ■* £it<- j S.1- r^oz-^'^.'r 2". : -.< f4>:; ' ■', .j- . / fL- .. ■! ■ *. : :k> r :■ i ■■ , 1 v -.;r ?c :2^y xijt ' •; iy.-*AV UC i.^‘. .. ;,.^,-7s jfri. .v:x ^ ‘ ^ , ' - : v^; ...r ■'•TH 170 and forward such list to the secretary before a date to be specified by vote of 1 the Association.” Mr. Eddy criticized this provision as follows: ”In my opinion the law does not permit the filing of price lists as provided in this paragraph, and plans along these lines have been severely criticized. I know of no authority which permits members of an association to file any list of prices, 2 either lowest or highest, 'at which he cares to sell'” Upon the receipt of these lists the plan provided tliat the secretary should make up a conwosite list, stating thereon "the lowest conparative prices found on any of the individual lists submitted to him, and immediately send a copy of this list of lowest prices 3 to each member of the Association.” Mr. Eddy criticized this provision as fol ows: "The precise duty of the secretary is not clearly outlined in this paragraph but, as warded, the paragraph is clearly open to the objection that it permits the issuance of a more or less arbitrary list for the guidance of the 4 trade; and if so, such practice has been specifically condemned by the courts." Mr. Eelix H. Levy, former Special United States Government Attorney, now practicing in. New York City, in a speech before the National Pipe and Supplies Association, held at New York City, April 22, 1914, gave it as his opinion that the interchange of price lists was in violation of the Sherman Act. In developing his line of argument he cited an instance where a certain association of manu- facturers of machinery devised a plan for interchanging price lists through the medium of their secretary, the purpose being, that "if a buyer came and said so and so is quoting a certain price, the manufacturer could look it up and tell 5 whether or not it was true." The existence of this practice - so the argument ^‘Babson's Reports on Cooperation, C. C - 10. ^’Ibid. 2- Ibid. Ibid. 5 . ’Domestic Eigineering, Vol. 67. llay 9, 1914, p, 203. — xr^ . J \ - ' ■ . . : ■ E (, -Or .-*vv v;:' r c.* a 0tole^ -Cifc^’v^:o -3 3*-^^ o; •Ta.-'!: i.:;* t . r* 3i:cl sfi r.oitivo^T s hi'^ .V..' •.-:? ? .ui ■ i i-atirc-x.; s^t il »ci't', io oi£? -:^ljrr:c2iioX ,t^i:I '-• qr ,|aifle c «4 e^fvr'r ^ v-4irr.Pi 1 a£iS 'io ”rr^. r.-. --.-iTtil e\ X?irx^:"''O0 ‘ ' ■ " l,?.-»i. ife'->.-roI sai: tQ \cm 5 ,.'.t. oi Jbsr^iEif' c Ovt-XX |' t " ^ ■ “’ •-■JOija.lsOB* A. fiuf^ 2^0 \;fc*.:• Mii/c :'- ^2'T -6^6*2 -:3« ^ :^c‘ 16 'vAr-.t-fi : wo ;o:i |; -i--^''-/e,co.eW2 o? fto^o »2 jf eu^ ,ioJbicr «r ,2iri 10 6if.* - 3 ', Tell lifrA 'iisr.9l 'ro -;ic-- « to ao£i^9&l 9dS elta^.^cr 91 .: ■■..''■>0 vrXrrOi^U-.a ejad 9T^tTz^%r' rft-L'B ,-t.R \t hri& ,♦ • 'no^5A..w.«»u^i«v:-:' r■■^TA;k tthlts: z.i: ^ | ri::a 6ri^T,X^iox->q:: -?,'2 .^an 0'.:i' oc , •; '• < -■ - . &- .••, . .,_ t /il jbAjaf ‘ oo^tq «fJ’ rl/jow j*i.-. ;ica 4^^ j! '-* * • X I 'jj •' ■^•: ,VT. ' . i’il V5 no ft ic3qpr.# a.'tj o3 .-.h-'jo; ' • ’. — ^ .'S ' i j * * » :t' - f." ^tiicv'fiori rir X .' ni:VU ■»•: ■ ' e-oIcAlix. c c-if7o .i»cro lo -rTi^ja,-n ■-;- ns : H-> aO' c>^‘:x*,! i ..*• ■oI’T' r:£:.o ’r " ' t.' “ «J ;. ; * a :91,^ m ' ' - . "1 0 » C '■ ^ a: mr:: . .'J : t?. otf? &^a..uTQj' •■ '■ ' . s Jt.^ OC ,• ■'.i. *;ol r:',v-'^''rv:.-f.t»e • 4^. *1? « rri'.- 'iJ'*- jii .1: ^.-''? t,:-/i:’'.' .'Tl'p.: r^cv '. . T i.'!''’ j- 3-'^^?..'.^ <'::.^./- 'T li :£<;Ci Ji.'.v 4 : ^ I ; arfif Itc s 1 9.1 : >'.' f 1; •...: ' '.' UiO I !?■ Jjo.7.^.,3-: '1 n- '4*' •r'? : ' ■ - I . ■)! ; r.:;3.;o J v.-f; ._,r:i. ''fi'nfiit p .'■ ~ ' ■j~^. 'r.': i.'.-jJ"' . . ; j ? • ”70 uron :,:-M "; .’-coir : " . .u ' :.-ri« •r. :-:• --f: -o ,-_ *•. '■ , '■*" N^rr *■ •:- 0 70 &:•■> i *"«loo.’ • o O*-. “-i-l '»•- -riv:': : i'cj oj' erfifT '•-'i/* ■;ri ,?.,t / . : . -:o IP? ' - '••• 'i; :.%&] i 1-- !• „..i.'. *-’ - ' o '• ■. ■■. 51 ~: . •tt7: o. Ic. #i^/rfcX5:>«ftA. Ct . .•?<> f - ' „ i't’t' '•■ <» '.J[& 172 "Given an association in any trade or industry cased upon the single agreement to exchange information, there would he the temptation for groups of memoers to agree upon their hids, to apportion work and so secure for the time being arbitrarily high profits, by suppressing competition." You agree to that , don’t you? A. Yes, the effect of thst is ... . 0. That that is the temotation of these associations? A. That the 1 temptation would thereby be afforded.* * * Q. Reading : "It is almost as common to hear men say, 'We have an association, but we don't agree upon prices.' "'What do you do?' "'Why, I get up and say, 'My price is so and so', and the others get up and say their prices are so and so. ' "'And the result is, the price of everybody is 'so and so'. "'Naturally, but we don't agree they shall be, we just exchange views and let prices take care of themselves.'" Do you remember that? A. Yes. Q. Do you agree that that can be done, that the law is going to be whipped arouad the st'omp that way? A. No, Mr. Untermyer . . . Q. Do you agree to that? A. To the effect that they made statements as to what their prices had been. Beyond that I do not agree that they can state what their prices will be. If that means that they can state what their prices shall be I don't agree with that. Q. You are skating on pretty thin ice, aren't you, on that proposition? A. Sure, it is a very thin line. Q. Pretty fine line, so fine it disappears when you look at it? A. No, it doesn't. T. Ir^athews, Wto. J. , Record, Hearings before the New York Joint Legislative Committee on Housing, p. 4629. « A, "1 . 4*/ X ,-.JL --^ ...wi«v! ,J'-.-i'ie-’jq if_ .i;i \I’*-Vi6 ' X‘ ■■':« "j/fi-,- ’ ■ iCf j :• • . -1 - » ■ :- ... ff.,1 ^ ;4 -.ir-.r,. * — 1 «... 4. ■> . •■ “OT -VI 't' t- ' ’ .*/.-.o H'OC t ^ - . QQ : * i jl" t - ' csf .;,/ ’ ■•■(-., ' ► J ’.■‘. 4. , oC '. : V.' - ■ *■;* lcy> .'-'t vii? i* c.-’*! ;' ' >• - -. , X t- " * 1 • ■ J * -; fw -, « .. .£; i'Jv •-/£,. ; , t - - 7 ■ '* ' ' • .. .v ^ f* l .^ - - 5 - ■ ^ , 3 '} ; ;^ • - .-'i .-xJ ' •■ •-■;4 vji- . ' * 7 . 4 ., tift ‘i tf ji;-. .., T '.r^ -•■V’j -0 v.x:- .ilwf : *5^,^., •.>«:. , ,/-x ..-rj^ ’ :,;. ** oj ;^!cr, £ . v, ^ 5^.^; j..,^,. ^JOB .^,-a S.J>- 4S rmv J .* ! . ••V .’Vi •. ■■; -X- ■ crCj irsoo'- f. ■ 7ce. -t,.- 0. ijviV, ,. f'0'r^.a - ■; -y^ ► sSl Tib^jf ‘ 5 /iff. •.-.tiiij.v .iip -■'^ ■ .-f '_' i *'"- • • fc' r - S S7 . V.H ^ ij. I.'i*<'0-: 'r^ :,. .i ^ V> . V - '.- 'n- , ..i • ' ■ - • 'Jit J •■.w> * ir.qzv « ■5*5 -i ! .L. n ijcL ztt . ac • ■'r “ V ftf; : '•* Jili • -. -■•■■*? i' - 5 ;.'' - 173 Q. Of course you know that husinesa men do not travel across the con- tinent in order to tell one another what their prices have been; don't you know that? Because competitors are supposed to know what their prices have heen? A. They don't knov/ it and that's one of the puri:oses of this society. Q. You think that competitors in these great industries with their swarms of salespeople out, one man doesn’t know what the other man's prices are? A. Sure; they find it out very quickly. Q. So they don't get together to suggest what their prices are or have "been, - they get together to suge:est vdiat their prices should be? A. They don't 1 do tliat in any of our societies. * * * Q. The principle of the Eddy Plan is cooperation, isn't it? A. Yes, but not to eliminate corrpetion. Q. You are of the opinion, are you, that there can be cooperation, combiriation aund still coirpetition, are you? A. Yes» sir. Q. It doesn't strike you that those are absolutely contradictory terms, does it? A. It does not. i * * * 0. Don't you know that cooperation between competitors is unsafe to the public unless it is guarded by governmental supervision and regulation, so that the public shall not be taken advantage of; don't you agree to that? A. I can see that it can be abused. Q. Now, then, we have at present no governmental regulations over competition, have we, that is opposed to the principle of the present economic system? A. Yes. Q. Now, in the absence of government regulation of agreements between competitors, don't you see the peril of such agreements to the public safety? A. Oh, sure. _ Ibid, p. 4624. 1 *'r ri-.fOU --.i rt jiT.-- V •> '. './■ .‘/••j!»o‘ •#•-■,'•:< ’! i^if4 ^A~?j '?otv:v ,' ‘i? . 0 at ^r-.*ca 3 '*: ’‘/v. .i 'rt feioj i ,’«.^caot) •.on rLu nioo-*.- eifr V -rc ham >71 . ■ ■ 'ji'-.- :^C". , ;._ y ;■ . . : •': j Jl'J •■jo-'r-SJC- ^ ■ ’•i”' ti<.x •- .c , .' ■ '■ < ft’v ' T , •* f liT ■ :C,.'- ^£; ..iv -.•? .•?-.; .' 3 " a ! ;_.. .ajj " . . to ! ' 1-1 .* i i ha-' r>^ 1 ‘ 0 -li i :.'C 5 . / - .Tu.ii l 3 «^ -*v; .V - J* 4. 'rt-i'a ,.-;'?•• ■?•»;' ... . ::.■. . w -- ' • - ' - o:-. 1 -. ■- v' ^7:'pi’ i>«P">r^o tt :. • :. ■ : iS.~‘* r —'-3 t:l& 'I wcff .ii/ t'T'j cb vr.ji V. > • A . .. i; -•; :■ ) :u r . ^=r— irtT : -.-aasEj?! r.i - ^ • - -/ »•-;■... .-.rj*;-.- lo' n« is ^ 4 , i ^ vf. VO rlt 0 $ ! Oa ‘-7’ •■■" nolia^rOw / :• :iv,u» * “'"t , V : . ii , ^toL' a ' ' 3 .ciB * . ■ c:>. .... .. , 'i.af4\ - • -• :v*q «sV ., ■ *. iT. i u; J.d bM tf. :dj -.’r -, ‘ ^ .^J: 0- -'■ - 'i, -cw £v . ,,V4- «>C7.. xo at.’. : c'li’ -j '.lc i"'- . 'iv''.,.*! V'- • _ lioi •:*. ■ • . .' ’ -i* — - •' ' ,.:0 L-' nf. '! e'xs, 7 -- i-‘"; •- -■ - ' 7 -_ao: -- .-! -o J Si- - *: J v a- , f ' : i vlt, ;. I ^ j -■ r :: ": zl eaoi^jCvJ .. i ^ - .*<#4 ,* - ; , _iJ .' t . .* *\ - ' L--i lo e '■. k* « - V. .5 .... -. -f-;. ■*. ->*n.<:- 'X , ’"3 . .■ 'Ji'-~.X '» 9 ^ - J? J ;r.-. *1^1^^- ^ V bO -' i. 7 -0^ _ O.t# nr „ - XA' ?!ro> 1:^ w’jitc. r». '* oa ti V xisac’ijiqr^ iK-'K^\ , i .7 eidi' r. 'xi oi ,-• • eta^fasw 5 x;». . : ! .3 vl ^r.o>'V - •»' ■ 'vs- J . . .-:. 175 obviooisly forms a possible vehicle or mediiun for reaching more or less definite agreements or understandings controlling the prices at which luniber is offered, the extent to which they may serve as such a medium deoends upon the policy followed by the particular association as to the degree of publicity given to data of this character, upon the efforts which the association may make to in- duce its members to price their product in conformity with the highest rates shown by the current reports, and upon the extent to which the individual lumber producers or selling organizations may use the data as a basis for price-control agreements or informal Tonderstandings. Properly employed, particularly with a large degree of publicity, such information should serve to stabilize the lumber 1 market to the advantage of both producer and consumer.” In the face of the statements made by the staunchest supporters of the Open price plan, tantamount to an admission that the interests of the public may all too easily be jeopardized by the unrestrained operation of such a system, it appears that unless open price associations are to be forbidden their exist- ence, some means of regulation or control must be sought, looking toward the end of confining the activities of these associations to their proper channels. Before considering the reuiedial measures that have been proposed, it may be well to give particular notice to some of the more common methods employed by so- called open price associations in their endeavor to unlawfully maintain or en- I nance prices. ILLEGAL ACTIVITIES AND SUGGESTED EEffiDIES In the attempt to maintain or enhance prices by means of concerted action, reports pertaining particularly to production, shipments, stocks, costs and prices play an important part, for they serve to illuminate the competitive ^Deport of the Forest Service of the U. S. Department of Agriculture on T irnber Depletion, Lumber Prices, Lumber Exports, and Concentration of Timber Ownership June 1, 1920, p. 68. f^r; ^ 'Xvi ;• 70 ^.[;:r:i:>v .579lf*f> .“ 1-. . .. r, ^-r ?z, ,\ ■■ i...; ;t.''J , T;r: .-; or. rr.;:o. !>./.. no'v :-^ - ..'ii-.-.f - v-:s. 7 * «4 fv.r:,'.. :i-:rfn 0: f.-f, 3.' .: .V V oi «Jft. ^ C.i> • ■**Ji ^Jjw \. : ■, - oof_a V.' ' c'rir.w •_; iciJt'- fci,; .fta.. .•sajs^bu.'V^c’ sX-^f ' 3 f.. a:Jf cl i . c:., . \.i t4^9 l .j. ■ . A .,3 o>f . *«3ov..‘*';k • ,.^ ' St ^o .: 3 e£i; ■® - ■ - -- ..i* • •; ^ r •jo '’.'« S C ,i^x.. . _ ’ijtfr ■ ' '*■ ■* !‘ 4^ 8 i ■» • -7 -'V. w ? ;.r.. i . •:« i , . ' ‘sr-Oe : a • : I.-;'; *.' :, -i ■ ,_ h' I *ti ; a » ^4-na ^ , ?7#r'© ^ - •■■ ? 3: 'iv - iy .>.'iv!i£, .i xt'yjo ‘10 itxi# ' . ■ ; ■ . ■ ” . ' ' ' ’-■- * .7^*^ ■ '^ L\'^:} ^:iyzst'.,- z *■'•' ■ 7 ' ~t; . ,v. ; >} {) \c '-r-->ft r:;*- tofJDfi :• : svl- o* t 5 *r ';w 'X* - u t’.'/c. ' i;rf»i J.:: . !i tiC lu <2SK"3 "Ii.C : :i.l 5 ■ • • cryi ^"^7?IV7' :'X JA. ■ '.U. . .r. s, ^0 (i.'jit-'. yo tooXT:; ■ -i:.. .■.X^l.:,iJiiCi OJ O' ,_ s - V yj \;X'.;-‘.'':.':/i ."17 7^ 7. ., /.. ifiif.'.t!' r^xor^i :x. '■y- i-i. ,.: •7-*.3c.'; V r : 3 T , .ti. ''t'lfo JU rx , .* "^o- XJ-: V, . . 'ic- &oi7-s^ :e«r^'.’^' it 7,..' -:. :L:iT i > n :• i >3 : -^ ,hO- - i^rrl ...Oi;iXL *g>x 176 situation in snch a way as to malce clear the course of action that should he adopted in order to accomplish the object in view. If it is thought desirable to seek to achieve the end in view indirectly by curtailing production, a oar- ticular study is made of production, order and stock reports. After learning the conditions of supply and demand therefrom, it becaaes pogsible to deter- ndne approximately the percentage of curtailment that is necessary to net members the ma>:imum profit. In the case of the Yellow Pine Association reports of this character were made the basis for determining the percentage of curtailment. Action to curtail was decided upon by resolution. Not only v/ere the reports used for the purpose of determining the percentage of curtailment but the sec- retary used them after the resolution to curtail had been passed to determine 1 whether members were complying or not. The use of cost information as a basis for enhancing prices in con- cert is often resorted to because the circuitous method involved in this pro- cedure is helpful in camouflaging from the gaze of the public the true char- acter of the activity engaged in. Incrimination is therefore less likely to result than if some more direct means vyeve used. In its report on the ’’Causes of High Prices of Farm Im-oleraents, ”llay 4, 1S20, the Federal Trade Comrrission exriosed the practice in vogue among the associations of implement manufacturers of peiverting the study of costs to the end of controlling prices. In effect what v/as done v/as to have cost ccjrqparison meetings at which inflated costs were compared with the tacit understanding that priceswould be advanced tho same percentage shorn by the inflated costs. The standardization of implements, and the equix^ment that was furnished therewith, was pushed with energy because by means of this achievement not only prices but also costs could be made comparable. 1. State vs. Arkansas Lumber Co., et al, 16S S. W. p. ISO. 177 With some degree of standardization accomplished, cost committees could proceed to arrange a cost schedule, assigning arbitrary inflated costs to each kind of implement and equipment, these having no necessary relation to actual costs, hut serving as a basis for "recommendations" to members that the percentage of increase in costs would justify a like advance in prices. There appeared to be no direct price agreements; no doubt it was appreciated that there lay less risk of detection in controlling prices through cost education. As the report of the Federal Trade Commission states, the "connection between cost study and prices of memoers was one of subtle group suggestion and unity of group opinion created at meetings rather than one of direct nrice agreement or other formal l‘ action taken to influence prices of members. " Eeports of prices submitted by members were used to check up their activities to see whether they were follow- ing the course indicated by cost study. It is apparent that the cost work done by these associations was not for the legitimate purpose of educating members in proper methods of cost keeping so as to make it possible for them to ascer- tain their actual costs, but the purpose clearly was to encourage memibers to , . 2 advance prices by disseminating among them studies of inflated costs. There remain to oe discussed the various legal abuses attending the exchange of price information. The exchange of price Information may take the form of correspondence and conversations indicating prices to be charged or it may be confined to past prices. Itost so-called open price associations have been ratlaer circumspect about exchanging information of future prices, because 1 . ^ - Beport of the Federal Trade Commission on the Causes of High Prices of Farm Implements, l,Iay 4, 1920, p. 427. 2 . Accounts of the cost activities of the farm irr^^lement manufacturers' associa- tion may be found on page5308, 309, 318, 414, 459, 460, 526, 584-587, in the Beport of the Federal Trade Commission on the Causes of High Prices of Faim Implements, I^y 4, 1920. ^--c« Cli ?:.■*£,;?!/ .'-T-i:4 ' -.^ jf ‘'T .-^ “•- --' "', ictA ,t " ’ O;'; :Jil i s ■ ft- t; • s^-QO- ~ r...^y 'yt.z. :r. - .•^ ':c ovftJi ■9v'2o; *,. ,. L£ -r liXTA ?««”•! qptl ’: o'J .•l■rl5^•:'' *ic "t aZiiifJ 4fi%§ .. v.-.s •■* i c*:o. “ , i :i T -'^i c^^cr. r* ' >:^i«.nfca- I . . i. ■■'* ^ ■* * ‘ C • -^4 ‘ ^ _ .■“t. Ci". . '. .r~:T' ^z'.:l'‘‘i . - liricrc q:-:?'. I.- — - . ■ :/ .r'noi . .i ;c ■■'* -. - • fftSiJSSIc ,. >) nOl^C .jC-i) ^ jf • '«■ .r'.'cf no/?o^ , ... trs .’ .i n'. :v .it 1‘viai^ftt uxiJ 0 ^ftOlB-.0l^« r-r^i- *- - ..-> jt o la.-.JJrl ^ ■» 10 rra- to t O' 5/1 *4^:-.' U t:P/lQ to S?T.. tSf*^ ' ' ?. Ol ftfl • - ■ • rn .''^ zvi * orii«'i'i 1.- V "Jc ei •!■• ?it8E^-'«S5rt ^ riT-iic. tkiv-r tv/ . :j ,.•- V zl il ..■• t..V-*a Ja .o v ** I :..i ‘6^-^ita V; ftiio. ’ c -se-t >y<»I 4 '■ 12'“; .‘Ci. . ■•^ r.- .-.■ :j. ioi)«&0r r . h .r-.rct ■•« \*.J F Cif ^ • i. sr'v/ i.‘i6 s -■.'1 .:.£..'l.ix ‘.c t ' -'iA „ : ;ju!i.r:-sa j.f> \d i. - .i;f j-4ft3i , .'Oirftc-. ; .-.-c; ,'fUt y. . ir- . « -*■/ lx*vj 55fHo : ;-, 7 . .r0 5-0& tZ :-"' ..’. C4 i.- • r - - '* ' to/ ^rlr.;jB,--;:,:. : V . i®->t ' :i-,iVt to ri“-' r..': J’^- >i.v ‘ . i ^ : -lOD’ -“'^■’XoR;.X'C» 0^4 to ‘i: •'. ’* A'£TDX^ *8*1^’: 't'>i.'.Z'.y "1 . \.I ..ii •<:-: ri : ,a=j' . - looii ; ic !M .. vij .-o raJitviL. .J .c /x .;.,: ;.^r j; .':»4 l3 < r*or, .“oc-^ • 'S ^ i --*^ I - '■- ( 'v -c .■ yiv/ 1” j' tiii -.?-f 90* III .’ ,. \x:^ ' , r- i 178 it has been generally helieved the courts would look upon activity of this char- acter as almost prima facie evidence of an agreement to enliance or fix prices. However, manufacturers of implements have "been exchanging such information among themselves, hut they have been careful not to involve their associations as such, in this activity. The following letter of F. G-. Allen, General I.fenager of the Moline Plow 7/orks, to W. B. Brinton, President of the Grand Detour Plow Co., September 17, 1915, is illustrative of their methods: ’"It has been our intention since the Bloomington Tractor demonstra- tion to raise the price of our tractor clow. Y/e made a price on our ulow which seemed to us to net a legitinate profit, and find that to are below the other people who are making this class of goods, and are dis;posedto get all we can for our goods, even though the price we are making nets us an adequate profit. ***** We could not see hew they could have the courage to demand so large a profit, but to assure you that it is our intention of raising urices just as 1 soon as we can get to it, and that to think will be within a few days.” Prostitution of the system of reporting past prices to the end of maintaining or enhancing prices is most commonly achieved, first, by members, in their individual capacity or through their association leaders, urging each other to strive toward the accomplishment of these objects; second, by the acts of association officers in disseminating data with the purpose of influencing members to direct their energies toward this result. If dissemination of price data is decided upon, the central office may choose the method of withholding some of the price information received from members, disseminating only that which will seem to indicate that going prices 1. Ibid, p. 343. L ga c *'^ 4 ' f w • f ^ ; !Vi » »iil^ ^o ^ji>T-V:r 4 :■:* ; . ^ 7 - j ^.voilec - • t ri'-r; - i; •: 7 \ -r V cf ;:-''.:n!M>'i54 >:• er.''-:.3 zi r.r. *;o3o* ' .'■'•..•i :\r .g ^}- .*T '»* * ♦ • t ■»., - k,' ■ <« • - . ' "o.'i* .tOi /r* ‘..r^rfO ?-V j £'’-7 H ■V v.cJ^ .^.. - ^ tOS.r'i: lifO to €-:•';; r . « 04 .:.w ^ Frcis' ,r^\x- A ^Oii oj «ai:^?r- b^Ciom .-A '■ 1 If' . ^i'twelis ♦'54 ''-x' ,/.i, ;0i 'a f. 1:1? ;..-f-^#y . •■ a ol'^oa': r ' ' .■ •i;, Jbliroii •-’^/ ■* f,Pcl- 7 3 r*i; !. '/t': to! *u,i^ »,•; ,f,v , f " a:-- - - M?F7/ ct> 1-iv wJiWtl Fr’*. .1 t'f ? jv Tao ooov: ' c i.C-1-i ,05 *0 to 30 ! ‘ i i Z. , ’it'fsu-a x<- , 'iiTil t.'<-'v6i;,'cjL '; ’ -,.;.'7C0 •'ccc:~aJ oeoinq ^< 1 !: -X'an’: zo •. XX joyfcf, tise j ilv^c.-alj -jj iiiai 1,‘erfi fri ‘ ■, ^:l3 '-;c ,-'T-r'i -.« ; a ?o to 4n'?.':x:I«( ? .!id? lv:-Vvo; cvi ^ -04 . :■' ■ : Ic ■gy.'l-JV “■'?■ 4.?ei If: ~i : V0uitlo'aOi.4«i‘'vi«3a Ic .„ 7 *^ TO'i L .V- • T.iJSfTw^ I'n:.? -* 00 ^ *i *- -Jmfjg :l'’t< - -• . -1 ;• .-f f: Oif? ,i.-jr^. -' ‘*'1 .‘c-C-: _ ? i SC-Jhq t’o CO i ? X;'J ’ O : ife- ‘it >■ * w-*5 : cavieocT s"' lifi»T-'ini ^oltq tO aftibl' *rl; I.v ^0 ;XfCs , .... / caez.i - 2. i-r 179 are higher than they really are, or the method may he adopted of issuing to the memhership, "suggested" lists of prices purporting to reflect the character of going prices, hut in reality being "boosting" prices. Most of the lumber associ- ations liave resorted to both methods. In the case of the Yellow Pine Associa- tion, the secretary assemoled reports of all prices charged by members, but he compiled and disseminated only those which reflected the highest prices secured. 1 " This was characterized by the court as a price boosting device. The American xiardwood I.^anuf'acturers* Association also adopted the same scheme but very soon 2 I abandoned it on the advise of counsel. Mr. L. C. Boyle, attorney for this asso- ciation, upon being questioned regarding the legality of the practice, replied in part : It is Biy judgment that it is "cnwise, especially at this time to cir- cularize this form Oi. market report of high sales and this because the conclusion is i-iaole to be reached tliat the high ueaks are desisnedly given for the 'oiiip'Ose 3 of forcing up the general market. " It has been suggested earlier in this chapter that in some quarters it is considered illegal to interchange list® of prices actually being quoted by memcers; however this my be, the illegality of distributing "suggested" price lists is unquestioned. This device has been very commonly used in the lumber | industry in the effort to maintain or enhance prices. A description of this 4 I practice has been given elsewhere. I 1 . See account given in chapter seven, pp. 132-137. Gadd, F. E. , Eecord, American Col. & Lumber Co., vs. U. S. Vol. 2, o- 1110. 3 • Gadd E;diib. "S", Eecord, Vol. 2, n. 1242. 4. o, . ^ > La: 'm9*i ' . *■ CXjta*: 1*' ) ijt’f •V; . s rv , : •. : ±ii '-Of \’zt\ •'- <9 1 ■ : *r . .'; _-.■' ft«il*. 15 rs .i'i- ■■•i: "»ci- ol- » ~ . 'in i. i/. LiJ* ^ ~ ■'.y'ii- -'y' 'VC 2 :% :-v; ,:r- 4 a ,-;T*y^-'e* m:: .rrobV .,:. Inw ciccL. ■;>«.? o: r C ts£i . -;.f * 4 s:c> 5 ^-.' '.. . i..,;'C'fi' 5 XrTBl .-. t .. j .' -'*» 5 ..‘->0 ,noi^ i '• , . t lx.i . : I ’ , . . .; - • ■ --•-•• -■'.j.lli r ‘ 'T‘>f :■ ; ’■ ■ ^ ■ 'llilV' ■• .'viii-.-p i . n^. : tit hit ks i- - '/ r - :- ■ ,-/i "-0 .. ?!■* . . • - JiAu ■■ .A L«r. 5-;j, : . r • ;■ . C i, - .* -. tel ' IbC' - "f 1 r.> '- ; t'. -’I’->! 5 ’ - 1 'i 'a y^i^lL-kc-f.X 4..J ~ ■ 1 t <5 i « , 3 ' , y \yfen * ^ tttiT. . 4 > :■ L'-.::i U‘.~^ /: lI ‘ .TCV*. ,-; {j.; -- -aiJPoi it’ ../' V . J : • ■' '■ -■•.%. . ■, ;.. .- ^ 180 By the Interchange of inforimtion pertaining to past prices officers and members alike may learn to what extent fellow-members are adhering to sach arrangements, \mder standings or agreements as may be in force. Being possessed of this knowledge, they can use it as a basis for bringing pressure to bear on those who seem to be out of line with the general policy of the association. It is no longer c\istomary to exact hard and fast agreements calling for penalties in the event of violations thereof; exhortations, recommendations and resolutions have taken their place. Little trace of compulsion exists. Unity of opinion developed at meetings and by means of correspondence is relied upon to carry out recommendations made and resolutions nassed. 1 To illustrate: in an investigation of the bock-paper industry the Federal Trade Commission fo^^nd that, while ostensibly the duties of the secre- tary of the statistical bureau to vhlch moat of the manufacturers belonged was to corrp)ile and distribute certain statistical information, in reality he was principally engaged in inciting members to increase their prices, this being done by correspondence, use of the telephone and telegraph, attending meetings, 2 and holding personal conferences with members. In the farm inclement industry members often took it upon themselves to give notice to fellow-members when their prices were found to be out of line with those *' re commended” by committees. On January 19, 1917, C. S. Brantingham, president of Bmmer son- Brantingham Co., wrote to one of his sales managers as follows: ”’I.ly attention has been called by a competitor to the fact that our recent instructions sent out to branches and competitors show sulky |>lows with T. Report of the Federal Trade Commission of the Book Paper Industry, pursuant to Senate Resolution Uo. 122, dated August 15, 1917. 2 . Ibid, p. 17. IXJ V - : 'ijcoi e ; ; 1 ii*,-: b ^ - - 1 : k ' '• - ^ •; j : \ . . l-:rT^'’l fio : c . ^ .V 30 - -alV •:•;• £*i'^ -• ^ ^ / It ^ ; I 'i' r-f-.ao:_: ' OXSCrl ■'/ * '• - ■. • -:,V^ ' . 1 * '.■ ^'r* r.:. "i^isjri _ . *ck »► --crfi’ -.- -^,7A •: ■-■ r : , ., . rotf ...-r ■'*■-• V» - •• : c ;••>:; " : .•'•CAD .•'hA r " : • ,, .-«Ti*r 7; 4 i>CCg.ft , 181 an advance of fifteen per cent instead of ten per cent as was arranged. You can perhaps imagine my humiliation in getting this information from this source, inasmuch as they have before this called my attention to errors in getting out 1 our price instru-Ctions. " The issuance of "recoranendations” by committees of members is a common device for working up a unified sentiment that may be counted upon to crystalize into price maintenance or price enhancement activity. This practice has been particularly prevalent in the lumber industry. For instance, in its report be- fore the Fall Mseting (1914) of the Michigan Hardwood lifenufacturers' Association, the Market Conditions Committee stated in part: ”'Ybur committee has carefully studied all recent sales as reported to your secretary and the attached price list is their best judgment as to pres- ent prices. We want you to study more carefully than you have heretofore statist- ics as to stock as prepared by your secretary. If you will study them carefully , we feel sure that each and everyone of you will decide to curtail your production all you possibly can and then some." Not only have recomaendations and resolutions been used for the purpose of exerting a direct effect on price policy, but they have been used for the pur- pose of affecting the price policy of members indirectly through regulation of terms of payment. It is the writer's observation that nearly every trade associ- ation in the textile and lumber industries advocates standardization of tenas. The Eddy associations appear not to countenance this form of activity. The Eab- son Statistical Organization once quoted to IJr. Eddy the opinion of a correspond- ent that terns of payment might properly be put upon a standard basis and asked 1 . Heport of the Federal Trade Comruission on the Cause of High Prices of Farm Implements, 4, 1920, p. 312. 2 . American Lumberman, Oct. 24, 1914, p. 42. ct:J • C' .. '•f '■ ' ■i: i' T. ,r- •, ■ • - . - Vici -• ; U-i’. ^ ^ r^fsor j» ■> / , 1* , 182 Mr. Eddy to conm-jent on this point of view. llr. Eddy replied in part: "It seems to be the opinion of your correspondent that v/hile men may not advance prices directly, they may do so indirectly by shortening the terms of payment, etc. It is needless to say that all such attempts to control the free- dom of the individual to ru.n liis business as he pleases, are contrary, not only to the Shern;an Lav;, but to the laws of practically every state in the Union, and no open price association is permitted to do anything of the kind, except with the cooperation and consent of customers obtained in advance of the adoption of 1 the nsv; regulations. " The foregoing discussion, it is thought, makes clear without further demonstration tliat open price associations, or any other trade association for tliat matter, can all too easily extend their activities to the point where they become a detriment to the public welfare. The Federal Trade Corariission, as a res’ult of its investigations of numerous trade associations, concludes that "such associations are freq;uently tempted to extend their activities beyond the useful function of collecting trade information regarding supply and demand and prices, and to engage in activities tending to artificially control prices and the 2 channels of distribution." It is generally recognized that the present law en- forcement jpoachinery is inadequate to prevent lawless trade association bodies from consnitting abuses. Proposals for remedies have been made, but they are general and superficial in ciiaracter, - just wliat one mi^t expect, considering the newness of the problem. The chief remedies proposed iiave been along the lines of greater pxxblicity and more governmental super'/ision. A combination of these is advocated by Ivir. Samuel Untermyer, New Tork attorney; "’The real v;ay of preventing injury from these combinations' " he is qp.oted as saying, "'is to submect them to publicity, and all their acts to rigid ^’Babson, E. W. , Eeports on Cooperation, C. C. - S. 2 . Qpotation in American Lumberman, Dec. 22, 1917 from Annual Eeport of the Federal Trade Coran-lsslon for the Fiscal Year ended June 30, 1517, p. 31. - i. ^ r; '1 . oZ.-v’- .-O. . ■v '1 T , ' a ioJi.? Oi ; n tiX . . •riv’ iJi.’r'O: :c*? ,M3i. rr . i.«. t c - ; t J , \ .. ti w‘ 6 ^: rrJl. ©i» o OU/. mfC.f - ■ - V '. 'S 1*' - toiO ccr ‘ :>v' Xr- ^ ■ * , ■ lb . : -xhetda .u.iS.' ^ . ,-*- i If; J . 1 . 183 1 governmental supervision.’" His plan for controlling their activities hy means of a State Trade Comrrission is the most concrete proposal for a remedy yet pre- sented. The chief points called for hy this plan may he briefly suosirarized as follows: 1. Creation of a State hi-partizan Trade Commission of six members. 2. Bequire every trade organization that is subject to the jurisdiction of the State to file with the commission a copy of its charter and by-laws, with the names of its officers, directors, and members. 3. Require all those engaged in business in the State to file a report with the ccsrrnissicn disclosing all trade associations of which they are members, and any "agreement, arrangement or understanding, whether written or oral" with any one else engaged in a similar line of business. 4. Prohibit those who do not meke proper disclosures from remaining aif filiated with any trade associations. 5. Permit members to participate in agreements, arrangements or under- standings intended to regulate or affect or fix prices, or output, or the divis- ions or firoportionnxent of territory, or the "reporting or excliange of cost prices, or the names of customers, or reports of sales, or that otherwise deal with a subject that tends or is intended to regulate or restrain coim^etition, " provided "such agreement, or understanding, whether v;ritten or oral, shall have first been submitted to the comniission and apuroved by it. " 6. Hb agreements, arrangements or understandings are to be approved by the commission "unless or until the ccmmission shall have approved the prices at which commodities are to be s old which may not permit of a profit beyond that which the commission deems to be reasonable, nor unless all the terms and details have been exposed to the conmission and have been approved by it." T. ~ The world. Sept. 15, 1920, 184 7. Failure on the part of inembers who are parties to agreements, arrangements, or understandings to comply with the provisions as above outlined shall makre them gailty of a misdemeanor and upon conviction they shall be punished etc. 8. The Trade Commission shall have the same powers of supervision and visitation, etc. "as are now possessed by the Federal Trad.e Commission with respect 1 to interstate corporations." Mr. E. H. Gaunt, a prominent secretary of several open price associa- tions, favors legislation that would give the Federal Trade Commission power to permit trade associations to fix the price of articles sold by their members, this price to be a fair one based on accurate costs. "This could be done, " says Mr. Gaunt, "in the same mamaer as the Public Service Commissions of various States control the price of gas,' electric lights, railroad rates, and street-car fares by requiring trade associations to file with the Federal Trade Commission 2 their proposed changes in prices." The policy of price fixation involved in both Mr. Untermyer's plan and that of Mr. Gaunt has its obvious drawbacks. To review the arguments for andagainst this feature would extend the scope of this chapter unduly. Suffice it to say, that many economists of eminence as well as prominent men in other professions hold that price fixing under control of Government commissions is not desirable. Perliaps their leading argument is that such a course has the effect of checking technical development, because with prices fixed, incentive to inprove processes with a view of increasing business by lowering prices below 3 those of competitors is diminished. A study of war experiences with Government T. For a more detailed account of the Untermyer Plan, see The World. New York City, Sept. 15, 1920. 2 . _ ^ Gaunt, E. H. , Cooperative Competition, Providence, R. I., Jan., 1918, p. 32 Clark, J, B., The Possibility of Competition in Corar.erce and Industry, Annals of the Anerican Academy of Political and Social Science, Vol. 42, No. 131, p. 63. ‘ .''Tfj- : l~i :z£-r &.'} yt/'ij. » . ' r.t c* .. ’•**!/ :■“?■ oi ovcr.ftri£^e*^r,'-n" •?-■'■ rr^-i^ p:. i u' ''i. r.:-.c.' >n% -ir^. ’i'.'; */^5 \ :-s-.; 5 c‘a Ctr;---£ ' '.jei . .1 .> is €1:1^00 . '^'- : "O * ” I “ . r.c isir;:’ . t •! ,/- f .. i'iv ».i .* Xj' ojvrm ■i:v-z .ROOi » ’ -*r. c iK.r»fei i:*r.O .* ''-' ■ •' ,r‘.v -■«' . -ie'. 'pjf Ll3j i-. = . ■ '•■ ■ " , r ''!■;■•' ; ■ ,:k' '. : i ::o ij' '^ic ’' " 'ti-c: 7 ^c*.<-r .' .■ . ■' cl -.VA.. cX r-:'*i ■ 'i.'v i-v*, . i ,••■:»-. i C'ir. . V 'N * ^ - ’’■ w-*: Ia;? -«'? :.coj *; 4TC*.: '.li ; -y f .'V- ,».:.'j^r^zb «;rf ®A({: ixr-j; v:. fcrxft .;■■?*-„ , i.*'; "^O Or^O^s v': ' -’v 4 ,i, -? ri-j ' 'x,*r / * i : :i .•'v-. 'j .v’-. _ iir-'fr t«i j -. ^i''r.e Vij;R3 ,, ‘ r •'f' r:^- .3 „.T c-:, ' ;,.';j;cc J* ii5i ii fcnsc ■ :.i : v; .,, X A <3 V . - U -i.. *DJ iiosi ■• o.. -; . “. 3.'4 X'-'"’ e-1-^ iC ""‘-‘-Ift seoi-^o .i'iii'i \i • •. ■ 1 - •■ ’CT: r\ '>_•'■ I *u... I-:. vbuCt H . s- J^' 2I- ?*r ' - 'r*" 'i.',-7 aS? ,v.4 ;.i 4 :: ;■• , .s ‘i r '> ..Si ,:z'^*icz scA 185 186 thinks tlaat the activities of trade associations can he safegtoarded hy the coop- eration and control of a re sponsible public agency like the Federal Trade Comm- ission, and by systematic publicity. In its annual report for the year 1917, the Federal Trade Commission recommends that "all trade association files should 2 be made x->'dblic records." "Such publicity, " declares the commission "would ex- tend the knowledge of all producers and consumers regarding conditions of supply and demand and help to prevent abnormal trade fluctuations in supply and prices. 3 It wou].d also tend to curb association activities of an objectionable character. " Neither the Forest Service Bureau nor the Federal Trade Commission has done more than suggest the direction in which to seek a remedy. In ether words the suggestion is not accompanied by a working plan. It is believed that a study of the possible means for putting into practice this plan of publicity will reveal some very knotty problems to be overcome before the plan can be put into operation. Our study, thus far, has revealed that membership in even the most successful associations represents only a moderate proportion of the persons who are elegible to membership. The inducement to membersliip is, first, that the association is a benefit to the industry as a whole; second, that the associ- ation is in a direct and personal way, of benefit to the individual members. It goes without saying that usually the second inducement must be strongly , present in order to impress prospective members sufficiently to cause them to join. The average association member has joined because of the belief that by so doing he can acquire valuable Information that would otherv^ise not be accessible to him. But suppose that the association recordsviere, as contem- plated in the plan of the Federal Trade Commission, made freely open to the ^’This report refers more particularly to trade associations in the lunher in- dustry. See Report of the Forest Seiwice, Soma Public and Economic aspects of the Lumber Industry, June 24, 1917; G-add E>kib. "A", Record American Column Sc Lumber Co. Ys. U. S. Vol. 2, p. 1198. 2 . Quoted in American Lumberman, Dec. 22, 1917, p. 26. 3 * ^ Ibid. ‘v*“ ’DOti.i 1J- '.o ff a/,‘ ‘ . 1 -ic ...j ,: ”M.>' ciloV*! •" ■'-f'."'n r si '. :■*;•' .•■' J ,:^Usl V ■ . . - ' ^ i -*..,♦ !• . ;tt .! a I iamoO £.. : #«'.' ■.' 8“0 lwiuu( i \* i’. .' ^..Ml I l' 9 v JS .' - ■■•'■ to 6 lr:.:o£ , -i - . ’a~ '!v:. " ■• ^ -^' " iJ^<’h T^t . “ ■« ?■ -•: - v j j vjromi 4 - •*: i. :: .i Oiiia -■■' ■ ■ *^'-f‘- - i . 0*1 ■•• ' '.asft.vi:™ ff*oaj '•* «■ ’• “>'•'•»••••• ••• • .-. ■/-■■? ix.;ja«ie..-..i «» '0?? ,c.; .iJ:-'. •'* ' - ‘vijj. i -VI* ):e:;r.-'' V^:- - “ .1 -'-a . :.. r..:.r L.., ‘ .‘-'8 •■ ■ >.' V-: ?• - -t : : • J ; 1 A -'- X Li: .'i^'t.. r.,? Cj Jtl?. ■»<*:.' /. >1 : :■-:.* >.- j <•■■>'■ yrt'. ix * fitf : - / '-.Av*' .^ ctlsi •;:. • .xw’S'.rJ Ov •iv‘*xo % A. i I*. ^ I r ■ I ■ .••xr^o,;,^- f r. w • ^ xai'ie^iua ?rrp v-jiif } ai.,- ,„„, - V - «*“• «--*». «-i» ¥U*. ; ft- < -•» “: 1 r- . - .&-ixc‘, •»ci ^tol.'ceaajr* uu-ivV^Ai,* ?.'V . •■•ft. U(ab •-'io2g j{vo*T'^ - < Aft ^ li trie -a r' - . -tOM Xilolldnri ^ Xr^ - *'‘***’t® Ov 5/r/T:x;vr ^r •" . , , , ^ t«# #•:» ,d»««> *, ,r 0 ^ OJtfttfSAVrft T •»*n’4 .« . r .1 . li * ”*Rnj o. tX'*’"'?*/! /k 4 i », .. t«» a - r V — > fi to J .a £.,■• X ? A- .LXIXtiT r _ I *« »o «lr.« «(, ,0 „ ., f -. . ^ *" Si.iifisiSaiii .aaviat;,.*;. I, h A ^ ^ t ,^rJyto r’ v.-fe*'« 5-'4 ,ft«f* ^ ’ f; , • «*eMo« „oa I *f* ii^j..0 Uif.-ra 10 Iiwooi iat, ~„,o«. . ' •*<>> ,«.fo^^ \ ^0 c»o X .*‘-i»u. Ails ' ^ . > ,„. . . -"-*< “0 •-‘.li’cmi ci aoi»«ojo„xi 10 3»o}a»o '.orr. vTi ie .* »?.,>' . >ji...o5 oi jiloiij lo i™ ao'jootoiiT lo • M .^.-*.0 .X..XCOO 10 ■ ,,, ’ . -=l.oosi0«o. eaoo..„ 0-, j ■o.roiX^,rr.v^,,,^ t.U^m ^ t:a«. .aoioi ^ -•ir„,5.,v o.<.« tu TXteiXo «>a ;,’f.*J»:r^5 „ f'-l-^o: tto:a 'ft »• i I4i^ 188 deserving would fall of tliSir own weight. The educating effect on the consumer, investor, legislature and ’basiness man would itself he helpful to the tradeasso~ ciations ttemselves as well as to the recipients of this education; in the course of time these various groups would come to understand the possibilities involved 1 in helpful cooperation. Trade associations engaged in illegitimate trad.e practices, which now find it possible to thrive unmolested because of the prevailing state of public ignorance of their operations, would undoubtedly be obliged to refom were the glaring searchlight of publicity turned upon them. The rise of trade associations may itself be taken as evidence that the policy of secrecy in business is being rapidly exploded. Open price associa- tions go further in sanctioning publicity than do other trade associations, but even they show a disposition to confine the information at their disposal to their own memberw. It is believed that in the futtire the public will insist on sharing the benefit of the knowledge that is being pooled by these associa- tions. Certainly in their capacity of purchasers, the public will be at a relative disadvantage unless they possess knowledge of market conditions equiv- alent to that possessed by members in their capacity of sellers. However if the public are to insist on having the benefit of this accumulated laiowledge they must not demure at sharing the expense which is necessarily associated with gathering, compiling and disseminating information. ATTITUDE OF THE FEDEEAE GOVEMiffiHT It is the writer's conviction that trade associations would be less secretive with reference to their activities if they had some assurance that by T, ' The gist of Ms line of argument is taken from an article, entitled. Trade Combinations, by C. Ernest Fayle, appearing in the Edinbu.rgh Beview, July, 1919. I - ■ 1,-^ac C‘^is •- c'^^e 'ts/.i.-jas, ' 'uisw 'io fSjtJ :) t-x* ;:i:? O? Ir'l* I :>;; J&lBOw 4 «a.-^i«jEnJ 2s«e' h-ei 'i?oo ai ; • iviffr' *io r ;' 5 .' :. io--'i « 5 vf^ oi feja w la aV‘YX®ea«B; .'•-*-'.T.i f 44 iii '_v- iiico f?.--c o* V-'j:. i.v.'cv. otroi*»av io ‘. ' , o.>, ioldxK i.*; . o’*.;- »- r-j-s 'x f -2 ^©gj^j|C» ‘aioo ct.^xT ? ^ V > a .*^^’12^^;--. V i.- Q-:riT“!#'i^^ <-Z .“ ^p«C':•• ri tai* :/.? trz m arro^sy .a 3 ri- ar/,c.- b*».'n '3 V- .^'.-jil^xaw , i iujiiri Ci:-: 3.:-&'iT« SA o’ \ai; crr^ ”.;£^ irsB.: . z^ a.i L’a»c*:jw/cf xxL "ro efi? ,aa: JcaloOf-aria s;_-y;-' mrlito ot nrci^* j Cdjsq ;:axrto/)^fawi «i aarfjfi '7^ 03 '?ri'-2:? I4acr''' i6 Tiudd iA ftoi^Ksnolrl *d? >. l^o o r noi#-^G6^; 12) a wd Tjoui.: -oyo* ^ ■eic.ii ii n'iXc';?; 4idj c ; / .' ^siS >'*'p»jM* 5 ti esKC *i:looasiJ «*ci^ \d i^Iooc uu&<. i.l V.ivlwcrri f0 A^J^aXtso:' : saMf^c ^ctd!t fcaelxc o>^:^rt£r£i*a*Jfc avl^jJ’c'x ^ *i 'i->v?VfO'’’ .-TAiXaa 'i^ ••xoicra: yi' .Via68*r0': en^' :vni\-»i£ rto ^aia/rl. ^iX?Xir: fylvt i. 'yljfteaaeoiiii ai aoicfw •fuafl'Tx- rfKX ii;l*xArJa sir; -AJb ?On . iiettAaifti^Ea 2i ,x;ius V‘-^ ’ „ Tmr^m[tx. .lai’rm-A CP. 9 I t-, i''iKr^ ^4Xooa!i2fiJEi£-'rrf acl^tXvfjOD « *ia *iT9T «X Jl , ‘ ' »., **■ f < 5 KS£* 6 'Xia>S 4 . o -.-it tjwi ■; i ‘lijxlj Od • 2 >r:O 16 l 0 l .'fr hf ^Ti' 1 , nZ ii i:iz wi-*:A njA r.-.’xt ataiet t.1 irM-.a,:'^’!^ \c e .:iX sii' "io *t- ?'• .-'vi ^*. -2,' /■,■“•'•'' ? x-3i gnitArqqa .Li ",3:..:-.' . ' *fv^***‘ 189 doing things paiblicly they would not he laying themselves open to attacks hy the Goremcent. In other words many associations have sought cover because of the hostility shown them in the past. The misdeeds of some trade Associations have resulted in enveloping all, good or bad, in a s torm of public and governmental disapproval. The conception has prevailed in governmental circles that the only true competitionis competition carried on in secret and in ignorance. Thus trade associations have been shown hostility because they have tried to make their mem- bers intelligent competitors. The point of view that business men should comnete in ignorance is well illustrated by the tenor of the questions put to Ifr. Ylm, J. Mathews, comsel for several open price associations, by Mr. Samuel Untermyer who was appointed to conduct the hearings before the New York Joint legislative Comittee on Housing: Q. Now we are talUng about coirpetition and you are talking about cooperation, which is to my mind the antithesis of competition. Now in an economic system such as ours in this country, based upon canpetition, you imderstand? A. Yes. Q. Don't you see how absolutely incongruous is the idea that every 1 2 competitor should know every other competitor's business? A. Absolutely noi. Hbv;ever there is evidence on every hand that the attitude of Governmental bodies toward cooperative activities is changing. In the case of the United States vs. United States Steel Corporation, the Department of Justice made the following concession in its original petition: "It is not here alleged that merely assembling and mutually exchanging information — EeSr?^^^ 4638^^ Degislative Committee on Housing, Dec. 29, 1920, 2 . ’ * writer's conception of true competition, see chapter three,. i es^ jori \ ^y.iob' I- LO T©v:;o t' .-.-.-o e kitolj£.lo<;^K^ xc^pm, iibxoTt rd r.’s© ic^-- A‘ ©Va-T BkiC . *ij ?COtS~ v TTO£ lo au©ftJ^c k 44 « 9 '* ■* ^ sri.^ s'Ti -':©ri‘? r:rr%'i..\:JiIi;^-c*' ■ 3 -rv^^ 5 t:\£ ..'iCjriii Ki ^,-.cf to ioog ,i.Ia ci .^ejX '‘Al;*! 4 S tAa.; R' lo'Xi; I* J;:? 'ri-. ■ voj. :7i '•>*>1 iavo' &. 1 T I t! -i^^l -ij i^rjj di £ro i!)ai*T£c ••jTf" || -^.3d I,i~:-.1 i, -V j V A-l'f -r7^{ '-erf:j at*. •'«-,f>'-f '•'-iXX^r *:r^ -fratfg n©©tf «rici^#fcoe34 jl f-. rror -c.- 8 -aM --:r ■ . ■ ''cf -^.^iv Jo :.:X 0 : ;'srN .RTOJiJe -uoo eiiS f ■ ■ •■ ^ .i jf:r. -:o *ro«ftf--£c^ ribw ©i ©^lorriX oi Ck.\T 7 "•e'y n • ,i«; - r , :«v a Xw. XT, ^ - ^.' * oL - . t ' '^, ^ '1 •■ TCl . 1 . aniOO J - ' _ . ' ■ ’ ^ { T m ',l tfd^ aic-"ioG *^Ti'La-xxx t:U ijgx '^s i UrsacC- r • - •-* : fr-L-jd *t» 4 . ■*■' i :t:€s. ^ts ac't In* n .a .- ©•'.■„© o ixrvXfa --Lfc ew ’"OK . - - ■• -■ ■:., ^ , ' ■ ' 'I ^ .;: t 50 U . .::’tt‘i.^c -0 a;£i t.Jc: VT! e 4 ‘ MOiJMT9qOiX> r A tX :ifi : t- 1 si ruj" LTr:'; , tc i j i ;M S o -tc norrr f .-•ici'xwoe tldf rrl 5*iro Ha rforra tn©4«va | . oT S , «»Xii ©nrf 3 i 0 ;?.*'i 06 ,i W <• i tef -'r;J € c “ic.tl#o.^ce *i:Tii;'-' igri^v© i*o.*t’i‘X'rc*,5ii 3cixrt*v->»' '.o rb;rBt 3 j* ladt tnMci ^levo zxo Piyxrtei ivet oi ©t y't: ityv©^ *■ 4’4 "y ■ ■ - - / -■. • W- - - -* .»• ^ '■ '’• ' ' ■‘i.i&xiCi ei a©AX*viJr.'#3 ivi^a^Tc ■oo*' r^xytr'-^ aaii-Otj* f ' ■ . ■ ^ . ‘I f ~lx‘x-"tcxTo;; Xo©-?? ie^a?G i-dS 'io ©©<» «d? ,t? | : - c.-’-i^ij^r iaiyi^iTO *yi rd rtc2>'T3o*r o jjfriTro 'X-;! ar:tf a»ata; sojtjt '/X- 10 | oi3J(rric>fel “a.Ti »n4^.oa.v vJ . /../;i/jr? Xjrjc 3rtXf'Xie4iftir *^X£7©a Jbe-xeTIa ^ont «i |} , ;J'X , . ..^-yZ ,'. •Xa^.'ot! no ^tsjaX -r.^'OC) jTioT . ij*’ ^.:.n-’TC9l' ‘ ■-'n. :.••*: ;ii>© tc -5 « •;. 'io Txoi J -©cpfpr ^ -.■.Xp "ip j^aijoooa tc^ - . q,. 190 and declaration of xmroose amount to an agreement or a combination in restraint 1 of trade.” A letter written by President Wilson to Edward N. Harley, then vice- chairman of the Federal Trade Commission, dated Iday 13, 1916 has been widely quoted as indicating the attitude of the administration under the. Wilson regime. In this letter Mr. Wilson said in part; ”Your s^aggestion, tliat trade associations, associations of retail and wholesale merehants, commercial clubs, boards of trade, Jtianufacturers' associa- tions, credit associations, and other similar organizations, should be encouraged in every feasible way by the Government seems to be a very wise one. To furnish them with data and comprehensive inforcation in order that they may more easily accomplish the result that they are organized for is a prooer and useful Govern- ment function. These associations, when organized for the puroose of improving conditions in their particnalar industry, such as unifying cost accounting and Dookkeeping methods, should meet with the apuroval of every man interested in 3 the business progress of the caontry. ” Significant of the trend of opinion is the passage of the Webb bill, permitting ctobinations of American business men in promoting and preserving foreign trade. This bill received the active support of the Federal Trade Comn>* ission and President Wilson. Mr. Robert E. Belt, Chief Accountant for the Federal Trade Commission in an address before an association of hardwood manufacturers, Jaiuary 30, 1917, endorsed the work done by open price associations in the following language; 1 . United States vs. Inited States Steel Corooration, 233 Fed. , 155. 3. . , , Quoted by E. N. Hurley in his article entitled. Present Attitude of the Government Tov;ards Trade Associations, Heating and Ventilating , Sent. 1916. Vol. 13, pp. 46-47. o o . ofia - ji .rsuxoM MocixT!] ’ - 1 — . . C-. t '! to • »i » »«• J V ■■•6 7 .ro-a:^' i-'"-il i 4 ' : : *■ ^ ' ' ,iur ^ •• - r ,'* --'i '• i.. c.,'.j ^hi’ 7 1 S )m Stirf . ' '.1 &■ t •' * ' ' - -•'■• • s^- '.’eor-Si^- Trr^-T'’ ' ■> . ■•. £ j»,- 4 n 7 •; r.'f / (.‘l.-.vC' .? .To 2 - . J Zi r i r • 7 A.:?. >>r£ „•, .‘-o i >v ^ iX"": - , ^ V. iv iX-W; t ,- -: ; ■ ‘ -'■ ■ ■'• 'C-W';.-. VT'*-.'' .■■ r '-c: .’.fc'fMiiL •.'•■•.v.» -... JsxiJ 7 . .., ;roj— -c:..? av.: 7/:.;;7 tds ■-.TC ,» ’£:>t ,rf: :x &• ;;a* f; ,• -. -,ord*^i 7 i*: "J .. ^ r.I '““■ »> -«’'57.^.jc ■■\U '“,' ..■'uf'- i>,'. VJ-a:. L’ „ W,. : jJClAt.- : ':■ ■ i l! 8 iS- iftJTtf vtif iiv-W uiiJ . ■■ r.-. , c .; ai j •:.' .■.■;- 7 ^' oxij ' -'7 ■.-7 :.iZ^ . .;w:; nl a*if: «£ ?'r* <. .'c .'--•r. .’.3K7l >o n OXvtjit.'), t <:> / Xx 7 5 X< 7 T ■> j xo tfvijyp l:il 7 ^ i . •*,: iie I '■ .7 •i’xy ix^neI»«T 9.*f? 70 "i . t.' x: ' . .*.' 07 ^- •• T -t ^ . n i "iw ^ -'A* d- ♦rt ^ ,Jb '■'*5 “ i6CT -:i -oj . ol ttcM 1 ::rsaj. vr !-<• ^ X • »ric- ri-. ■»■ i’r-. '.o : '--a r.-' . ,^x;£ 7 o.;^_oa' . '0 Tr.;‘ -‘ * : ,' .'. • 7 ?j)fv - - -. ( • • , *ir. , 7 ,i v-.' 7 - '••Ml s'itjKk;?: . 7 '.; ,gi57 •«■• .‘71 , 191 ”My observation has been that the associations that are acconrplishing most in a letitiroate way, for the individual nieniDers and for the industry, are those associ* ations where the members meet periodically to e^hange information, coir^pare e:!5)erience3, discuss trade problems, and profit by the interchange of ideas. It appears to me that cooperative work of this character is essential to the economic and financial strength of our industries, and to the full development 1 of our domestic and foreign trade. " Those who are identified with the work of open price associations appear to view favoraoly the turn taken in the point of view of those in control of governmental affairs. Mr. Clark Mcl^ercher, former assistant to the United States Attorney General, now counsel for a number of open price associations, is quoted as saying early in 1917 t "Ganeral business believes that the Government is now on the right track.* *=*=*♦♦ "Government espionage, once feared as a I counter irritant to all industrial disturbances, has under the intelligent guidance of the Federal Trade Commission turned out to be an admirable corrective and a beneficial stimulant. With a restricted jurisdiction, the Commission has been decidedly encouraging in its helpful activities. It is making good on the promise of Commissioner Hurley, who, after speaking of the assistance rendered to business by the Interstate Commerce Commission, Department of Agriculture and the Federal Eeserve Board, said, 'To do for general business that which these other agencies do for groups to which I have referred was the thought bs- 2 hind the creation of th® Federal Trade Commission.'" The recent action of the Federal Eeserve Board, acting through the 1 . Belt, R. E. , Improved Accounting Methods and Business Practises, An Address before the Hardwood Manufacturers' Association of the United States, Jan. 30, 1917, American Lumberman, Fed. 3, 1917. 2 . Journal of Commerce, Jan. 3, 1917. •^4 O: ir. ix.ij r. ■ •- ••• ' T«.; s.'.-, .i :.v:i -■SS, r i.'irn i 'll-ri sn; . *a- : - -'u f oi v;iX^tif j irc.r^ ■; 51^;^ L‘: . * r-^. ..• -..-/r.- ::‘ -^Vij 'x''-*5':,." .ae-'rht^ye .' i^i..*rc3a- *I -fVvOif. -:; ■: I -;;^ ';o . -c-s- .;.^cri 'sfe ftra- .'.O-' ■. •.■iM ^■-.' o .* ,. . : lo ^ T iZi iyuiXl -Let:, z 1. .'.ios / - . * - ■=* i::22£'^o'5 Z)l,Lvz^t t.' ‘»wA juim .'Iri -' 1 ' i e7i» yi-W - - •'*■* '■■^’ 'iV? i". i;; ;::Jc;q , j . i '^■'-£'*''>^1 -C'^v ■■-■.■?^ 'ii!:i-o.',i, . ij3 t^ 7u-a~ia-^c>:5 lo / V,X'.' -i 4- :cro ,'■ „v;t ■' ^ ^ ho ^ ^ *i ■■ir'- f . ' J:.1 ,; r ■..-c.V:;: ^ ii- .Jvni i»A. oj' ,;;;C^in'^i 'v 'iSCD -iJitrzLc^ ? v'O j . . £*1 ^0- - f.{: . a fc -0 ••> ■ ' .*v;^ . *il ui .o-^-i-rorr^ T‘- ■''-■>4 f-':? ,-dv; , 'ra-sr;ieMi.‘::^‘ .zs , /!»»•. ‘.::us/0 »sja 'aa^rioA:^ -5j A i'.':..*.';'! ,**t '5'f 5\.‘-.. t.'jX-ir.l,. .• I':. ^P'-': ':* Tt*tfiBs?2; ^ ’i-"!- CtisnA^o?* rrLf- ti, .-. « L ^-v-:..' .-n •: r. ■; v'a L .Icidr- 'i 4- ^ eel orx >;<«’• •,cs.„v’v h » ‘ " 'l^.' • , J :?'- 'Vv ..-•.-r'i 5;: :,•".. ,:'Uz.\ zf^zLr'^S ■ fc, i,'v-a ratzii- 1 ■ ^-‘‘' •'-' ' t- - £ - i. i-A i. eve's :,. ,r''u , .J .iT u ■“ ' ' t ^ ".'= .<-i. i*£i ‘..■v ~. ■’ ■*■' ' «I,A 'i -.^ ■ ‘Z~'-,S . f 'i • .tC "3 '.«• - wO to *i;nf»oL‘ " ' ' I "*; t' .... 192 Federal Eeserve Banks, In developing a s ystem -under which trade data are to be collected and distributed much in the same manner as is done by the tynicad open price association is highly significant because it amounts to an admission on the part of an important branch of the Government that the methods employed by these associations have a distinct val\ie. The fact that the Federal Trade Commission some months ago worked out a plan almost identical to that of the Federal Eeserve Board is of added significance. The plan of the Commission had to be abandoned because its facilities were -unequal to the taslc. The plan promulgated by -the Federal Reseiwe Board is described in a general way in a pamphlet entitled^"How is Business", published early in 1920 by the Federal Eeserve Bank of Philadelphia. In brief -the purpose is to secure from representative firms in each of the more important lines of industry, cer- tain figxxres relating to their production, stocks, -unfilled orders, et cetera. The same firms will be asked to make these reports at monthly intervals. The figures collected are then to becon^iled so as t o show certain facts for the industry as a whole, such as the increase or decrease in production "from a known standard;" the increase or decrease in unfilled orders, and the increase or decrease in raw materials and finished product on hand. The work of assemb- ling and disseminating such figures as these has already been begun in some fields, notably in the textile and wholesale grocery lines. Indorsement of open price activity^ at least as applied to the dumber Industry, has also been given by the Forest Service Bureau of the Department of Agriculture. In its report on the lumber industry issued in 1917, It specifi- cally recommended that associations furnish 1-umber manufacturers with the current trade statistics necessary to keep them informed on the condition of the market, 1 . Federal Seseiwe Bank of Philadelphia, How is Business? pp. 2, 4, 6. ■* - .■ .:Sti\ n i i- ■= V I J- r ^ 4i •^: •»»«' 's.'' , vr^jt --•: .? Jt .H: tfsa i:»7C«XX♦ .-T i ■ * ■■• ■; rt-' •' \ r • rv. >-« . .I^v • . •/ i ? A . . . ' »* ^ y-._. z:. Ins iBtr.y *:. . r '.? r : . L'f> .'i* £■-.;: * I ^ . C'.‘ ' t r k»i: y.iu «• ~1 1 V ' y, ' ^ ^ T : ■ ' ■ w‘ ‘ *v'’^ . s;c' ■■' : J ■; 'lii . ' ' C'2 -' J:; s / 'itfCi i ’ ^ ■-■ i r3 jX €?r:ii-: ■ - "* ■ *T ^ '~i- • ■ ' ' , . J j.' - , ■■“: J.z :. ■-' I i • r ---^ •'. . - oiiK.’ ^ . 7 “ ■ •■ r ' , 't - ^ ■ ' u ' . i ? ri *-f •” ■■■^ ?*• Ik.’ J '; -r . r 1 ; *. v 3:. - < o,iit ■■>'' t z . ..« -l.oxic^-3ji V- 'i^cf. .-‘ i .-: . .":\ ■ . • ’ tt ^ , to f 2;,'r*T"l '.♦ A i 3 ii o’“x . '.2 r : i - ’ . : otf ?. j -J J' • ' - ii ' f' ■ - ji ...' ,v" uvi'-^-v X»7 */< li .* A ’ - r-;l l . .^;.:'y r,07 1 J , ' r t 8i;-i-.-„ il ?U*r I ^ js. :•. ,ali»if9- ■,~i:^cLpeJ '.tiki •^.^^• V rr.Tjfc.'iaC»- :t-r.i^:.y> V «* -X /• i vcM ni^ t f» Jf • .-*-: y. ;. .-i.'” •: . .''-.tr fvras>' u: z..:'^''tri ■-■'^'^r: ,■ -i: i. ; ' I’ •.i:;. ..r i;j j/' -- ^ J *^i 1: .' • ‘;o.. . ■vs^jC- ;::.V - .. tv'I \C ,'rc’^ ■':. ,tO r' csis * . ro^ai XJ .' "2 :1. 1 '■"iCi.x^-^: t “nrf-mo-. tuu? nc . •*;3. t*:;- 'A .li5 ' ■ ’ ' ' • ■- . r, : > l*v ->^ r . '••i ‘jZ/ ■• 'io ' . 'oc ' *11 * ' "vwi; ••'■ “f- J»x> * * 2 i ' ■. ^ T« ‘.r. 193 in order that they might "adapt their own business t o its changing requirements, " these statistics to include data on the volume of orders, shipments, lumber stocks on hand, and prices. The, report concludes that "with adequate safeguards the public should encourage such fonns of cooperation among mamofacturers as a necess- 1 ary means of making the lumber industry more efficient. " That the various branches of the Government are veering into the position of recognizing the value of open price activity, when it is not per- verted to the end of maintaining or enhancing prices, seems to be amply demon- strated in what has gone before. No doubt the war did much to bring about this revolutionary change in the attitude of the Gcv emment toward trade associations, although it is probably true that it ’.TOuld have comie about had there been no war, for signs of such a change were already visible prior to that event. Never- theless had not the war intervened, the change would undoubtedly have come about more slowly than it did. Daring the war the Government fell into the habit of every'where depending upon trade associations for aid in lining up the various industries so as to achieve ma:xiirrum efficiency of production. In fact the Govern ment, during the last few months of the mr, told firms and individ-'oals who were not then members of trade associations, that if they wished to do business with the Government they would be obliged to get into organizations and do business 2 as organizations and not as individuals. It may oonfidently be predicted that Governmental recognition of the necessity fer industrial organization will not lapse even though the pressing circ'omstances which were instrumental in calling it into being are no longer ejdstent. The Government has taken a step which it is not likely to retrace. 1 . . ^port of the Forest Service Bureau, Some Public and Economic Asoects of the Lumber Industry, Jan. 24, 1917, pp. 1197-98. o — •K.ellogg, R. S. The Legitimate P'unctions of Trade Organizations, an address delivered before the Business Secretaries Eorum, Chicago, Illinois. Jan. 25. 1918, p. 7. r.\?f :!• TSilO n ,a'*.. *10 "io tail eScslcsil j? .r j c . .■■• = ^i.;‘. -CDV^fi io Z •”•.> :.v W,' ^rrXi Tc . ^ jj O w o- ••’ ' - •# - , 5*"^ ' . X&rjt-'il'j ’I’> *■;. . lo :*■;.■:» j srttd c:Jt . ti..-. i. -_•; ..J ;:i;.-j XXi. -^6?' • * **’•*' •• 5..:' -r.l jj rr'dd f-z-^ : i JX- ,ji r*:,..o;.rX4i j[ 0 .- wV'^iar •?.t ■,« *,-? v‘ ^ .k..-.y -a rj 'Ic-^-ers^J-d zc't /ii® ^ i‘ .V. J.. • ‘.f.-x Xi;r; /? I .'-au-.^ ,• i* -.- i zsris .: > ^Ofi Iwui i :z'ii:ij , **^ -rfV--* ;'■ * *"'*'■ ■" ' ■’ '■' .-Li,' :: -; : .Hi i.^: .t r'.ir av#-' -vJ«, - jkj>a.- • • .-. i JlT’ f .-‘i . V .•.:,^ . '.• n* on f, ..j &»iT->*%--!- ,.i, ’■ ■ '■''/• -2 it i i*C,* U...Z I i .'•;. ' ,"J?7 cr/i.-'itK '••5-3. v.iAi- aaf2 Utxjfc *r;s:'.-' -tj '-'iL h il 'Ai •<£■ -S-f tL_ vr„' It' '■ ■■ i^A9lst£j’..o,. i *>..'•; 3 V '- v;i;. t-ilJ :‘i> .>ji/Ii'v/\'OCT , .r> i : !..r-. -re---. o’xio ^.•iifi«,a'"i':. la ■ .*- -o.-* xI-^ LH r '.ii'i- f » ~ 1 ^ ■ : - :;: -^f svisjonooTj X.jj. oX ■:; ': 5.::; " "•^c'jiSfS csii lo '^t • •' ' tJ--' .'1^',’riCi* , . -xl, ‘ tir^t ,:.-! er t'i -,it’^Gr3 #t w.'.';^:-.® ■ *Hw 0'2 -./a 4'^ .feyr'.’.i, ■'r • .-- .. .’•:^- t 194 CHAPTER IX SOME CONSIDERATIONS INVOLVED IN A STUDY OF THE INFIDEJICE OF OPEN PRICE ACTIVITY ON PUCES To atteinpt to ascertain vvith any degree of accuracy the effect on prices exerted hy open price activity is indeed a most difficult task. The youthful character of the open price association taken together with the numerous and confusing influences at work, particularly during the last few years, makes the value of a study of tMs character problematic. More- over the data upon which to base such a study are difficult of access. Those who are in control of open price associations hesitate to permit outsiders to avail themselves of the information that has been accumulatedp-eespecially of the kind bearing on prices. Perhaps their attitude may be chiefly ascribed to a fear that such information, were it released, might come into the hands of those who would attecipt to use it to Jeopardize the interests of open price associations, or perhaps they are actuated by the feeling that as custodians of the information which members have inraarted to them they are not privileged to make common property of it, and that to do so would be to violate the confidence members have reposed in them. Although the inaccessibility of competent price data makes it futile to attenpt to formulate any conclusions based on statistics respecting the effect of open price activity on prices, it is believed that some progress looking toward an ultimate solution of this knotty problem can be made by pointing out, first, the probable method of apX)roach in the solution of such a problem; second, influences at work tending to vitiate the accuracy of re- sults derived from a study of this character; third, influences tending to confine prices to channels in which they would be expected to run if their course were not upset by open price oj^erations; fourth, influences tending to J <4 •■TO*' ' 3 k r;’" , ^y.r-^Kim ' ' .' ■- ' .' -■ • - ' '- , — _:r - -"i ->«-^ A ' fm m'-m. i s 6 r:?:i^ - \--SL - ■•: ''>«►.! >^-:.-* ' ... 'St ■" *>., : -U i, ■•■ — _ ^ -•» • - •* , jA ' 'i^ -S' . V- :V - 4 . _:,^y : ^ ^ * • ■'”3 I*- ' ":am, f ■ .' *“^ ., . :XuiS‘ JMOta js. «i l - ■- , _. '■' ' TO fk. ^ ■ ^ ' 01 V.. 2§4X U j>ixwriSrrl sf;itjrfbio& ,4n^ r . ?» I-*--- ■- — .'■" ■ - 5 - 1 ^ .oi/JSffltItfcrtq « jo^^fiki/XdV .- _ - ■ '' -^ i- . "V- ' ■ ' * V. ‘ -S,, ;jr " ,*; .jatfC'*"?' 4> lo lIi,t?11iX;ir j'^« a aoMi? -ijqrr ' ^ ' ■ ■ ' ■■ ' V p ' ■ , ■ - - ' A- . ■ - r :- ':- ^ , J 4 - '' rsi ,. . . ■.-•V.I *- v>Jfc. > 1 ^** -a’^Hq-TO . . 1 -. , ' ,„■>■ -oJax^samjac^iCai^p e^*»ir *fl3rJ^/wro|^i dsi-a «;#' ,!* '" '* -' ■}i’ ’, ■- , ' \ ^.r '.V'^ ■ ’ .’ atdf tKltTAiibi^^ o^'fl 9 ^xr ddk W * *0 ' r '~J '■“ *' •■! «'- ' ■ , ' _ .' ' ■ ^ 'j.; ‘ , *'’*^" ■’ X - ; j4j' ^ ii &el oxl^ c*a ^a< 5 afo aq ie ^ira>i4isr|g;i»aA .jn& *5^f’#'‘-&irl35‘sar.^'3:J £Y4i4 to , stiji’ifQi . o; -%}i 0* oi 'h*^oAOO oi 'fe- . ^ T~ 7 * ■ -" . ■'' ' ■'— ' " ■' '■>. -■ *' ■\^' - ■"""'^ 7 .*. ■ ^^': : , to v.:^Iji;IOa ts,t|^iii\ ^ 3^i^,*aeft‘ :#X.iiidcv54ij “'I'' ■Ut'fjt-ti *>»j/aJs9^3 . J - . ' ft 1 i : at ' . : iC ! i l .1 iC "i ^ . ' ’'^/TTCror ■ * i . ' i ^ : :• :- V\' i.r ^ •; s«- ■ cv ^ ■'•'■”* ■ ■'■■l e'C rt.c"' i'l i i '^r-n.T: vi ': ■■-y v K. -iO/-.-; •-•*- Wff- • '•■ ..;' Vo v'* • '*■ ■ *- ■ ■ . • ■ '*“ ■ •'• i* / .' 'i x^; c ' ■ ■ ' .T gdOiV : dt in 1 ,’i *: :,o 6*?^1 /ttJC ^An* »«v'.rr j‘<~ ' •. ‘ . , ^ nif;i ^ v . r '..-fw «J*U^ *«.Lr7.oi v .1 ttW:> i , J40"' i W-i;. - 'i,r_ ■'•''■ ':lr>av.> 0 - ^ 0 -;. jfji . ^ >v ’ t * ’' j li 'fi-^ • -■ ^ -V : t 'ti; .:■ • • ^ . ii ’ ■- ' ■ . 1 - aiai^fc ,. >.' 7 / * - JC ■ • -* *** .... .«.•■ ..‘--'i 3 , '4 ; ; . . 1 / : ■ -- T ' i ■> ‘ • - V .. J, .... ^ !* .. •- *»..#•., . J. . 4 _ ^ •' A -^J: • ' “* 7 ^ 4 . 1 . 'ir~hC',‘-' .uon ■u .- ..' V-i-- -.•*■ .. .'.f j>. . -T'c ? -■■WJ : •. -'•<: 1 i uo - i.' ^ ...;_ ■*■ , -s-- ' r:a . - 1 ?- v/ 7 V £»vfirf -i^iy ..r*;.i ■ ■ '^'' .'*j' iiuA <■»?* '•..- ... ^ ■/- ■ • " N H ' ' ■ ■ ft. -lerffl -. ^ '' '■ "./-rir'vC^, 2 ^.? tu> Mot.s^ t-iiV . . “' J* 1, 4 .^ .b^'^ :-.‘ix4'.’l9:.Ct » ^ -f • . I.-;;. ^ ‘"■•^ J ' - - . . 7; . „ *.+* .* nrJL- , -. .: ■_. . , % .' ■’* : ’ . . .v>*? V- yxin '.A. ^^■c> ■ ^ > r,\ni w ; ■ rV'?'tr'. ' ..••'•• . . 7 ' A. ^ . /V '‘i.'IU*;" ' ' •■•"■i.i I. •'v. Jt , 4 . ^ . ■ ‘ ■ i-* i ; ■''■* Sift «Xf.i v"iV', ■■, • f'iV . - .* ^ -^r-- -;- '■ •'■' .- 3 .. 'AK -r r _ " ii ri a «..^...;- .- 3 ;j. 197 In addition the defendants introduced cories of all the sales reports compiled 07 the Manager of Statistics aiid disseminated among the memoership di^ring the year 1919. This was done in order that comparisons might he made between prices chargad by members and prices ciiarged by non-members, the contention of the defendants being, that such comparison would reveal that members were neither maintaining fix- ed prices nor were they securing prices any higher that those receivediy outside competitors. The Transcript of Eecord, which was all of the Eecord that was acc- ess! ole to the vsrriter, contains charts giving the prices that were received by cer- 1 tain non-memoers for the entire year of ISIS, but the reports of sales, showing prices received by members, diuring 1919 are not given in their entirety in the 2 Transcript of Record. The Manager of Statistics, however, placed at the v/riter's disposal all of the sales reports issued during ISIS. It was found possible to ex- tract price data from these reports of sales which were comparable to the data contained in one of the charts showing prices received by a non-member. Prices re- ceived by non-members as shown on the other charts could not be made corn-arable wi on prices contained in the reports of members' sales because kinds, grades, or thicknesses of lumber did not correspond. In the instance where it was found possible to make a comparison, the graphs which the writer plotted to show the orend ox, prices in each case, disclosed that the average prices received by members of the association for the year 1919 were no higher than those received by tliis 3 particular non-member. The v/riter also prepared a chart with four graphs, three of them shewing the average weexly prices received by three leading manufacturers of hardwood, the fourtn snowing the average weekly prices of all members. The period covered was from July 26th, 1912, to December 27th, of the same year. i'.J^cord. Americaii C 0 I.& Lura.Co.,v:% lb. S. , Yol. 3,Krebs Exhib. ITo. l.u. 1509 ; May Exhio.No.l,p.lol3; Wertz ExMb. 1. ,p. 1613', Thomas Exhlb. No. l,p. 1398. Reports of sales are shov'.n for the month of January, 1920; Record, Vol.l, Exhib. "A", p. 33. 3. See chart No.l, in this chapter 4 r. Ui * - '■ V .-.i; »' : ^ s’ - s '.0 ~il f^iCC fi»i - '. T .' _ hfbtl... -•J7.T LI tv* /:■ . :ii, ■* :- ;i_ : vn- r.( ci, -.tf '• tan |- : inj^i . ,; i^.t'O- i#! \o IsTi’sctt. "tT r .-jrTi/: •;.’ rv ■ il;.i si- ~.qX sVjjpJ .,, •'I ni-..- T , ■.■•;’ a • * - -c -r .aesiit > 't'litl 1 .- 13 *: iibi' -nzxt'' , « - « r, o- r If j ' - > ^ ■^' 4 - X ■ r£tr ,'i. •■ ; ' .'-^’e c? ' .j t aim.. .^' Ir. : R w. 1 a?- - : F -• ; ’ ;. a i .-V :t»| L ■' ’ ' '•>' -2£iclSM I i ijr-; i :XL'-_ V- ■ “- n • } • • i t ^ v-e.r. < - -V ♦ J * J ^ • iO I •d-, fi I, I': 198 An exmaination of this chart reveals at a glance that the prices received hy each of these man-ufactnrers varied widely from time to time; nor can one trace any existing relationship "between the prices received "by the niannfacturers and t he average prices received "by all the roem'bers. Ass'jming that the trend of these prices may "be considered typical of that of all the other members, the inference to "be dravm therefrom is that open price activity among members of the Hardwood lilanu^acturerb* Association did not lead to uniformity in price policy, at least during the year 1919. That the statistical conclusions indicated on the charts drawn by the writer, although inconclusive in themselves because based on inadequate data, truly cbpict the character of the prices received by members during 1919 is attested to by several purchasers who stated that the prices paid by them to different member were neither uniform nor were they any higher that those paid 2,3 to non-members. In this connection it must be pointed out, however, that the price data' taken from the association reports of sales cannot properly be used as a basis for determining the effect of open price activity on prices because, as indi- cated elsewhere, only to a very small extent did members use the sales re- ports issued in 1919 as a guide to the trend of the market, for by the time that they were received from the Manager of Statistics ( a week or two subsequent to the time when the sales listed were made) current market prices had advanced so far ahead of those listed on sales reports, that the latter, if they had been See chart No. 2, in this chapter. 2* See Becord, Vol.2,p. 1372; 1367; 1394; 1395; Yol. 3, p. 1563; See Chart No. 3. in this chanter; shows variation in prices received by members during 19x9. 4 . Chapter 6, pp. 124-125. : V f * M ‘ . - . - • ^ . *‘ • r--i'-3v fi'j'OTx - irrftvr . ';Yo .•j-i;.'- ‘ tj. «. f ■• -. . . . V' - ' ' j ■ ^ -...A »t • .■f'.rj;rv. i.Uao; ^ Tro u''--\ V, ia» - '''•*" ■ ^ " ’ ‘ ■ '■ ’■■ . Z. 1 -. t,^ 'oi£ ; - ,»*:•> .?'■ f -,*4 '■-' f-o? - , 4 A . ^ "■ ^r-v; -> 'r^erel^i /•:-i:c': oai-x.- tx ,: , *i . -■ ‘x/:r*s . r c ’ ivlr?? ~- '^■-,‘UK'i _- •• ' w ._. -. '-'"iCiX.. ' ■’■ *'''^- ■'“*■ ••:.:^ ,-:-V.? 7 rr, ^ 7 ; ' i - * ■'^ ■' p * ‘ ' ‘ ****** ''" Vf ‘Orf ■ ■*‘^'' ' r--p fai c: U«>ij:.varv. nl '7 • !• ••/•'. *r:: •i . . - *, c<* 'aivi.i. '•. irciTs*. ,'a ,^. ^ ^'-i’ .v.'o . i^r’ M- r,'~' ■'^ ^ ' .'. *iU \ ' r ^ 4 4 ^5 ^Wo Si ;i»«* s.-ti & '•* ' ,^*T'? Til^ htttst aI'' * ' I "9 A ^ ^ - ' r 1 , t ^ -. . - .-> •^.Li ,. j. •, i- To -x*lt ^ ^ * -f A :vi^^ ‘■''^ f.i cr£ic**t-.:sj .• ■•* 4 .^ •A.*' . ■•;.;/ h®. " In a. £lcf ■” :c%l ; /r ' '-'^ZAV iifwor-4 ' :‘T 4.7 *,/■ / < - • ♦ ^ .i * ■'•< .'--■ “2 a, ,.«r‘ ~Vp^' I 199 taken as a guide would in a great many instances have resulted in sales at prices helow the current rate. Only the class of small manufacturers seem to have derived any benefit from studying the sales reports. Even though the prices listed on the sales reports were below the best market prices then prevailing, yet they were higher, apparently, than the ones these small manufacturers had been accustomed to receive prior to their entry into the association. Of the numerous letters received by the Ifenager of Statistics in commendation of the Open Competition Plan, all of those which pointed to the fact that ^he plan 1 enabled meuibers to get better prices were from small manufacturers. An un- precedented demand, accompanied by a shortage of supply resulted in such a rapid advance in pri oes that the sales reporting system proved unequal to the task of keeping members properly aporised of the latest price developments. It is obvious, therefore, that the results secured by the writer from a study of these sales reports reveals nothing of importance respecting the influence exerted by the open price system on prices. Perhaps it is reasonable to assume that on a rapidly declining market sales reports would have been equally worthless as an index of the trend of prices. The failure of the sales reporting feature of the Open Competition Plan to fulfill its mission in this instance points to the important conclusion . that when confronted by abnormal conditions, the system may prove too inflexible to adapt itself to the new situation, the consequence being that the course of prices is less affected, perhaps, than it v/culd otherwise be. Probably the course of nrices would not be totally unaffected, because other features of the open price system might continue to function more or less normally, ^oe open price machinery involved in the interchange of information pertaining to stocks, output and the like might continue to operate effectively. 1. Boyle, L. C., Argument before the Supreme Court, p.68. J egjci^as ww f c... u.. . * 5 H ‘.^l l«^rirf«T fi:»J^ra 3 *siCo of lo ■ycj^xoilC arf? r 4 P ’iiflf f^6*1 Orff Of J6oftti6« dolW 4^0dx 16 ^A. 'S. - -rt£- ‘" \ -'■ '•" .'• — - 4 “‘^* -■£*;. © 4 fcil ^i- 8 r *rfcffe 4 Of $« ■--•--i ^i'. 4 * * *. A '-' -T7 . « rfai]^‘-ipx .^xuiTifaS 0 03 *"I«£ 3 ?-«.T 3 y.J&« wi •:mj«v'''l»alH 6 (v#.t f.,* eaf fjirff wi •*^ *** » 6 i^i 2 fdl>MrfX'« 4 > X^ 04 Ja,^rr a:^ 16 x^rf« ii Aui'i Iffhcw i>rftf ^ AuTL'Sas orff f teiol6i<44 „ 21] ■ ' N£!'’- ■" *» . ' .jtf- ' «.>fl k f a*f'r«£^#nf,4iti.lsi «£f, yizifrscta-x K-r^ifingwi l6 ^.^Kjofr at^o^o.-s ciX^w-^f ^,| fC®> '• ^ > «TBliSALi*>t; i - 'i »> fi »^?ir ■.- ^di Vc «!T I 'jUmSui^o JftBrjorsjl 44 ? 5 J &trth>r. ^ fii 4 ^X Viff ,fnralt^x 3 fl 6 o X« Oityoc 8^flp8»»0fe nrff^ »?«?- 4 rff of lletfi 8rf-i^W4fa#lli4 Stir .sj 450X7^ , ' ■ '■> '' ' • 'kiSi* ' r'T- ‘ ”V- ' \r ■ ^ krifa^fl 7 «rffo ♦nokoirf TgXi£i|of %^r for. jfeJji.w acofT^ lo e» 7 j 4 ^ -y. ^ A 4^'/** ‘XliA’Tipft tttiS TO 47- iof 4 . 7 r i^a eaz' ' vT '■,-►• -t. • 3 fi-A , o^aHcT '^ftrvsTJt :4 ^ 200 THE IIEED OE EX&.RCISIHG CAFE IH CHOOSING DATA FOR STUDY Considerable discretion nxast be exercised in imldLng a choice of open price associations for study. I^'Iany so-called open price associations are in reality combinations in restraint of trade, seeking to conceal their real identity by calling themselves open price associations. Associations of this character accomplish their purp^ose to curtail production, or maintain or enhance prices by "ed^icating" members to act in harmony in pursuance of a common policy. In its report on the lumber industry the Forest Bureau of the United States Department of Agriculture concluded tliat there was a clear-cut distinction between the services performed by open price associations and 2 activities in restraint of trade. No doubt this is true, but as has ’oeen indicated in the preceding ciiapter, some so-called open price associations are so clever in their "educational" activities that only the most discerning are able to properly discriminate betv;een these activities and those carried on by true open price associations which exist for the legitimate purpose of keeping mempers properly informed of market conditioxis. If an investigator making a study of the influence of open price activity on prices were to commit the error of choosing for study an association more properly termed a combination, the results obtained from such an investigation would obviously be vitiated as far as being a reflection of true open price activity is concerned. Results of this kind v/ould not only have no scientific worth, but, if given currency, might work a grave injustice to the cause of legitimate open price activity. 1. See Chapter Vlll, pp. 175-182. 2. Report entitled Some Public and Economic Aspects of the Lumber Industry , •Jan. 24, 1917, Record, American Column & Lumber Co. vs. United States Fol. 2,p. 1198. >ve- 201 IIIBTUEITCES AT YJOEK 1_ It has "been argued elsewhere that a knowledge on the part of "bTiyers and sellers of their C'm interest, implying a Icnowledge of all conditions that might have a bearing on the supply of and the demand for, a given unit of com- modity, together with the ability and willingness to intelligently act thereon, would result in similar exchanges taking place bn similar terms; or to state the proposition in terms of price, it would result in the naming of an equilibrium price "for the same unit of the saiiie quality of the same article in the same market." Jevons exoresses the same thought when he says, that "in the same 2 market, at any one moment there cannot be two prices for the same kind of article." The concept here conveyed is undaubtedly at the basis (consciously or unconscious- ly) of the argunents of those who contend that open price work enhances competi- tion and stabilizes prices. 1. C5hapter 111, pp. 44-47. 2. Jevons, W. Stanley, The Theory of Political Economy, p. 91. 3. By way of illustration of the point of view that open price activity tends to stabilize prices, an extract from a report rendered to members of the Aner- ican Hardwood MEinufacturers’ Association by a committee appointed to look into the merits of the open price plan and devise a system applicable to the hardwood industry is quoted: "By maiclng prices known to each other they will gradually tend toward a standard in harmony with market conditions, a sitTiation advantageous to both buyer and seller. The conraittee does not expect this plan to result in one price for any one grade and the difference between even the same grades of various manufacturers is \to 11 recognized. It is contended, hov/ever, that in a very short time the extreme range of prices on any one grade will be materially reduced and eventually the prices obtained will be in direct relation to the character of the grade offered and the prevailing market conditions." Anericai Lumbennan, Feb. 30, 1917. The Forest Service of the U. S. Dept, of Agriculture also concludes that open price work tends to unify rates. See Eeport on Timber Depletion, Lumber Prices, Lumber Exports, and Concentration of Timber o^mership. , Juuie 1, 1920, p. 68. 4. The view that open price work increases competition may be illustrated by an extract taken from testimony given by W. M Stark, a manufacturer of hardwoods, in the Hard\vood Case: "Affiant says that from his observation of the Open Competition •atr •If - -cl ■ ' f adt •* i . r . ' : *0 • 7^ * *J#- _. 'fc!' . 2 ii t • " ■ . c' ' o .v-* 2 f >• ^ 'i o *"<» . . * . . r *?:r. u jj _ o; -s ■i> - r . '>oi XX^ ir I X -X : .-.v: ■„ *;-Cty if “ - : ' I ij’OjC'j i ■■: :• ■ * 3 . oai V' :i. * nCiJ 1 xZij. ."V-^ 2 'Vlr. ^: ,OKiS . 4 .^ ». -;c*i- ‘-? .' 3 .' t.ri'-' •'uc* #': C- -'7 i'. i.:^vs: ,.#«■ ' . - . .. ■ « ■’■' ’V 're-c .-rc.-o V.-* * O '■ X ii^ti 1 ’ 1 jA • > f'tlJ. fr- ' ’"V , . . ,. ■ *' ■ ‘-i' -Xli •i.sJqiu';'^ M 2 ' ' '-i -• ' c. '^X wri? ,*-f?Xf..: *1; .r(-. .ir^^'- c'U s y- . -'.iV 0 ; <3 ^ V AiTfi’ ' ’• n ' X J ►.•■ % -*i A. ^ ^ f JV ,-, - '. • ‘ roc . ' . ftkt ..■:_? •.;.■ '•■ rr .- Cikft ■ .' .'.XX? f’: i y; * • .> ^ «i. ^ ^ a ^ . . j. i . ^ : .' - JvJ.-.r ' 4 i \'Tfa;-.*-.'jX S J ise-.' ; X- ' ■ 0 -f . aj - '** ••? :'X >’f- • ' J' *rt.;t'.fC>;'' ; •’j ..,- T,^ ?« 5 " 0 ^^ C- ' -' > j(,l ?:'Cn .:/'■ ' .•/ ■■.-•- ' T-ij i' ■ w-vx/rf !0 V vO' c r :. i T 4 -.1 : ■■ ». s.- ^ t-- ■hs.-. '. - ■ ^ ;a * . 'i * ' ' •* r^ .'f s. -V " 1 - :i .Till. •: ' -XvlJ .T*' y -;wcxr-A -3 r- *t . t r\r' ■ - ^ 4 - u. :«X ..: ■:'l^ ;‘£--S 3 y ■'y iv ' . •lee; ',?>o‘i .. : f c-r ..r. oifj :o aii’: Frye’s! ;r iV *'’ ‘'PAfcs^- 5 ^ 4 -’«!ars:.- . 202 If all the factors in operation in the case of 0 ]pen price activity- are identical with those which find expression in the law of supply and de/ioand (i.e. the economic principle described above), it seems reasonable to conclude that open price work does lead to exchanges taking place on similar terms, with uniform rates emerging as a matter of course. It is conceivable, however, that price xiniformity can emerge thro-ugh association work, despite differences in the factors at work, btit it is not tho'cujht that such uniformity vdll ensue as a result of sellers acting independently of each other in their capacity of oargain- ers, but rather that it will come as a result, not necessarily of direct agreement, but of the power of s-aggestion, perhaps, conveyed to members by precept or example emanating from leaders. By a long stretch of the imagination it is possible to conceive of price -uniformity being achieved without premeditation, --if members form the habit, for instance, of guiding their own price policy by that of one or two of the outstanding leaders in the industry. In fact the cons-urmation of plan, he is convinced that there is nothing whatever in txie nature of the plan itself or its use by the jjjnerican Hardwood Manufacturers’ Association which has tended or '^dll tend to suppress or restrict competition, but on the contrary, it tends to create a freer and broader and more -unrestricted miancet in which all sellers and buyers may and do freely, actively and Intelligently compete. Yiliile knowledge of market conditions will naturally and properly enable some persons to sell to better advantage than if dealing in the dark, this is only an incident of any open market against which should be considered the general effect on market conditions as a whole and in the long run. From this aspect, information which directs the production and selling efforts of lumbermen to supplying the market needs for which and market points at which there is the greatest demand, necessarily increases competition and works for the benefit of the buyers and cons-uming public. Obviously and properly, it also works for the benefit of the lumberman, as they can only profit by supplying the demand. ” Eecord, American Col-umn & Lumber Co. , vs. United States, Vol. 2, p. 1260. I •l- - t S 'Zt f * * ' . I • • • ''j.yc I — - • : Vi' ^ • •: c^vp/’ Sr^: a*_-: r Si^;;- 3 »_-: ‘ j • - . - ' “' I* .sitcwr f * ,fcv, - , no i .c i „ % ’ *^ ■ - ■**‘. 'i'-n.-. J 5- - . . -. : '■ ■' -.•* -' ” ■ . • 1 ;, ,f... . - - ■ •■"''".<= .-j-.-if: f • - , - -vr..^. rfcCT __ ■ ■ • ■•. ■.•,•,=■ lo ..-• ■■■ . • --f-'* -=’ f: -^11^ 10 . V , 't*:- B 0 . f •“ - •• ,* L-t- 1 -j ^ti . 1 ' : j :v< . ’ j . i r.^ “ '• ' k--^ , - _ V -'i ■' v : *v ..,: , ^ . ., - ■■ . ■ ■' ” i ■; ‘t - . .» . . *' \ I V’ -. • T» ^ - ■*.,,• i • - ,f - ■ ■' - ' '.' ^ -O : 35 v»*t Tfj r -r* ■ - A- i. , ' " ■ ' \ -f . or-. ; , ■ :y-"2 ii » ( . ; 0 '' ' *»• ■ ■ \-i -o-i,-.-, .i:-;.. K ^Xj ^ , lO f-' ^ ~i ■-■ - Jf ^ ‘ ’■*’*• r» -, ' .i I • "■ "• '.'ix* 1^-. :.-.j . *• •.. * "■ * ■“-■*'■ - **: i - *» I .4 J .v.-.i ' . A.«i' » r ** -f** K *** " T'. <’• . V ,C-s -J-;: , (? ■'■ . - r-.o-.w'- kIs . .-..-r-'.- - - ,* M®*tt«}-... 2 o« -»S,V(,' rv^*’X'.- S^"~ Oi?- fWif- anr^ ' * -* ,. . - -^C. • -i •lifted’ -jCI ‘ 6 -^ •'■••«» .Z , ■ *’' * -^eie a vr':"-a~.- ■ ..r ^ "-X-rjugio . ■'• •’' * " •'J.SV- oe i-_ ‘CA&rfljiVoO .-i' . ■ f •■-• -• .--ov r,«-,",; ... .:.f,:.:-^ ; . =»<'^ » ■ . ''W --■'■’.'J .'V.T' ^ 203 such a result inay he facilitated hy the very ignorance of buyers. Lacking the power that comes with knowledge they are likely to look upon the cornpetitire sit-'oation which confronts them as being unchangeable and may accept such prices as are quoted them out of a spirit of helplessness bom of the feeling that they are powerless to do othervdse. The problem which we face, then, is to determine to what extent there is justification for believing that open price work is a realization of the ideal kind of competition contemplated by the law of supply and demand, pre- supposing the existence of an open market in which numerous buyers and numerous sellers, each conscious of the bids and offers of the others, work out a common price. Assuming for the present that sellers, through open price work, possess sufficient knowledge of market conditions to enable them to act with intelligence in the furtherance of their interests, are also buyers in this happy position? 1 The burden of the argument in chapter three is that they are not. In tliat chapter the reader* s attention vt 3 ,s cs-lled to the fact tliat Mr. Eddy designed the open price plan primarily from the point of view of the seller. Moreover the 1 observation has also been made elsewhere that v.dth a few exceptions, open price associations are not disposed to give buyers access to information which they 2 have accijmulated. Previous to the inauguration of the open price movement, buyers held the ad\'’antage in bargaining. By malcing wide inquiries for bids they were en- abled to ascertain roughly, at least, what idling prices were, -and the accuracy of these prices was of course unquestioned. But the seller, as a rule, was in 1 . 2 . See pp. 48-49. A 1 <5 t.bqt. Tnemberahin is usually limited say- fi oneration of s^och associations(open Prics)of benefit to the producer ^d the con- ’.rmer alike, but unfortxinately the tendency is here manifested to confine the in- ormation to members. "Chicago Tribime, April, 13, 1921. A notable exception is the American Hardwood Ifenufacturers* Assn. 2 9: V k*. (' • - • > - • « . -• 4 'V 'Jo c «;i k' jXin,, £ HSi£‘» 1 ! 9vJ- ^':,nr X :V .-) ;,. v.^- rxi,^ Mi :>q a :. :> - .'ii'.'t;> ir. 7 V ^ :r- -.1-: ■ fr^: lo .tvo :jui'.T? ^-JU Jj^* i. , ‘ ’ ■•:•«'■.: r.fr«-»’;- • .’ ,■ : p: arf# Jo itDi i.' ^ - - ,. a. . U-JB^ ,:^^;o .:•!. o:' ■*■ . ' I •■ - • I- ■i A ‘ ’,.'-: .1 i.TJ . -' ■’>-^j 'io *'10 \'"J‘ ' ,* - t.'i, ,» v>J: fcT-^'ij .j.va t£ii' >«f3 '* v.Oi, , . 1 ^-.. cci"? ; ;» C- .i:r ^#r.'7 ijl ii - »-» ^T' W •• . .JJVJ, iv _.- V F-.'ciJ .'.^^hAVi | ’W '.*;.-.0c 'i-. '«: r r:t a,-; o ■<.:<* o 1 >f« -■i ,t -'^ - *:p;v.i vir -'*. .%’- A- ?! I’ V ■' ■ ■ ^ ■' . ^ *7 *' j *T>;^ r^qo j' j * : >• ^vxrJf^oL ' - . " ^Pjdj ci-s^^ enr o* i t^r.' nirr nvii.^s.^ ^ ' u:4f"ce*:c^ .- Ho ’>pjv lo rri’;^^j- ■ nerro ,ax: J ~'pr ‘o; jitt^««:c 6i<'3t x' -yr 'ajcfi Jarf ' - . ■••"'" • •■ ■ ’ . (i ^•7 ;Cc?nv: . ••'•.■.-'/ir: -yj'! ^'^«o- 9 L- ;on irx4> tS»«a Jooajx* L A . - ii^fC .''.'O;-: r : i' -o art'-* "O JXi;'. ' >x‘; .*•-’• jv^c'i fl .7-v- x?'"V ir:id V- - . *4-** •*■•'* * ‘ * lixm r &tJv 'j.xJiU : V^>iA : .__.*rjt :'' i'*,; '■■;■ ;>,' "«•*• .iy 3tii ' T - .f^- 9 -v*: ^ tflXffi ; -l-JT H £.^ ,. [■'g cfiS 7X7*1 y. »• S' X * s < ^|7 jixi' lo- fiiiW 3 Jff 9r' ' * ■.... • X.'*IT « 2 • ! “'g'i i'9'- "4 7»--*= * '; -r/*" *'' * ‘’0;xjj«‘£ I i; - *ffij:r ' 3 & . - ~».y-,-,-; w-oyaC^Ki t-.- rl* r' * efij: i ■ t. • /Tpxr :* > : r-w C. f ; ,r i; r.:’- '..'■ie?'^ zo'' » 1 J . r.o; ':vCcO^:? .7ncp^p£Xii J/. icii'S: .••"7 yp T -i^x-r^-rO ^ ' -*•**-, J/. 'I*: : 7 .'P 7C '• .A/;;*', lot*' ■ • cr.ri.x:-!'.^ ,i^rs1■a h: ■ .triiovx.- .4: «^7 : -OT • tp'A 'i’:on.'.vr2.al4>f M lx .wtcx!. r:x».''’ iv '•' •/' ti .'Oi*: vr>-r alj^^cn Jl »va B Lj*^ 204 ignorance regarding the prices that competitors were asking, except in so far as salesmen and huyers kept him informed. The latter found it prcfitaole to mis- represent to the seller the character of prevailing prices, with the result that the seller was often deceived into meeting prices which }iad never been quoted, the prices thus made being less than market conditions joxstified. With the initiation of the open price movement, however, buyers find the tables turned against them. They discover that they are at a disadvantage in bargaining, principally, first, because they do not know what other b-oyers are paying; second because they are ignorant of the character of demand and supply; third, because they are \mable to make accurate predicitions of future market conditions. They lack the data upon which calculations of this kind are based. Ivkich of these data, such as information bearing on production .and stocks, for instance is not obtainable by buyers except with the cooperation of the sellers. Vfe have here, then, a situation in which the sellers as a class are well informed of market conditions, whereas the buyers as a class are poor- ly informed. Since one of the iiqjortant premises to the law of supply and de- mand, namely, tliat both buyers and sellers must be accpainted with all conditions affecting their competitive sit'oation, is violated, it follavs that similar exchanges among buyers and sellers can not take place on sirioilar terms. Jevons specifically mentions imperfect knowledge of the market as one of the "extraneous circumstances" v/hich interfere v/ith the undisturbed 1 functioning of this economic principle. The advantage enjoyed by the seller over the buyer in consequence of his superior knowledge of market conditions probably will express itself in the exaction of a higher price than v/ould otheiv/ise obtain. One must conclude, then, that members of an open price association are in a position to e:cact higher prices than they could were buyers equally well informed or were not open price activity Theory of Political Economy, p. 91. -s-arsw^.ji A.') U . I t--' » • •V ^ t ,. '• 'i: j ■* • -f , a i ^ ^ I (■’i "•I ’••'■''C... . , ~>Ci/S rr A- - •? y ' , .-»nii .. ^>-n^en (....- I i l 91 J I '.v Jc. ^ »' ’ ' , * f yi. t . i» , * * * V ' ' ^ ^ ** . >■ |5 * 1. i ^ > '•jb j ".’ ':r.’' ’:o .. v«»J ' f - .. M a - - irt 5T*. *D.' K'. 205 1 existent* This conclusion, however, is based on the assumption that members are able to press their advantage to the limit without hindrance. Such a sit- uation, of course, obtains only in theory. This invites the question; to what extent in practice may open price associations be able to utilize the theoreti- cal advantage enjoyed by them in consequence of their superior facilities for securing adequate market information. The task involved in bringing to light the numerous influences that are undoubtedly wrapped up in this situation is one that is difficult if not impossible of achievement. A study of those influences which stiggest themselves to the writer convinces him that in practice open price associations are little able to utilize their superior knowledge of the market to the end of imposing higher prices upon the buyer. Influences at work tending to minimize the effect of open price work on prices can be traced to the follo?/ing sources; first, defects in the opera- tion of the reporting system; second, failure of members to utilize the in- formation conveyed to them through the reporting system: third, the limited sphere of control excercized by open price associations. Defects in the operation of the reporting system manifest themselves chiefly in the following ways: first, by incomplete standardization of the articles about which price information is exchanged, making price comparisons more or less worthless; second, by the unreliable character of information collected and disseminated. Obviously price comparisons can not be made if the articles about which price information is exchanged are not comparable in every respect. 1 . The Secretary of the National Association of Purchasing Agents writes in part: '•The real function of the open price association, as we see it, is to permit producers to charge for their commodities not on the basis of their production values, but on the basis of all that the market will sympathize with this S • • ii L ,'TfV'r' . r ;. •:j 9 ' S^- :iv ."ii * *. i '• , ^ ',:i m.-ft" »».-!»,. i ». < .- 1 . "!?rrr^r;‘ ' . ^ , <1 „ j . ■ ' u* *;t *! t'- *#i ': 'J,rt 9 < i I r tx — ■ 4 . X,, . f’* i'4-’ • » c*^ “1^ *r. cJ^** •> ii Q/.-<; ;\i d: . '..'4.» lcj.. • : <:; . -’,j : cfl^ . . • v^*-: * •; '.’ j A’t ...;;.s ‘ ' • ' ‘ 73 - ' ' * "I •^■* ' < 0 t.' ■v '-■t' X ’/W Ii.', ■ 3 ; {>■ >>*■'' • ; :• t: or*.' . 4 ^-. -a,r c 4 »•:/ • - 7 .-. .. ^ 03 XT.-[ d 'r? ■-:t' •-. - ,- . ■ ' r: '• c-"' I'l'*! : 36.' X'.'A ■•%.■’.*;. oXTo'^ St.? 0?. 110 ^“’ t r -• st^oi'jci nc • OiT. <^■^ . .:rtqo .^0 J 3 *r‘:o -;i 3 .'’, s:;, '•' : '.roiaia - :"j'i.;:'i rtci* • i-^ • #. Jk >71. T :ixs.'tTo or:, ^ AMf ■ . :.: 7 C 7 :.v 1 . -.i Sri; , > ’ ...7. .■ 0 ^ ■ •;.- I... f.- ; ''71 b / ' ; , 6l *K' ®? ■" ' • r:.isetl .* fXbO rf'j '-a , -r^: *>.:U *. * o-'r.si ac ji 3 »i ,u ? £;:.-* i-'' - 7 (nc? :• ‘^c^ v; . : ■ •■.' •. V r.‘ ,77 t w . 77 .-. r JofI '.Cizr' Ci iTtij Jt :jit , ' 'r.f'jr" ^;ic ' ' •■• " i. ' *•*"' ■ • *"* •' ■ ■ ' 1 . A .. i. ^0 nc.x .t-.'iB/i i . .4t. ',"3- ■■ 7t ■ ^ o.ir ■* ’ra.-T'-i- nj . :• ^ - ioo<;o*i 5 'Ci'>: *.tr.;o v 07 ' 3 o C .7 7 J.&..; ;o fl- ‘.d i 7 !>-no Jw.; « ! ; 1 ; ^ 3;..-'-.'60 7 : - .. -.-c^ '37 ••-. : .' . ' ; f.'»kC 7 <^ f-'i'j-.T- -.i.-ft .f.i.ij : ";o •! 0 i>d *fCr 7 . 71 ■; i . t r xz-T ‘,r c::i. i ■' .;•■ -.qxo ';.^ ..aisv •. ' ‘'.' 1 : 1 !. 206 Differences in size, shape, quality, woriananship, and the like, are bound to re- flect themselves in differences in price. Miere these differences persist there is lacking the common basis for comparison that is needed if interchange of information is to have any effect on the course of prices. Standardization iciently adequate to make prices comparable is difficult of achievement. This fact has been conmented upon in another connection. To what has been stated there by way of elucidation of some of the difficulties involved, may be added some coriments by Mr. C. H. E,ohrbach and John Allen Murphy taken from an article of theirs v/hich appeared in Printers Ink> ”Th« prices of leading makes of talking machines are not alike and no amount of price infoiroation could get them on the same basis, because they are not alike in quality and workmanship. Take leather belting, corsets, air compressors, office furniture, overalls, knit goods, hydraulic pumps, silver- ware, clocks, vacuum cleaners, etc.- some of which have and other have not an open price association. There are too many dissimilarities in tnese proaucts to permit their getting on a uniform basis, and although the open price idea may be of use in some such cases, it can only be of limited help to the in- dividual manufacturer in determining what he shall get for his product. It 2 can not establish a uniform price.” In chapter six where the advantages and disadvantages associated with open price work received attention, it was pointed out that the usefulness of the open price association is very frequently seriously impaired because the information interchanged is either inaccurate, misleading, or obsolete. If, for any of these reasons, members become distrustful of the reliability of Chapter 6, p. 118, 125, 126 2 . Rohrbach, C. H., and Murphy, J.A., The Reverse Side of the Open Price Association, Printers' Ink, June, 24, 1920, p. 41. ' "Ga/: . . A - w -■ I "■/:lt ‘ >o^ • ^ • n**' '•-c . . , j-i ~ *“- 1 - ’4 ■'! 3 r:* .. .vX( '^ • .0^1’! ’ .:--al-if. ■i:! Cl i-v -•-• £C.r i*; '-•■■ *• 'S . ' - i. /V ^ VJ *f * - ’"tf •;.’?: ;n0Aa-^S; ••■ ^' ^ *:ktj • • -cC'i afe^'J j of . — i-. ; »■ . j ‘ CO . - - • AC ,':>iTi :'7.: ' l" " ‘i’tM ^ c ct: n.x-k £ ' -. f ' 0 *«,v f ^..or . -:xr. ci5;I* *j..> /.Tj-r-c f,.. . •' 4 •;■•>’ 3 t' •■ ♦ ■' 'i.- ■ ’ ’ ' ' • ^ - ' -- . •‘d*uirX&ir%,'80C ' fii ^ .■X/L'-f; ':t; jj,;, ' ' ' -X-~- •> , ' . .. . "’ic-. vi»‘I<5SC- -i --..v i.i -.V i“vlr^r ^ '1 . . Oi.'jclo ' . cA' -S' *• ‘''I' *«•<»> «‘V .- •>^,- c»c' --Jb trrjc: . ’ - 2-4 .-:.n. * ‘ ■' *'“■ > ' •■ ^a7ci* .“w '.. 'J . . tj 0 / 1,..,,,, , ^ ^ _ _ It: " ' '* “ ^/3 if. ni LijpMtX ' - -I xnz^l.ruj n lAlir w t. .■ .cf,:. ■*-v i.vc : X. ,'-. .. j 1 ■ . I • . ' ■■ SSt-J 2X>C Ajf i F" ' i * »X j 2 ft Ci '■ ! ■ " r.30' •■•li . to^ yfrc » -■-. ', r;r:ov:f.l . 5V-J. 1 ■J* •' - r C--L\ , 1 *^ '' v.-fi ♦f ‘ *1. .2 ‘;:f;,-G 207 the sources of information wMch they receive they are likely to act independ- ently of that information and in consequence prices are less influenced than 1 would otherwise he the case. Failure of memhers to utilize the information conveyed to them throu^ the operation of the open price system may he due either to a deliberate dis- regard of such information, or to inability to under atand it, or to inability to 3 act upon it even though understood. One secretary vn:ites that members have freq'uently addressed letters to him incjjiring what luling prices for certain commodities were, v/hereas the sales reports containing tiiis information were probably lying on their desks at the very time when they were mailing their letters, lany members, no doubt, disregard the I'eoorts received becaase to properly understand and interpret them these repiorts must be given time and thought, and this they are unwilling to do. Ho doubt there are also those who can not understand the reports, llore often perhaps information is not utilized because members find themselves in a x^osition where they are unable to act upon it. To give one instance, - information received from the central office may malce it clear that market conditions are such as to make it feasible to cease manufacturing for a period. The necessity of meeting heavy overhead expenses may force him to continue operations, despite the fact that his better judge- ment would dictate a policy of curtailment. Failure to utilize information is therefore another factor operating to prevent open price work from influencing the co'orse of prices. It is thought that because of the serious obstacles operating to pre- vent the spread of open price activity, particularly in the larger industries h See pio. 122, 124. 2. Ibid, 113, 120, 121. .i, . wcncxrj i; * . 4 1 '4i AOBfMS o*:./: ift wj livi'jio' 'io :'J ri t •r •'. v.*i V. ti 'T i*::-:'::; 4. '; **'•’ » ~ 'IOIjCI lo x»fj ji nDc^tf ^'ot yu‘ . : i %, ..if;-:.. •;ci ,.r„:" .T.U. 0} lion :;! p^r:.->tcmK>o . :Xi« „ . .j .. ,, _ '«'v 4 -■ ,,5 j , ^ ,_.- r>.\t> t».^W Si. l'. f ^4^ {*»»'. , ’Oi' :. .’.• - 4 * ■>'* ,. , ,•■ .<■ . . . U.,,1^ , .4 . . lotss^-' TDrt /IRS, I .' ' * u Sc -%JC r- .i. . , * • > * - ^ I ^ ^ ti f:r V. ‘ ' .. ,* ‘;ci ,• ' ** * ■' ■ • ‘ • * S’6’» ■ ’ -' . ji'i , r:j’ ,*jr*^ f ■•'" r'; ** .. u ■ .1 ■ “■ fr !' • •.;; * • .,;3 C ::: r^ '^.- i; *’ ♦ .' t‘if ? 1/ j '-' ; 'Xt. *t 'In, . .. : :.!7Jur''l *-: ■• y . f-. da "j t'jjix 0*1^ -TC.' ' • ' • -.i ' r» Ja'-.i ^nsQ B - A. i -ioi';..' .*;7ii-:r q^AJkl 'ro ‘ * '. • ^C-*" T , -.^■' , -4 A. * 4 - --.* » . . ::iT 5 f.,, ' , 1 '• •• '0 c«. 4,1 jl • “'i-l ,v)iviji4 eoi^.r K. ; .-.x,-; ; .; j jj. *r .^' « U>i ,1 - I V*- - 208 where competitors, as a rule, are relatively numerous, if statistics could be made available, they would disclose tliat open price associations do not enjoy 1 a controlling influence in many, if any, of the larger industries. If this be true, there is ample reason to believe that open price associations, as consti- tuted at present, are able to ejcert little influence on price movements. Their sphere of influence and control is confined within too narrow limits. They f ind themselves more or less helpless to influence the price situation, first, because of the presence of indirect and potential competition; second, because of the power everted over price movements by competitors who are not association members. By reason of the danger of competition from substitutes and new capital, prices are likely to be confined to narrower limits of variation tlian v'Otild otherw.dse be the case. VJhat these limits will be, asstuting that no other conflicting factors enter into the situation, will largely depend, on the one hand, unon the ease with which potential competition can become actual competition, and on the 2 other hand, upon consumers' willingness and readiness to resort to substitutes. If the sphere of control is insufficient to permit the educating in-, fluence of the association to be felt by competitors in whom are represented a substantial proportion of the total productive capacity of the industry, it appears more than probable that the competitors outside the sphere of this in- fluence will be more instrumental in detennining the price situation than will association members. Competitors outside the ranks of membershio are presumably less well informed about conditions affecting the market tlian are members. As a For discussions bearing on tills matter, see ch. l,pp.5-6; ch. 6, pp. 113-126. P Mr. H. R. Tosdal, in an article on Open Price Associations, concludes that, "in the absence of some basis for monopoly, the condition of higher tlian nomal return would attract new capital and eventually the rate of return would be restored to normal." See American Economic Review, Vol. 7, No.2, June 17, 1917, p. 333 •C ^ Ov aL;. :• . -.:- 5>: -VI ic «J5^V I ’ ^ ^ s;xCov.' , ^ i.i .; 'tq j o* ; ae 1. a*. ■ .-n -a t -• V ’ •«uB*c- 4 if ?>*r' : ;j ^ r- - 0 , ■ -.J Ic- “So — ■ * . ■ ' -•.; ; .'o-j ■■'•,, ■-r'.n ft iruust^- r; -.1 firr- - .- ■ ■• -^1 r‘^%-s£i rrjv. ,.;ol ■ ■ j !'a ■'■di i'’. ‘ •.»»?» .'(Ofi'Dt'i: 1 tj .. ‘?>i • xW /!!*»■ ■ i: i:u>. ^ ; ;.icw a .•■' ■• i’ • 69- 1 ^ „i XcrSr.v ^■-* 11 ■ ii •-■'•5 ..Cv v*^ -• • •' 0* . i. aiOOftIkf Y AD- ‘f' -> • * '• ,'J ■•.■ . ; V i*: 'I ; rroi •:.•;. -a. : u>:, :ly i'udi - ..v' ^ f..; ;‘. o; .':i 1- i-AD*. . . . .' 3 'aO'*' ; .. tkii zn..L\ll /. ' i.-x ! • - A ^ ■ 1 t -^ ’S • ■ , ■ • '. *4', ■ ‘ ' ! :c O'. B A ~--.0 j:o I ■ ‘X j.'. . DV .A . ... td-* ,y U‘' 'o'-^c-a 1 ■ .'.1 • r.Jmi -/•-f Ui’i< . . '..oV . , tivfei' ; ,X.:Dv, .--.i i'r rA :' I' u.tc .r..:. --! ':cl ...i ,Y. ^ . -.1 • li ■ .... ■ J" ‘j ■- r^- :vn lTL~ja» SP « ••'- \’A 209 1 class their knowledge of the costs of doing "business is less thoro-agh. Lacking information bearing on the character of the con^etitive situation, and being relatively ignorant of costs, it is very probable, that in their ankLety to make sales, th&y will permit themselves to quote lower prices than they would if they were acquainted with all the facts. Tne disposition of many buyers to take ad- vantage of the ignorance of sell rs, inducin them through misrepresentation to quote lower prices than competitive conditions warrant, gives added weight to this prediction. Knowledge brings power. Lac ’td.ng' knowledge it becomes almost a certainty tbat competitors outside the ranks of membership in an open price association will secure lo^^er prices than those inside. LJany manufacturers of hardwood lujnber, particularly those who had no sa es organization, attested to tile fact that they had sustained losses which they could hzive averted if they had had proper market information. Other manufacturers, not belonging to the American Hardwood Ivlan^ktacturers' Association, v.ho had sales organizations, fared a little better because their salesmen kept them acquainted in some degree with the trend of the market. If low priced competitors are present in an industry in sufficient numbers they are likely to e.®rt the determining influence in the establishment market rates, for purchasers v/ill give their custom to those who make the best prices, assujning that all other conditions entering into the situation are equal. The fact that all other conditions are not on a par of equality probably accounts in some degree for the fact tliat prices v;hich are recognized as being typical of the market are somewhat higher than those secured by the lowest Mr. E. N. Hurley, former chairman of the Federal Trade Commission has stated that only 10 per cent of man-'ufacturers and merchiants know the cost to manufacture or sell their products; th.it 40 per cent estimate what their costs are and 50 per cent have no method of determining their costs but price their goods arbi- trarily. See article in Metal Worker, Plumber & Steam Fitter, Trade Associations and Business Methods, Vol.121, p.473, Jan. 9, '16. i j y - ? a: Ti . .-J 1 j? .*■ V i .' « : ^ . 0 C- •' :o t h .: ^ i.r. ■ • _ , . •; - • , - ^ r - ..-C^i ^ ,r:.-v ji j/j. .. • -•• •■ ■ -^wr' .-aU ’i-.--, •;v, ••^,. ^ ^C- :i /,■* 1 .' •■• ■ a ii) .v;^ ■• ‘ • ' '<■' ■'.* ;.>C) - • - ra-fi 2 9&i«jrff tr-\-L o.- j a^j::. ,..f* H . : i'^:’ . 41 rr.. . ‘‘* •' tv)J 4 / 5 r.«Ca *«flr •..U^'#i. . j^jcXii .| i ■- V ;; ■ 5 .Vr,,CSt '.'i-iv# •■ - * ' v ' ' . ■ ~'-' * i !-■■•■ M-f?’ ••A;j ■“JOU.T \ ■‘iV.' -'3'iaq^^,* w *.-1^4 ‘ •■-> . '■ r'i . (i 4 » • •x «:f.T 0 • -w.- ■'':- 4 ? •• -:b ■£ 11 ±.,: p*., ■. X.a ' rO .. i' : ■• ,-X|',^ 'J\c< ' • ••' ■ - - <. • -■* ;. *u -t . u-o4:jinA * ^ A • . -l. .. A t.C-t.*iji,. i .^., ■ ,- 5 ., ; ,:■ •;.^j*£_-. ~ .. ■•-■:; ■ c; :--.s'iJ- 'aif.t JUoiC/trU/r .- t 7:t9Vtifil a:. . y-.- S', v^; . r.'i. vj:.i’ M ' .. » »• Ofi txi 04. He* •:; ;;> r. 05 «fila| jc: i 1 • '•' .' \ . 83 tli V. Ji, 'I.J /e-Ho • c • '■-t'» **'.x i*-Mi-J .. . - - - . I .- w- f ,0 . • ' '•'ir .: irXi'JC ;jrf.if» ! " '1. ' i j'^v .' '“i" : ' • •■■•>; u "xi^v : •- -i, ;'■' I tw . i'l .* 'r! ’ ; “ i'- * -;4^‘ ■•’ V** ;• .- '. n .;;3* « .1. _; • J.,... .. ■iXit' r . i r.,. V'; ,:*vsaa z ... ■ »'t? 'Stfs '■-'•0;' •-■ ■ --I:.'. •. ''‘'”' ^ V* -*"•■' «^w4*q *. u " 'C • ■ iXt±n9Stl' ■.. >r" .15.‘' :: $ v; -rti " , .' ’, .:i.X , S . J , J '. - . . ,>->.:v:‘ . , a,:; ! I « -• # - - = -. - » -4 -^a^Kt.-ooajt .0 :LHt^ - .;?.■ , ; e ?- 5 u,- '. c. • i. . ; f • qa ,,, ■ ..^r-:r CuS ' .e-sb :ii ■'•*■. 3 ^ : • C'irie .■’'ilYA*; * 210 priced competitors. For one thing the lowest priced competitors may lack the necessary productive capacity to handle large orders; then, too, their product may not he up to standard, or they may he unreliable in some other way. never- theless the influence of these low prices, as well as those not so low, quoted hy non-memhers, exposes members to the danger of losing some of their custom. If the productive capacity represented hy these outside competitors is sufficiently great, members will he compelled to place their rates in line with theirs in order to insure for themselves the share of business to which they have been accustomed. That some open price associations are cognizant of the fact that their limited sphere of control makes them more or less helpless to exert any sub- stantial influence on the price situation is evident from the following extract taken from a letter received by the writer from the Secretary of the Northern Hemlock and Hardwood Ivlanufacturers' Association; "In view of the fact that the members of our Association produce only a part of the lumber produced in this territory, in view of the further fact that this territory produces only a small part of the lumber consumed in its markets, we cannot say that the information we have supplied our members has had any particular effect on market value fluctuations. "There is about sixteen times as much Pine produced as there is of Hemlock from our territory and six or seven times as much Western lumber and all of these cane into direct competition in the Chicago market belt. "Freight rates have long been so adjusted as to bring this about. O’-ir Hemlock prices are determined by the market values of Southern Pine and Western Fir and our Hardwood values are determined by the market values of Dale, Gum and Ash, all of which are produced in much greater quantities in other sections of 1 the country, but adopted to the same uses as our Birch, Beech and I/Iaple. " 1. Swan, 0. T. , Letter dated Jan. 4, 1921. -rij iio . . .• i. r-:!; fClb * .. * j c* ^*lox>rAC ■ Y^a#.': 50 #£X fkjc-B .-i eic' n'c-iA:,- f ' , -o ^ t- oi' . .. ; fcr A OC4 1 *t •■' r i iu* ’w*. V ■•r.tf'' I'iul ec^i^ K»aX«^'I»’ • «. L- j *>.' . ci? ■• ‘ \ 3 '. i i'iC::* : ;c r •»fcfar‘,C w :j i ■. -iiS S’VXviL'tOl *£t!' e ;; ‘ »';Iy;.c .■. i vo:* il:.. : 0? Jb:)J:>.Tnoo X ?■■ rv^ : o;^ :T *■ r:+ «*Vl»WB«4. lie:!; V - iC -I i.: -Of; ■; . V' '"■■• c- .r:.i 4 t-;r 2 /. t:.. i:.'o IW -■ .'^'f I. j .‘/ibXc-ca I'tji H.-\ ndt * 1 ^ ‘ ’ . r » > i ■*. ■ . ' ' ‘ ‘ * ' ^‘x>a *rjX.n.' .. - . ... -s^. i-'' '-"I'll’' I 'Jj .. : . JU' Mi'rrci 8f.c .•■•.•:c iv-Jlrii r aii: ’£r «5 40 .''’ ■-.'xeofttt- ’. ' /IA^- e> . 6 nV 'c * .•- ,ac.'li''i lifw oCBXl .JVC .j' iffti-CwL* CI.'J -i 211 No dou’Dt there will be fotind many instances where individual members have succeeded in getting better prices as a result of participation in open price work. That does not mean, however, that the a ssociat ion (assmiing that it does not enjoy a controlling influence in the industry) has succeeded in raising prices in the industry as a whole, nor it is probable that in the in- stances where members liave been able to secure better prices, these prices have been any higher that the ones current araong outside competitors. The data brought out in the jjardwood Case point to the conclusion that in the instances where members did secure better prices, they succeeded in doing so becjause open price work enabled them to e:!act the so-called market price, whereas before, they had been unable to do so. As previously stated, it is significant that of the numerous letters received by the Ivlanager of Statistics of the American Hardwood !4anufacturers’ Association, in commendation of the Open Competition Plan, every letter asserting that the plan had enabled members to get better prices wasfrom a small manufacturer. Testimony reveals that as a class the small producer was unable to command the market price of hardwood lumber because buyers took advantage of his ignorance of market conditions to beat down prices. The follo^.-ring extracts taken from affidavits submitted in the Hardwood Case are illustrative: N Affiant maintains no sales organization and markets his products largely to wholesalers. **For this reason the sales reports of the @pen Com- petition Plan were of especial value, for the reason that the wholesalers, from the natvire of their business, are constantly in touch with the market, and when purchasing, naturally desire to buy at as low a fig-, ire as possible. These sales reports were a check against their statements. By virtue of these report?, hevas enabled to get nearer the market price from the wholesalers. **Before introduction of the Open Competition Plan, certain unscrupulous middlemen made . r r: :(v/ to. a\ ■ ;l;v as-.' .-i rn ,: •. :■ '• - i. .^.-, ^ i^o-l'xr^ zr:}^^ ai 1 ;.,>c^acrt V 'lyJi. , -■•r .7^.' ■ .*■ r’jf 7 ' I j w 41 J»-J3 c ■' oi yl ' ,-ii; 0 * * -'7-^—- f- • -if*. . ■ irX. - :i ..fci 3 ; .. “f j .*ii ■*r:2 .-* ‘-J .. S 1 "ii L’-O':-' j ■ 2 *t . T' I • '• ' 3liL'~ r. e!'’^5?',r0 w '■■ ‘/.o w;:'« .'/t!;? VVi ■* ' S .■JX9 -. i'. . ,'U, ^ _ jr.-i •; . •„• ,ii oo-XcT ..?£i‘ ‘ ' -■ ■ t;. , ’i • ^xwowc ■ fi'. ."jl:! .. *‘ ; . • isw- ' i>“* - Ov ^2ll4 p. ■' - •-*■■ "* .• . -1 ^ . \hxix -5 •-■.*•• - • •'►‘•••V' '4ds to «45£j * ,-v. . cujriiaii u - /rjjfcna-x, - I.;- : ■•.i . I;.»p J A. • O JO^EjifrlT iv 'w«4r2i'.. ' 7 - i ijiSN -.['■ . . j'; ,' -ViT. ';i np . 'XC 1 J,0C - . •■ --XL-Io;(r , .•- .• f '.p'./ ixi;'. cviuH •_ fi'j ••. • .‘V fi: i :p" ita/*? ‘ I - .‘ji? :r>ri> 0ii$ l:JU~tZ r- '•■^’rr: '4-17 VO ••-f. t96%£U9STd ZitA ' Xp .L ■ .' i._‘. r*:. ot ^ :iv *::‘i, .s^ucSj •: n< ;.>$ i-rk O :, .*->r ‘I -.: rft -,;t f-i,*' ■;t'7-0’.; :. ct.. ^ lozr^ a jr»f •♦i . r ■ r-tr>,v'v sa.iX’l a.'I a»qv t4v jo , a practice of misrepresenting the prices at which they had purchased lumher from neighboring producers, and thereby forced the small producer to maJce .an abnor- ira.lly low price. This practice has been done away with by the Open Competition Plan. In the opinion of affiant, this is one of the chief benefits derived from the Ooen Comoetition Plan, especially as to the small producers, who are not in 1 touch with the market.” Another small operator attested to the follov/ing: "As an operator of a comparatively small mill, which maintains no sales force, he found these rsTjorts and letters of great value to him. Previously to belonging to the Association he was Largely at the mercy of the wholesaler, to whom he has always sold the bulk of his production. For instance, in 1919 his concern sold 3,351,000 feet to wholesalers and 1,733,000 feet to ccnstimers. Be- fore joining this association and receiving these reports, in June of 1919, he sold first and second quartered white oak to wholesalers for $88.00 per thousand at the mill, or $105,00 per tho-jsand in Boston. For which these wholesalers ob- tained from the consuners the prevailing price of $250.00 per thousand. This condition of ignorance of market conditiens worked a hardship on him and was of no benefit whatever to the constuning public, the wholesaler reaping all the profit on the transaction. "That a small producing mill without a sales organization cannot, under present conditions, intelligently do business unless through some association or other means that keeps him in touch with market conditiens. In his opinion, the Open Competition Plan has been of great benefit to the small producing mills and has worked no hardship whatever on the consiiming public, but has resulted in reducing to a considerable extent the abnormal profits obtained by the wholesalers 1 . Affidavit of J. M. Morgan, quoted in Argunent of L. C. Boyle before the U. S. I Supreme Court, American Col. & Lum. Co. vs. U.S., p. 70. '•>- , ■ ’ • /> - - } s, 5 ,fC. i t'j.' e ■»..:.V‘.'0 .-.',0 ^f^■r V-'-', . ^■iiJ. A’ ’■ I ■<'• X i "' ' . % i f ■' y '*' 1 \ ^ v’C.f **T.i, O.’f . ••'!:j.: f.V>-..Vi>„ 1 '.‘j'.'Tj, C^3 *'*U *' J .Tiu c'l. f _J ^.. 9-J..:-.! .4: -.. . "...Ai 9dj ? :■ -.'_rrr.v :. To -i'-iAii-i <-'a '> 1. A f i' . u, or 5,- lA*. ' _ : -i 5 1 > ,e.ir j. ^ r .5 ^ t .0 . i ',*7 j .A‘‘, cJ' ''agL'. "Oiai •T"« ' ‘ ■ •'■'' ■’ .i «ac dX«« I • .,;/. • -or- 1 f h’. a "i 4 o'“, . . :o X 4 ^ •%»- ' - ,^'t ,n:. * ..rjo; .’ i*. ^Cei >>^ 4 ; rc j ; - ■ . t .*-e'....v:c-r O’ :sa;p- j- 3 .V-r ^ : .0 ;^,q . v .; , f. _ ■ -'.n- i, ■’ «.: ‘ t i^L . ; r—'-r^a lo. Syri#- . . i -io ,r«a4?.^ra. • .. ^ V- -tliat Va.. •r.i'ijr.ion ® ' w' ? f -f - ■ "tj- . ili.,.0 ■ .04 ...... t , i ,' 2-7 i, ' . :• '}..•'*•?. r , ►■■■ . ^’dbljirr auf.v-, pi \1 *• , i'i.'ji/j ,rr. ^ hi . , ; ' h ■;_., ^c.r:^.-r :fj.Nr /■•; - ’ ■ V- j s#iU r._ .i'lo.-.' | >- r-xiS”’ 't, X .40.0 ::^?i; * - .:jr a i:U:- , -'crxi ;/c :.,; ■^ 3 ^'V ■ rs- 'i J 1 2yi^ -■ '; {!BI^ ( , .. -'■‘^.■'•‘-'r ;y-.l.rc'fcno5 ’ao c c..;-. j - to:j I * ' r r 07 *'4f7 i i’x .0 wstti-; '• ? * 'r *«J 213 and middlemen generally.” One small operator wrote to the Manager of Statistics; "From my e:merience as a small manufactiirer, this (sales report) is one of the most important services the Association has given me. Before he- coming a member of the Open Competition Plan, I know I have sold a good many cars of 1-umber $3.00 or $4.00 -under the market to wholesalers, upon which they 2 have reaped the benefit of my ignorance. " The testimony here given is typical of many other sworn statements sub- miitted by small manufacttirers, -all of which point to the conclusion that the chief fi'nancial benefit accrued to the small maimifacturer, participation in onen price work enabling him to e^act prices nearer to the general run of the market. The prices received by the larger producers were no higher than those received by competitors who w'ere not members of the Open Competition Plan. As previously 3 stated numerous buyers attested to this fact. Incidentally it may be remarked that in so far as open price work does enaole some prod'acers to secure prices which ^projdmate more closely the so- called market level, to tliat extent prices become more -unifortTi that they rrould othenvise be. Respecting the influence of open price activity on prices, the follow- ing s-umming up is made by way of recapitulation: 1. Although theoretically members of open price associations can t ake advantage of their superior loiowledge of niarket conditions to exact higher prices from the buyer than would be possible if the latter were equally well infoniied or open price work werenon-e xistent, yet in practice, it is thought 1. Affid^t of J. W. Bailey, nuoted in Argument of L. C. Boyle before the U. S. Supreme Court, American Col. & Lum. Co. vl. U. S. ,p. 44. 2 . 3. Bohlson, H. G. , Record, Aiierican Col, & Lum. Co. v's.U.S. Vol.2.No. 1138. See p» 147 . ‘ ■ 'j f .1-ie V . , ; ~^ ' ','* 1 C *!?»*' , '■• - j •,- .' }•%,-«' ,1 ■ -• ilo Ji ‘Ijt I^V. 1 -■•'l.V ..^-,r s • . vV; . 7.-T W<. ifi.'i.' ■ .: ■ 10 OS..:; -ic aifc !i - . . ^ li «. t,-’7 .-. I, -' •-' I /•; i 1 .:t>rl^, orar; Vi-Tw'' « */: 7 ■•^ o-r.i.:.r» 7 : .Je ':.i,:r.c *'.'. i .i ‘ .'r..*' J ^ 0 r; :■ c. ^c/ ” b ' lO ai ' J.--' iO' ricJ,.-ivv lo . 'i-.t': ■; Xr*.,> . j, ' '• V- • '■ U b X -. icMt.v J i :'i^5 l[ '. '-T C - 'i', - ' O." - «Tc. V . .. _ V... " . •• •, * "•, trtr m '^'■* *• • «- ^ >** i ftvfc . .’it.x' 7 ^ ,iL-.Oc -':>« t:;: i-. • ., , • 1 ‘ 5 b' ■, r, ' ic?;x*ei. . i -r c-^ i. >7^ J»':J J'a j^f -/>',ri‘ u: t' ■ n n ^ -a •: 4i 'NSit.’, ‘i^iiVi 1 i ;' . •; '• j£ iiL ^'1 .■ir'J# iciig, . 0. *1 0 - ' 1 - ^.ij *“r“b:*!’ 1#T'- * V!r -; *7 b'. ’■ . ' .4 V \ ' O' n ■ . ' ’ .ioO ;-,oi*r / ;.!-iXK^aE , / ■W iT r ,'t:’:-L.o! • f^' 214 that in moat industries, at least of the larger type, buyers siiffer no such dis- advantage, for the reasons, first, that the effectiveness of open price associa- tions is con^^romised by defections in the open price system itself and by slack- ness in its manner of use by members; second, that the sphere of influence of open price educational activity is in most cases too limited to overcome the influence exerted on prices by (1) outside competitors, (2) potential competi- tion from substitutes or new capital. 2. Although open price work probably has not operated to raise the general run of market prices extant in the industry as a whole, in certain in- dividual instances better prices have been secured, these inuring in the main to the smller produicers, who, prior to their entry into open price work, were sel- dom able to exact prices recognized to be the current mrket rates, bxit found themselves more able to do so in conseq;'jLence of the better acquaintance with market conditions derived from membership in the open price 3. Bates are not likely to attain any degree of uniformity (except in so far as the higher prices secured by low priced competitors through participa- tion in open price work contributes toward such uniforrrdty), unless members ex- ercise a controlling influence over the Industry, in which case uniformity may be attained, not through freer competition ensuing from a competitive situation in which both buyers and sellers are conscious of all influences affecting de- niand and supply and therefore awake to their interests, as is held in contem- plation bj'- the law of supply and denand, but through the very ignorance of buyers, re stilting in docile acceptance of a rate made more or less uniform, if not by direct agreement among members, perchance by the power of suggestion, emanating from leaders, perhaps in the form of precept or example. - - 'i ■ Lc : : f ' ■'^^- '•'' tv ixr * '■* ' ■ »-»i r . ;^s- ,* :t aeo: ■-'6:^c tc.i ^,r . ■‘.->1 ' ,r:.*;iua5 ‘■' ^ «-:•'■ » *'? ■.-.; i:;; •.,. .... . • c - ' --- > 'X(^.<,'^: «» it»^ ' m V - . i.-ca.. , lo tm .. ■ : . ,ion . ...-« I-.!...'5..a., ,. --1 , • \B%3 W‘1 .“: 10 t? J '. 0 i.i • ^ - ' ■"i k • ,r . r . . . ■ , ■■’ ■•* -'xO« -.fcTc - • I i ,i/arl s.g ...j^p'-. - » - . . ' ■' ' - "'V.:."' a'.. - ••'. ...* .-, * - ' 'L, r o" .•,•„.■*«■ *f ' o /. -.- ; ^ , .,.. . -1. 7 «£jL. f t ' ri. 7 ;T ^ f • ••■^ ,t. .1 ;‘*x4*:v. ' : ,. ... . , 1 ,.. ■ ‘ . -t: >‘- Oi 'dS-.ry -■ 'J* i-.i-v.'. ; : . i . * ' • ■ *■1 '- •‘V .V ■- - -J- '-*1 vJ 'I. J . .. -;, ..,„ .., io-iiCit -e£(jp . j.- '•• •■ •■'• »0.! :::•. , i .5 ,,, t,. ... r,V . . S'- . xt{j» .a •'..'-.i.av . ■ '1 .’i|. ' ' . ., ... ' *■ '■ X re loio • • . .!fTfe VIv i 3 ,. , , ,<■ . -,,.... ,i„ , . / ' “■ ^' - V.', ::'£i « -C . :.t., ai T '■' ':o' ^ - A ' .. ■ ' -. C£. «1fT1' ^ vlX • • ■ - i j » /* V . ■ 'I * *c_ ,?:;;fc':ctf; I *■'•.■.:. / - •-'■■- • - - “'T.--S..ioci? Arvc w ;- : v1 .»(,'; 2 •I-^. y r:..: o„, - ,:OiT.eic, ^ ' "■’' ■"'' ■•'■' <. :l -? !tO .- -.. . .... . ■ ■ «^V"- ,*?&' , j; - ' . . ;GQfn : . -:£Jt;'-aes H ■Jr . 215 CHAPTER X OPEN PRICE ASSOCIATIONS AND THE PUBLIC WELEARE In estimating the value of the open price association, the all im- portant question is, what influence does its operation have on puhlic welfare? Is it likely to prove a detriment or a benefit? T/hen one reflects tlia,t the open price movement is but in its infancy, and that therefore the fund of ex- perience and data is necessarily incomplete, it seems indiscreet, indeed, to naie apcsitive assertion one way or the other. Despite the inconclusive character of data based on observation and e jpei-ience, perhaps a consideration of such of the theoretical aspects of the problem as suggest themselves will be helpful in seeking out a solution. On the assiurption tliat competition in business is the condition of trade most conducive to public welfare, does open price activity give promise of ushering in a regime more akin to the ideal kind of competition held in con- templation by the law of su.p]3ly and demaitd, or is it likely to place obstacles in the path of an approach to freer competitive conditions? Mr. Eddy evidently thought that in creating the open price system, he was giving the commercial world an instrument calculated to bring about a new comnetitive regime v/herein the much sought after stability of business conditions would be achieved through intelligent conrcetition replacing ignorant and secret competition. The conception underlying his plan, to mt, that knowledge is the essence of competition, Mr. Eddy undoubtedly believed to be an original contribution to economic thought, whereas the truth of the matter is that econondsts in their formulation of the law of supply and demand, have hypothicated their law of competition upon the very ass^'amption that buyers and sellers possess enoxigh knowledge of the factor# influencing the competitive situation to make them ^ ■ ' *' • ' ■' ....'-■" ^ •• •*-- • ^' ‘V.-iii '* /'■!<-■ *■ j . ,XX.,«(« ,air»i^-..*vi,t-iM*^ «ij -,>1 •t.ifjo W ,0 T« ^ /i-eij .o .»iJ*»^i».-.ea j i«ar»ije^» *aai ^p{^*m««^o no' 'tci»»J’''» i.'SflX»a ,rf M.,i»X)}‘,^ .4J la '■&*•, C-* -.X ., ^ ■;V iX •a.rtW BJ XJlj;?®Pc, v»^i» W lo i^jj4 >' X)artX»f^ «rf Z^Xirow *^?»xiri^5s i$^nM>,xr To ' ii{^ a<£j :r^',Jrt »X iffl.ivhf^aoa (i ,,' ^;I .iJt^ ■ ■ ■ -> •: ■'■'^ :■ “ ^TOX4®C^OA ^ar %'£^ aocot 915 ^ 1 ' OJ «3i&u;ai, *j»,ie:;ge*x '.•.• “ '*i.r *^' “aW -'* " '"' • 216 1 conscious of their own interests as bargainers. Not only is the concept, that knowledge is the essence of competition not original with Mr. Eddy but his statement that tiue conrostition will ensue "only where there are two or more 1 competitors competing under conditions that enable each to l Xiix.': j 6. \ ^ j - --i L .. »< Ti/J.' ■ 'S‘ is ttiKtu ’i'} s- - • . ‘ i wgBoq -5^9^ .C’jX. - *.-•■ 4 1 - *r ■>f$ ^•■ >.'' -.>, : i c Tii , -.1 ■ it ■ .rfv* 3 flB ’?»Cf ’ > f - ■ ••*> •..■Ut’i 0 ::i. -.1 : ».3 ;X„* (| .) JieV • »t '0 y:'.. « A... iu ^Vk'CB S ' ‘X'/JSi svj-*; ji : ur,r:3 -:.! - ; .• r.:n.. tor. at i«v;nf t:5jolv*-0 .tc • • . - ! ■- ”I 'a • . ? . i-. H 0 . * . 1 ■i . . .i . . " *« .. '1 1 1 ai r.c-y o: .;t ■ . » . ■arr r. :jii •'O'-.': viooeiP. ; ’«.tl .-■> •:. / . '-i- Xi ,... -,afc ^ ... vT .-J^ ..C. Jv'.. .... - ip'^j i., 4 , .-i;,;.-, ■' k ; 'x- vi .►-. c_>'o sXjr -ri ^ ■'"Sv i.' S • r .>.•■'• ^ Tif.i.v iiV 'ci ’ ‘ 3 . 1 ' : t L:#i. i ’’■.... . i ’ .in " f ' .’ 'i V ■-> c .'I . i.’\' ■- i"; rn :. ;. .Pvv-C. f.v. '•■j iw at". c-TKX _:;i. iv It .'T..-:tj ’i- ♦; ,r. 'i.i *i '.'o; i. 'i ■ -r'* '0*0 ■ ,feTr;,ici. ,»#■<&!; .o ; , i.'i, .- ■ A ’ •iJ- lOl " C .' 4 * 0 r.‘. .' 0 ** :in«/ ; x;,. l-rtv 217 Prior to their entry into open price work, manufacturers were no doul3t the chief sufferers from the ills attending the regime of competition conducted in ignorance and secrecy. Buyers were at least always able to as- certain with some degree of accuracy the character of current market rates by calling for numerous competitive bids, but manufacturers had to rely for their information either upon the statements of buyers or upon those of salesmen. The small manufacture i’ without a sales organization had practically no other source of information than that coming from the buyer. Botn cuycr and saxes- man have been interested in deceiving the manuf v.cturer, into thinking tliat going rates are lower than they really are. The buyer has practiced deception in order to "beat down" prices; the salesman in order to excuse his action in ma^rcing easy sales at abnormally low prices, his false plea being that certain alleged low .c[aotations made by competitors have had to be met. Having once associated themselves in open price work, however, the mastery of the competitive situation falls to the sellers,— at least in theory, for they have now come into possession of market knowledge which is superior to that of buyers. In practice, hov/ever, sellers thus organized, find it difficult, if not impossible to make capital out of their superior educational facilities, either because the open price system fails to function properly, or because members do not represent a sufficient percentage of the prodxictive capacity of the industry to give them a controlling influence over price matters, or because potential and indirect competition keep prices close to pre-ezisting levels. How powerful these deterring influences affi can only be determined from observation and e::^erience carried on over a pei'iod of years. The instances on record where individual memoers have succeeded in bettering their prices, seeni confined to small producers, who prior to their entry into open price work, v/ere unable to exact the best nvarket prices but ^ ■ .J J. ■ ' '“3 vits naJ C 02 * ■ ,.!,. r . • :-'■ V.',T .ci*^:rro«-r ^ xi, |i jl^ ir‘ f - -r .. • •• y .;•-. r ■ i. ' , f- rt' o 3 r ; vp* iuicf,s.:so^ m--:, r* j •» i - #* / ^ *• • -“•' ' • •■ -■-■^- »---o ’ -‘■' :r Iry:; • r-: vc. •...,*;^ t •- . ».ri v:cco woss lo: <’! ., .. . T y , t-' i -T . ^.-^r A. •;*;:, : C'i... .'•• . -•..; ..;A ■u>v . ,*»! ■•;.--,.i- . ,,..• ■- ^ . .■.■.,tf.-.»j ,,j ' •- 7 - V . - -V ,. - ... ^,... . 3 ij ' - i • I .4 4 ■-tvj t.-u ;;a.0®i«o ao , ■. '9H8M ^ ^ -979 a- ln,.c .r.. ; • . •. • h,:ctlsn9i bt^ a..^w! .. i. ,j...cy .■■vtiiltAi L lo -1 1 ; y,."J 0 . 1 -. Vilwu/ 0-; 1C 94bipi ^ d :««rf k'.. ... '•" ti ~ ir r r '. It'C'il'J f.',’, : / j.id" V 218 who subs© qiisntly ffu.cc6eded in utilizing open price inforrnatioii to secure for themselves better prices. It is not probable that the prablic welfare is prejudiced by the fact that small producers, by availing themselves of market information put at their disposal, are enabled to emct rates more nearly approximating those recognized as the current rates. In fact it is probably nearer the truth to assert that the public welfare is promoted thereby. The public suffers a large loss of specialized capital and labor skill every year by reason of the numerous bank- I ruptcies that occur among small producers. These bankruptcies are not always brought on by the inability to produce as efficiently as larger competiooi's, but, as often a,s not, they are the consequence of a failure to properly gauge market conditions. YJith adequate market information at their disposal they are less apt to make the mistalces which so often lead to ba/xYkruptcy. Another important consideration is that, in so far as prices of small producers are placed on a mors even keel with those of the larger competitors, the danger of monopoly ensc-ing in consequence of ruinous price cutting is materially decreased. Those who are in favor of the survival of the small business institution may find considerable comfort in the thought that open price work makes the small business man better able to hold his own with his larger and more powerful competitors. The chief danger of jeopardizing the public interest comes when an open price association enjoys a controlling influence in the industry with which it is identified. It is under such a circumstance tltat attempts to en- hance prices directly or indirectly through curtailment of produ.ction carry the best prospects for successful accomplishment. Success or failure in en- hancing prices probably would depend mainly upon tne effectiveness of the restraining influence exerted by potential and indii’ect competition. It is -Si J'K ^ \ WP-1 ■ ■ * • ' A. ' '%■ sdrlatflWMiJ’ •4' •*' Ha21>Strs^ dti’i i«d^ 'dldUtfCKi^ ^att■ *i. '^‘'- r.. 1 •— <« fcdjiirrooei C4dd:f *:? j ?«aSi cng^ 4i(«t «;Jei Oi ♦•yi? VtdadjtHii; 9i d::prtt td^ xil f^x»-.w'mS‘:t te-w.. ^ ^ * s'lalljM ol/d/rq;;^ a.-» k ^ t f . . Ji . , .»!■* ^ , oxa !.;ie!ii s,« TC*’i_o4^ SX ,;r^j »i (p&i^xi^al&Xi^KXi ■ ~ ■ - ..® ' : ■ '• to tajjA -la^kiAX ef(3 to c>t(ad./ XasW j^ya •^dui a» xto iaj ei 8.a.i334:s «ij<£>li-iAfy to-' 3 |t *■ >yfe (y. ‘ * .._ . '* ^ '■/ V»2i ,<;oX7£r3XJ«4ii att^- to Tota'i al •t4odb..#s^^ ! '"'' • "■' ' ** • . JM "' ' ^ Ilm Jtd$ tHm -aouL, 2aaf4\ liti 'iidtorpp ».Xdatoi>-*««>0 .\ anjo*. M* id^xsX u^' d^iW ^c. o* • ifdif^r' rxj|j »i«al|urrf‘ ; #7 ■•'.■* . ; ' -''' ' ' j ®: '■ ' ' • ■ ' .l•torui^_ f-- .J 1 .. w ^ n3^ Jii »r-:s«^rtoi 5iai/X*% ctoop # ^i-J'^ioota^ d^iu^ istqo "A^'3' .'._’A.-. if tfif- ,-flf ' «3;■ ;* jriHHjpa'r Xo # ^aixfldtr *i .*!• eiV*i'4iTxd^> I , ■ ' ‘H I "» ai?X4&--X'iW4y to id- »ftdltQ, dd.a^ Ij^, -i;« ai d-ic/toi ‘ic- eaaj.ocC .4!x®jitl«i;£^p«d*tsj6 X«idaafiOi?» lot- «;^s»w«cia toad *{!or^ aB«ifia3i:«(,« -aoxiairntsi S-^;V. iiJi-w no;xwiu«t.‘ Juij oioiHt-u^'ha’ ii P Xi i«wc» -io Jimw%r; i« v/.Xot ^-u,, i«o*fa, ! w- •; ^ i ■ ^-Hfcocsixt^ » m ^{itn* 5* — ' ^ ^ > ' '■ tairt*7 fli^tO ^0 *4'<' *a W- ' '■ ^ * ■ * - !^ ■> * ■ L ■• ^ lo r.onj^^ ?^S 4l.'«s ;ti'X4lo«Jiif» ,jaV *«-«■ w<# 1© •jaA ni ^ tad (ij t-*.''*rim: w»^a' .aih«E.I , . . - ■' - ^'- - V' ■ . „■ „ '%■ ’^X &l5't4l rfr ^tS^^dc et /i r^'Oi^’l-Jb'^ii'ji '4‘ai7?(:'%r»^'0 ne 3to Xoe*«ytf^'‘'iMfj' «i ' » . ■ '-p ,■ ' ’ Triu "" ' f w ' ■' IP- and « mt x^fta&itl tdi icl nmtintCi adX i- ■ Y *r ■ Gft' ^ I •a]«> eifr i»«5o©i'U » ■ .. , * ■■ '■. ■ 1 '‘i'o ^ ef4»:t6oi?. :'i;c^*j6 <.» 0 ifJ isi qmt.-fstins Xo eitfjr t»5iA©f«2i»i^ 4’^ Oi /t »*¥»?. t^v %t ,'r©re; :' * , ,-'' ' - ■ ' ■■•" ' '* tru pi/< .yJ ©xnci / .. '■4 »'* 220 follOTxers; second, that they do offer soine promise of redress from the evils attendant upon the old competitive regiine of secrecy and competition, not for j buyers, hut for sellers, particularly those of small productive capacity; that in the event of a future increase in control and influence over industry, they may wield a power detrimental to the public interest. Assuming that future observation and e:>qperience verify these con- clusions, what deductions may be made regarding the proper destiny of open price work? One consideration is paramount; irreroective of v^hether it is found feasible or not to permit associations of business men to engage in open price work, the work itself must not be abandoned. The information side of business is rapidly becoming an e:act science. The trend of the times is in the direction of greater insistence upon the accumulation of precise and accurate business information of a statistical character. A mere statement that business is good or business is dull will not for long be accepted as a sufficient criterion of the trend of bvisiness conditions. Manufacturers as a class will not be long in insisting on hirving at their finger tips actual figures showing, for instance the increase or decrease in production from a known standard; the increase or decrease in unfilled orders, .end the increase in raw materials and finished product on hand, — all this in order that they may have an index to the volume of trade, other things, manui“acturers are coming to les.m that in order to avoid to the greatest practicable extent the periodic disturbances to production that corae from unrestrained over e35)ansion, now recognized to be largely due to a general lack of broad insight into business conditions, they must possess themselves of inforrmition of the clraracter ei'pounded above. It behooves the G-ovemment to come to a full recognition of the fact that it is a mistaken public policy, and is also utterly futxle, for it to attemp>t the task of forcing business men to compete in ignorance and secrecy. * Os-s fcliKtja f> ■ t VUi'WtiBdiWliafcCTr jr-y • ' -i €3 P .L2 orrl .a*%^%4 to TVijl> ci^ m4 ,ii^o^tti t todian 1<5 **./<) •,# V- ►jI'^ %fij aaiiuB' Arf I «i :fl Ic •ciQ v , j y- 1 »3Ciib«r^ . f _*i«Ui1T, [ff ♦oi-^ nl amz »aeaiix.^* lo eff9itf*t2o;ia* itottsfl ojr. to ,l-»l •••.■iji’rf ^ «/, rjoJ/««syci 05 jOd itia Vi„,i a,W »i4i i ^< ■■- ' > , %f'- >4):. ;n> Ay-,i «t ,taij oaj 'tQ ttmt'ia .*aM;« id4 fc-ui'' .r-TOito e .brf#, 0 / »obr?i A* e W . ‘ , i; *:u' .0 f^S arxxi IjAfcof' ^ * » -w >4 •s^- AMf 09 i*3i£js«5n wofi- ^■aoii^s^.e 4pr:^ ^ *0yX4.#«^i 4«H*4'^«XW *?v ■ . ,‘04r prl;. v5^, c 4 i?^cwp~»roa «d;* »^rood§d «I - 03 3’^tbt ,eX;^r^ o»f* si ,Koi/W ol/bic/c, £ bl 32 vrjieJ^ ;, •V5^ , ' '-; •• ‘t^ ‘'. ^‘■‘zjt9 tm »»aAro£Qi tu Ov**^»do aj.t/ixst- Afjiim'? lo iire> "i^v ■ • ■ ■ ^ Our hope for improving competitive condition to conduct their hnsinesses like moles, "but s lies, not in forcing ousiness njen in giving them all the enlightenment possible as to the factors that influence the competitive situation. The open price movement has sprung into existence in response to the growing desire of business men to govern their business operations intelligently in the light of existing business conditions. They have tried to do for themselves what the Government does in a small way for the farmers. At great expense to itself, the Government issues crop reports to the farmers for the eaoress purpose of eriaoiing them to market their products more intelligently. Since it is clear that an approach to more wholesome competitive conditions must come through the wider dissemination of more ejact knowj.edge of the factors influencing business con- ditions it seems ill-advised and even unfair to force associations whose efforts are dedicated to these purposes to cease their activity on the ground that prices hf.ippen to be increased thereby, — unless the Government is prepared to assume the resx>onsibility for seeing tliat open price work of equalljr efficient character is carried on by some other less objectionable agency, either private or public. To put a ban on open price activities without offering something in their stead would be to discourage a valuable incentive directed, toward the achievement of greater efficiency in bargaining. The greater the development of efficiency in bargaining, the nearer is the approach of actual competitive conditions to ideal competitive conditions. If future observation and experience point to the conclusion that members of open price associations are securing too liberal returns on their investment in business education, at the e^Exonse of buyers' ignorance, the proper solution lies, not necessarily in prohibiting them from engaging in open price activity, but in ^^ddening the sphere of open price influence so that not only members of open price associations may receive the benefit of it but also all others who have a direct interest in the competitive situation. V\'ith % f : - ^ ,„K .»i.i*=i<, ^ ‘ ' . •" ■.-■^.’"S^ ^ety't-. al wtf .*»W’«(li .oas^^ rtf' ..■.3iJ»a»i. .9<:*cnai'/*rtJ .ToJaaS adn »* »li(^#»o» *’?’** si »eK.j,Jjt, Biol s»,^ »^»t» 4 wltc M-i: *..> iri wwxttctt ;tj«>t»Jn>'»«i>. W^pi» •.*,ta»c- | *>01 ^J 4 i her ©vxot ;x« 2 f V ^MWiJiJsi-eo Tfwiltxpf o* © 00 ^. m at hm 5 ©l.,T»prril’«-^r 6 « ■ 4 i 05 ©r: 'q[ 6 a:^ 5 ^%- i*»ro tX ?.■“ #«v?K fctaci . i. .- . 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'.Jjt/tsrfjIVf >0H3|j4>itj[ ’*^4 To .^r7-Mil^4^£xrqf TO' X 44i^ 03, f t. o ' 3l» I \y'.LiUi/S :.'iv 2 N. t'.TietJtOC «i * 0 O^- JSC. \lv\l7tlvi I iO bflO •> , »oi-Z /JIXJO i t;* . •..,: ^oV«t*r-r- r^r— 4^no tfr,^ ,rcc :d> x.*.. 2 lefel ,,e!*s.^ vJ -le.-Tsr;.. .. .J ^r jLJ 'irl'r >0 OoLtI . . 3j i gaoJtqtA. ricii ’tT Jx; •* X ccoun-u^ c^zrroo^ •. ;:i,a o,:u:i . r«w tool #»/ ji .froi^. 60 r.eJ*:..o •:.. /C • •> 4 -»eoai'Ti i-xii :„;.3 ■:. 1 .'. toi azldw a ’ .. f > oT-j I-Ti. ex aTc-i^ cwj ^X'’>/ i i..c. . Jrv. ; -.ft biu., a-j j' jq; 4*SA(X XaTdVftS ■rv T- - ■•'iOwXf XLr ^Cf. ii . ‘nv iZ i)jIW') r ' iw'i :o .• - . *a..i ■:: i lo ;.vl£r: ^ J^^CJ a.'.- -i„ .* - lliOTJnOS , I u.'" a,- \lrt-i i^-.. £ i.x- ic^ ,■!•. 2 r: « *1 cn'i* . a .'’iqT*. i/ « 49 ( .'Jirf** ‘i ',&.' ■‘•iir.o \«tT Ofi7 fj'i .-w a^JX'iwo i#j V-X.'J .^. :Olv'£iOO^ t^b 4 fflaa; •; ,i^+ 'X JrtJtfXf.t P» ' -j ^'X 4 iii Clt>V-.' , : C>V«;» 4 ’Ji.'' 4 ,'J r' !\j iri.* . > ai oail *v v 14 8 a TwOCT ti.“ 1 ci . ••'e>i ■;•• ;? x»^-, evf i., .ood _.»Jb ’iii* j lo 054 ■• ic-fj-i... *r:f -c-**, . i 54 i‘*roV.i ©lixr ^ - V.' 4 ;>v •* ' jOT .'■■.c'v, ft'j ... .1 . ,'. jy iiTiixre ,iSOfu:Jcw&-o'Tio L X;r V* ■"Jf S. .- . .-.'Xi r'. .xf , : r-:(drf a-^liis^l ■> *r:yid-I 3 :nn**o : ' • - -. " t / J.rz j'l a. ‘.jlivlu I . J f”' •' i'"'" *XJ ^-kiVK •'Sfc.'fr - if.' - * ■ ha.nn f— iir.» a ? **»»-f I .1 y,7i.?.nr/3r -; ' 4 . X' o;oi£T,. . 0 ~X5o>.' 30^';;^ ..oro xsi ftc? r. li ,K v--»j; i/;eEM -31 •.:i’»n»ioi'i‘i;'i:a v-x^o-js .jj I’-.x-^o . t -' -’C •,-:.< Loi'J iecoa t^'f Mxxoo ilolxief 'jxf O ' r..iar ,8lafc'¥ieo/rc-o ■:>fhji ai iiXiC. j lo ;.'we ■ ••' JTv :o ei "i .r*: i, j *■ i ';•- i T> : . . 1 ■ ixacfiivucx atJ lOij'xA V ',. 1 . '.’c ~i rter: ^Henlarjc ^ . taijrf JC Xriwi X".- 0 '» i!- *>... 224 necessary to introduce an element of compulsion into the situation, such as only the Government could successfully "bring to "bear. Business men could "be recplred to furnish vital "business statistics to the Government much in the same manner that it is made comjiulsory to furnish statistics to the Census Bureau. One Government agency evidently believes it feasible as well as needful to obtain accurate and precise data pertaining to market conditions in each in- dustry, for the Federal Eeserve Board, working throughthe Federal Beserve Banks, is establishing a reporting system for the purpose of securing from representa- tive firms in each of the more inpjortant lines of industry certain figures re- lating to production, stocks, unfilled orders and the like. Its main purpose in gathering tills information is to use it as a basis for making a scientific study of bank credit. However, as an inducement to manufacturers and others to contribute information, those who submit the required reports will be sent the figures that are compiled for their particular lines. The returns received for any given line are to be coirpiled and published in the form of percentages, giv- ing conditions in the industries as a whole, so as to avoid the possibility of disclosing information relative to any particular firm, presumably of a confi- dential nature. Obviously the scope of the work of this Board is limited, and in con- sequence its effectiveness is inpaired, by reason of the fact that data are to be secured only from those who volunteer their cooperation. Probably there will be a better response to the Board's appeal for cooperation than has been accord- ed to the average open price association, because the Board carries the expense associated with the compilation and dissemination of statistics, whereas open price associations must require contributors to bear this expense. But, as previously intimated, among a large percentage of those who actually become members of open price associations, thus indicating that they have not deniurred at the expense involved, a very serious laxness in reporting has been manifested. ■ * 1 . ,a9lSMS:l r - ■- I. W V..V, - 7 .P . . .--J V r,-. . ■ ' ....v=. ,:;3. “it .7t .•.’.saoMvoD «VJ «.- talrilr.i-. t , s.Uf:. ': s? ’ » ^ ^ j. s .. ; i . j \ ■•» » $n i.' ■• ; .' j ^ •■*. V i v# J.-fl'rrrrYOC '""T! ^. . . . *•. f . ••*■:■-■--, ©*h)-*‘Ttj r.u*: •■jjrxoooA c: «v*j:^*«)3 '• ':c\ " '”' ■ ■■■• ■"‘■^■■'-' »'•' '••■■-•-.■ ».. J -fOi 5;.;,-7f .;•-: , <«a ,i ■■■ .- . -.-..‘t. . -,! , .,, (, ... ■ ':•.■ nlxa:: bjX . .til. e 'j — • ■ i •% ... . . ,n ^:Tiurx.oi3 c^* «..i; i v o’ .» «. .,ct,.>v ^ ■ ■' UlL.i- ^ds iUdL’M-Or.'r . i,;t/SOC- ’ • '- - :-.’x. *-: -.rr *20^ ^t.ri^Oo c'-.V*: . .•-.-7. V' -lo'i a.'fj / ' L-.‘ • CJ b^r adi^ . c-vx® -^r: ' ..2^ia«0; b.-r; *ic7i -:.^ ?>. -- a^Uitf-'u •j» i-Jir xr;i ;:J- -.oo nrrj "V .;.,--ra^M. j ^.Viii t-. A \M« Of nolt .- il ,.,'I u.; : j'. - •-< f J -. ' : - r.w \,c , . . •: i « i> i a * .. f .r- j n „ , q* .t •. g;:'v. •jI/JO ud ■Si' :tDC/ ,'.i : : &- n.-- .. ,01 :..o.: - , ,,,„.oc c: t*26iX. .... c, ,K,-ii rnjqo ;.-i,. -i. v: jtif of A# n-vO U..O. ,^ciu.:--u '..j ...;T*i a/..t jt ’ '■' ‘I ' ’*“'••■ v-^ .•;Jxpn.njm eoir^ •;fl4.,joo o..f ,,-0..- j., ^ .ie;,,, :...i . -'i* fee-; --.'.L.. ;o,;’ xr.iji:r.i. .n ^ e.'xij .a'ici*bi3&«fc, oaii;, iisco \o -..IMi.- tAd -.i «„rxa, /-tv : ,lx>vZvv.:l , X6 . r^j ' 225 The same laxness is likely to he shorn by those who report to the Federal Heserve Board. The greatest assurance of success would seem to be promised by the es- tablishment of one great statistical bureau for the whole country under the di- rection and control of an agency such as the Department of Commerce, this agency to be empowered to require manufeicturers and others to submit at stated periods reports of prices, production, stocks, costs and the like, whereupon these re- ports would be conpiled in such a way as to reveal the salient facts of corrpetl- tion without divulging figures of individual sand then disseminated in published form among those interested. Inasmuch as this Government statistical bureau would have no authority over industry except to require that reports be submitted at stated intervals, there vrould be little ground for fearing that the establish- ment of such a bureau would mean too much Government in Industry. Neither would the stock objection raised against government ownership, to wit, that government officials lack the initiative and energy t o successfully operate bu.siness enter- prises, auply here, for the collection, conp)ilation, and dissemination of statis- tical data, when once successfu-lly launched into operation, would require little more than the establishment of a set routine of proceduje. The system established should be such as to insure proirptness in the issuance of reports. In open price system utterly fails of its purpose unless reports can be issued with sufficierfc dispatch to enable recipients to use them as indices of market conditions. By way of e^rceriment the Department of Commerce might mame a beginning in a few of the basic industries where fluctuations in market rates are particu- larly severe. Probably it would be desirable to first make a start in industries from which the Federal Reserve Board is not yet receiving reports, thus avoidirg duplication of effort. Ultimately, if the experiment of the Department of Com- merce should prove successf'il, the Federal . Reserve Board would no longer find it necessary to gather its ov/tl statistics to guide it in its oaniiing policy, but o: ID. •■ -cr-Ti ::. _ ) , ,c ■>: (Ll; ■• ■ ‘ ii i*> ■-•.1. r * '■ iA’ii .K , -37i .*r- f'V .I -,61 «'. %t : ■ , .;•: •■,. .U't ' > a/' v:.y, , - i'i - fi “> J- i‘6».-. ; ^ W s J— — A • ' ’> ::U'I. ;}a2 icorS;^ ■•^: . :x .tn w - * ■.♦■7' \ ^•7- . - ■». *i . .■ j ^ ■• '• v.-r. ,r..j/r:f -‘ - ri* -Jitter :-ii or. ■' ;'j.v^ [ ■’ 'iJ '■S'' : *' ■ ••.u. ts8 L-.1 .■■■’^.* idvj. 7: cLD- . • ■’- f X -zi vpn , ! 1; •• - -ivi'KVi.' ■‘ ■ ' ,'■ - ,- ■ i '* ’. ‘ r. • I - oait •• .••' .Tva i *0 > *•7087 fL :0 .\x . aji aqe-- -tt ■ ■«■ ' * . ! ^ , -j ,. .I.-Mi •< w*.® -.•. ,, . :. »;v; . •,i,.^' -:-l:.., : V. :u>i; ... ... ^ . : . -.r . ' 1 - * .'v ^ - - - ' . SI - •■? *, j ,.-- - r •*■ i< • - X. .’.. 1 i-ii;f^-'w r;«. it*^ • :«n{j ftiij >' 4 g ,: •-'.*/ J -. .'„.... .'X t -‘■»r: • ■ ■ “• - , ■ -'-X . .C-: ^ “ • - -^ - "X^. rac . a c & 0 1; *: rJ ■ . i - . ' *•■ i 'i 'i C7 iC^’t.'.'; . .TVO t>■.^ 1' •• ; ’-y-aapac 226 could utilize those available in the Department of Commerce. Since it probably would take a long tiir© for the Government to develop an open price system ade- (juate to serve the needs of the whole country, open price associations might be permitted to function until such time as the success or failure of the Government experiment shall have been definitely ascertained. If the results achieved by the Government should prove successful, open price associations probably would not need to be legislated out of existence; they would Ino doubt cease the open price pliase of their activities of their own accord, and in all probability '.■vould confine themselves to ordiriary trade association activities. Even if they should fail to abandon their open price activities, little harm would result, for they would no longer possess a monopoly of business information. In the event that the experiment of the Government should turn out to be a failure, the machinery developed by open price associations would be at nand as a basis for outting into operation some plari looking toward an association of buyers and sellers in each industry, organized for the purpose of gathering, conpiling and disseminating vital business statistics among themselves. J t r* *i*c! Rv'jm'*-’. r.'V ■ V.c'o*:^ •. /co»a, .Tsjc *fi. ftc Ci-: * I ” • ■"-' .- ■ 2 :^ n f f .'x ■Z *: .' f ■*• . ■I 1.2 C'jc>j*.2i-r ^ V oi .', ■. -wViar^i-'' sxliJ ( ■ , VJ ^ adi \q > j^r-j :,.l f‘.L‘ 4 -K ^ ifr-.-'u *: i W W r.xTO ■!»vo7q ~^ • ■ ■ |i £!:.'■ v\a .r;*; : vov ti/lr ':, ' :QiA9i»>x« \o ^r' c,-* b^^ioa j| '':lo..''J''"j. traiy'ji' obi'ij | EXHIBIT I OPEN PPICE ASSOCIATIONS 1. Anerican Hardwood I/Ianufacturers' Association. 2. Anerican Tack IlaniifactvLrers 'Association. 3. * Architectural Iron 8c. Bronz Ifeuiufacturers. 4. Asbestos Brake Lining Association. 5. Asbestos Paper Ivlanufacturers' Association. 6. Asbestos Textile Llanufacturers ’ Association. 7. Associated Metal Lath lfe,nufacturers. 8. Automobile Accessory Dealers' Association. 9. *Bar Iron Institute, National. 10. Beet Sugar Man'^afacturers' Association. 11. Belt Buckle Society. 12. Blanket Association. 13. *Bolt, Nut and Eivet Institute. 14. Book ;^aper Manufacturers' Association. 15. Box Manufacturers', National Association of. 16. Boys' Blouse & Shirt 1/Ianufacturing Association, National. 17. Brass Manufacturers, National . Association of. 18. Brass and Copper Statistical Exchange. 19. *Bridge Builders'and Structural Society. 20. Broom Handle Mantifacturers' Association. 21. Builders' Supply Association, National. 22. California Vvliite Sugar Pine Ivlanufacturers' Association. 23. Canadian Pulp & Paper Association. ’•'Nherever the asterisk is used it indicates that the association 'thus designated was organized by Arthur J. Eddy, the founder of the open price movement. . r' . ■ '*■ n fr. > •' ■■‘IJII2CS . A k: • *' ‘ » Z - ■ ' ?i7H . Oi:;V' ,V ;47tr-f; \* -.'■..'•.•,j JVfci ♦ «j: % : . .\y\l 1.7Tii\* : wtirfc . ■- 'c .,■. '. 7J7!/r^r'lJpatf| » eoJu^i. . :j':^r--4‘tr*fj . . gv. i. J ii 1 Z' t lA. ~ u4:'0a— 'e''i - •' - ,• ' :r -cAlt/’-.i::.! . . „.-iU -t; • --•- -- ; :;Oo ifts scA-r’^ JBf- . - I .*!". . ■ t 7 . ■ . .-^ ' i. -i at ‘ ^ ‘ — V.. ’ ', lirr?^V a.rt. .. . . . .'J- ■ ' 01;^/! - ;it:303f.A 'jieJtii' . ;. j-etccaoA 'i?7C‘i ■».— i* ., , r.;riXo!tii . -JjJt ^ 7fc«'- Cj^^; iuttr' •■^ •-■ ■ •-■.'A-i ’.TVJv^r ' 'vrnbvoc 24. Caimers' Association, National. 25. Cash Check Maniofactnrers’ Association. 26. Chair i’ilanufacturers, National Association of. 27. Chicago Eetail Lumber Dealers' Association. 28. Coal Association, Natioral. 29. *Cold Roll Strip Steel Institute. 30. Cordage Institute. 31. Cotton Textile Association. 32. Cotton Thread llanufacture-rs' Exchange. 33. Cut Sole Mamof acturers' Association. 34. Drill and Reamer Society. 35. D-ack Association. 35. ^Eastern Bar Iron Society. 37. Eastern Shook and ?Jooden Box Manufacturers' Association. 38. Eastern Terra Cotta Association. 39. Electrical Contractors' Exchange. 40. Electrical Sui^ply Jobbers' Association. 41. Electric Wire Manufacturers' Association. 42. *Explosives, Institute of Makers of. 43. Eine Cotton Goods Exchange. 44. ^Finishers of Cotton Fabrics, National Association of. 45. Florida Citrus Exchange. 46. G-as Appliance lianufacturers' National Exchange. 47. G-ingham Association. 43. Gold Filled Chain Manufacturers' Exchange. 49. Hack Saw bhmfacturers' Association. 50. Hard Yam Soinners' Association. • , 'p-rsa • T#rae«cA ’u'-i n. ?oii'Lc'i :i ic.a/o ■"'J V w^';_ 'fiXk * .«: f c oa . ' 1 1 - I i^, J g£ 2.^' • ^ -J-'j.:,'' ,/;o.‘ri.2sc«4 • t'-Ti ,■'■•■. n !•:>:_ j fc-- i i. j., ' . .;/: ' ■• t.rti e *'4 V. . . : -ii:/:! ,1, o.»rz«T . ; - - ' . r£-i'. ia . “ rj. t y/ •»*u*'ijyc‘rj[.'u .Ah- .■ • •. :..c2 iftjts.-/; ijx i99M4.4^ '■ ■ '■•:-;-7CriJ Xgl fl-; ; • Jor'l.* V' :- -. —"lent# ,AkO--C rr!#,. • w C . 0\, ttt *. >7'i*ii3k5.' iT'-jp? ‘ IT ’ . i ■' J . . .^' ., iv '"■*•» ».»•'* ^ O.A'-.'*: a:-A 'OTSv-C - ..-'C fai. '.nitf-iiscix^isfui,; i-il •.'J*'* — ‘Jo r»v.i ' *‘;:.:J .t-vifol^ ’ , •, ■ ‘ ix'i khojxj nojtfoC o"“ A.:vti?a. nc;^oo lo r*c.'.','iJ ■f'- - .• /oiii-: aai^iO .cci.T' j-iioil'i;. 'e-x ...;-ar iXsvij * 1 xtiox>i®4. ••afirfa- . : i«rxif • -■'-<«: irsaY ■ * 51. Hickory Products Association. 52. *Hollow Metal Door Institute. 53. *Hoop Band Strip Steel Association. 54. Indiana Millers' j^ssociation. 55. *Institute of Electrical Contractors. 56. *Institute of Lighting Fixture Maniifacturers. 57. Institute of Paper Package Manufaeturers. 58. *Institute of Tool f/knufacturers. 59. Knife Information Bureau. 60. Knit Goods Manufacturers of America. 61. Lamp Standardization Exchange. 62. LaundryiY'.en ' s National Association. 63. Lead Institute. 64. Leather Belting Exchange. 65. Lime Manufacturers, National Association of. 66. Linseed Oil Institute, Armstrong Bureau of Related Industries. 67. Lithographers' Co-opei-ative Association. 68. Lithopone Institute. 69. Lumbennens' statistical Bureau. 70. Machine Tool Builders' Association, National. 71. *Man§ranese Steel Founders' Society. 72. *I'.ianganese Track Society. 73. ifester Dyers' Exchange of Ne\? England. 74. Men's Belt Exchange. 75. Meter Manufacturers' Exchange. 76. Michigan Hardwood Manufacturers' Association. 77. . Ilichigan State Millers' Association. 78. Mid-West Credit and Statistical Bureau (Cement). 79. Millers' Exchange, SOTj.thwest. 80. Missouri Valley Sand & Gravel Producers' Association. 81. News Print Service Burea'a. 82. Northern Hemlock & Hardwood Manufacturers' Association. 83. Northern Pacific Fruit Distrih-'tors. 84. Ohio Millers' State Association. 85. Optical Iv'tou.facturers' Association. 86. Padlock l(5anufacturers' B^ireau. 87. Photo Engravers' Association. 88. Pickle Ivlanufacturers' Association. 89. Piano Bench & Stool Manufacturers, National Association of. 90. Pipe Fittings and Valve Exchange. 91. Pressed Metal Association. 92. Pressed Steel Association. 93. Eaiige Boiler Exchange. 94. Rigid Conduit !fenufacturers' Association. 95. *Eing Travellers Society. 9S.*Rolling Steel Door Society. 97. *Roofing llanufacturers' Association. 98. Sales Book Ivknufacturers' Association. 99. Salt Producers' Association. 100. Sewer Pipe Associati on. 101. Sheet and Tin Plate Rianufacturers' National Association. 102. Shoe String Association. 't i4»i 1* :•' .'C £ 1 L.’s . . \ ’ c . sil U*i ©.'♦J3?S ^ .■- JJi r. . . . ■ wf w^TX-V" ,.? _nitr'r/v ’o .^Sil'S • i. ^ ‘> z ::U 1 4 V / tj • i •■•>.•3 \ c- i . 1 icra^^ . a:>i\rre5 *s*. 3 ^v. -j. •awmi V. 'tU - i^oolf" > ^;■■l ; ,. .“'icrti . ... ’-r.iiH ,.T- ■ ., ^ -<;.V , " r, A * 0 '. r- ■ r (T.r ' * ii ' ^ C ." ‘r’i0’5^^''Aljrtw .rsJ ?ei*- A '■■■ S’, r.*/. jDiai ■- *■ .. :c jL ! i ! ' ..-:c ':-*co«aA f -os JJAiXSX-’. TOiiOft '..3^ I -ijijtr- . i..oa i . ^ I, - ' 8 cju *- .'Sa.4i 1 Bi-» 1' V A *, i li-xsii'' . iufctcoBitA 'ii'ifitxrLo's.'. . 1 ijj'is'iia;. r..-xW *i»« ■ i ? c’-' 1^'.. tnr.’ 1' £ 'lsK^s■.^ v n! i.r;a 7 . . ri 103. The Silk Association of Meriaa. 104. Slack Cooperage Industrial Bureau. 105. Society of Ivknufac tuning Confectioners. 106. So-ath Dakota and Southwestern Minnesota Millers' Association. 107. Southeastern Millers' Association. 108. Southern Illinois Millers' Association. 109. Southern Pine Association. 1 10 . Southe m St at i s t i cal r eau ( Cement ) . 111. Stationers' and Manufacturers' National Association. 112. Steel Barrel Ivlanufacturers' Association. 113. *Steel Founders' Society of America. 114. Steel Furniture Manufacturers, National Association of. 115. Steel Locker & Shelving Manufacturers' Exchange. 116. Tanners, National Association of. 117. Tap & Dye Institute. 118. *Tool Steel Society. 119. TuD'’alar Plumoing Goods Exchange. 120. The United States Potash Producers' Association. 121. Waxed Paper Manufacturers' Association. 122. We 0 Ding I/Ianufacturers' Exchange. 123. Wehhing Products l.'lanufacturers' Exchange. 124. West Coast Lumbermens' Association. 125. Western Paving Brick Association. 126. Western Petroleum Refiners' Association. 127. Westena Pine Mianufacturers' Association. 128. Western Red Cedarmens' Association. 129. *Window Shade Manufacturers. 130.*Wire Fence I-^anufacturers' Association. •;:,- ".Cx . rj'O Jo^ i: \o '-J 9 ' t ■-■■trr'i,.'.- •'o^A 'fci^XXi^ ■ : in mi - : . ^iraioonA./v.ri'T m 54 , .J/io ! iJ ji 7 L' .Tifriij’i'O? '■. -.-‘c . ■ ,1 ’^.tc'i j.t^'zs.iZtM - J: lo • ’ • - . 0 it '■ Tjc rrv j y ji '. * , ;>'j e/iaf." *'Oii«A *<7 " ‘i; i:;;: : Tr ^aJ-'r.L.-. -,v : . - .■" 'tic'ixi'iojilt'ru .: . ' tr J5>jii'trTiii*ia a53tr "•; ’ ^^u., -■ .♦ £ \ ' ^ - ».,n ■ Ltoc i ■ . . .'tc!^£l:VCt:'':Jk ' 3 r?»»o ■iAiooaaA '.■.•:.ri-T :.:f l9tf^ Itl . -i. *•:'>«»* '.^'lorciriici'iiTnju.'. - "H ■ t. :u' 2 L w.'. i 7 ?* .. 'aixi* ;ci vOfr':>'’ eiJ ."*. on ax i:; •iX .os: .xrx »c-X ._.0 r V** ^ VP I 131. Woolen Goods Excliange. 132. Writing Paper Man-ofacturers' Association. — — EXHIBIT II MimTES OF THE MEETING OF THE JffiMBEHS OF THE OPEN COMPETITION PLAN OF THE AI'/ERICAN HAEDITOOD MIAl'EJFACTUHEES' ASSOCIATION, HELD AT THE GEHNEWALD HOTEL, NE?J OBT.EANS, LA., FEBHJASY 24th, 1919. Iv'Ir. F. L. Adams acted as Chairman, in the absence of J/Ir. J. B. Robinson, The composite market report was distributed, and a discassion of mar- ket conditions followed. Mr. ^arks said that he found the market in better shape than it was thirty days ago. Mr. Ryan said that he believed the Southern. M^ufacturers were light on stocks. That he had taken up with the U. S. Bureau at Houston the question of fumisxiing labor. The reply that he received indicated that there was plenty of labor. They failed to furnish any, however, and upon writing them they again replied that there was plenty of labor, b\\t that it vrould not leave the cities. Believed that labor conditions were getting to be a serious problem. Mr. Deutch said he found many wholesalers buying up stocks with the view of taking ad-vantage of the better prices bound to come, and because they expect stocks to be hard to get in the near future. LTaen the ocean rates become stable there will be a stampede of buying for the foreign market, as Europe was in need of large stocks, and everything that is dry will be moved. He believed that when this occurred prices would be better than before. Ivir. Brev/er stated that it looked as if the wholesalers had taken on a lot of business at any old price and cleaned up the small manufacturers of their stocks. He had found his inquiries to have increased heavily during the past week. Mr. Bohlssen said he found that the Texas box manufacturers were buying heavily and offering $20.00 at the mill. Mr. Sx'ith said that it looked as if il^Z Oak was going to be a bad seller. ■; T t . •'iJ £ ; or :%i. '• 'X V 3 , „ . « j i T a -j-wi Qsfi .^1 itaiy vJL (♦ 1 i f I I » i I 0 Jt. ■ (I I: . »• ( i I J i ] .f « • - .» - -i * Vjf. • " * ' • c •i llr. Cleveland, who had just made a swing around the huylng circle, said that he found manufacturers well stocked and most of them han^pered "because of the failure of the Government to effect settlements on contracts. He looked for a heavy demand for #2 Gum. Stated he was holding Sap Gum for ^37. 00 at mill. Mr. Adams stated that his mill had been shut down since last November because of weather conditions, and had a little over two million feat of stocks on hand. He said that Louisiana had experienced a thirty inch rainfall in ninety days, and of course there was no production. Mr. L. C. Cornelius, of St. Louis, who was present, said he found furni- ture factories buying better. He was asking $50.00 for his Ash, but manufacturers were quoting $45.00 to $47.00. Believed there would be a better demand for Bed Gum. The demand for box material was off. This was due to packers’ production being reduced as a result of the Armistice. Looked for an average price on #1 and #2 Gum, and better prices on F. a. s. Sap. Ash stocks very low. Mr. Stanford said he had more timber orders on hand at satisfactory prices than his mill could produce. Mr. Patterson said that his commissary man reported prices coming down but the consumer could not find the reduction when he paid his monthly bills. Said that returned colored soldiers were bent more on trouble than work. Mr. Geissler stated tliat he believed the. Association method of adver- tising might better be carried out by a campaign to educate the public to the fact that lumber was the cheapest of all building materials and that it had at no time advanced as had other comrodities. He did not believe that the public needed education as to the uses of hardwoods, but that they did need to be educat- ed to the fact th.at hardwood prices had not advanced hardly any beyond the cost of production. Mr. Geissler stated that he did not believe that those present realized - '2K the exaggerated idea of the public as to the prices that icanufacturers were obtaining and the profits they were making. Believed if public were educated to the fact that mills were coirpelled to close down because they could make no profit on the present price basis it woixld be a good thing. Mr. Gadd then related the movement on foot at V/ashington to plan the return of industry to normal conditions, and read statements by Secretary Eed- field relating thereto. Mr. I^an thought the Government ought to cut the strings and get o\it of the price fixing business. There followed a discussion as to the value of Oak and Gum Stunpage. There being no further business, the meeting adjourned. Chairman. i Secretary. .A S' . . £^f '. J,. ♦ J '■•w aJt^riinj .J -i'.iil -;;,* id J-d# •• >1 1 '■' ) . . C>. -a, r: - ■ • : •■, u :/.l*x::; . -. •; :...'vcua » ■':■ 'r"'Z.'j: Mr . JT\ Si ;.-iV igii ^ V w^- i,^v"Cd .' 0 ?" .".O .0 iriiii^'z' :•?’! U*jci '.. V. ■f .'•f:r atf- 0 '.^ “ “■ •. « « U A. >. ijTft d‘ •: .‘Vt r ■t'- ‘ '»•*'. r'xl o:i .%.: ! •■» .li.'fT ' " v;j! . 1 I » ,ii. 1 1 m. ; EXHIBIT III CX)HSTIT'JTIQN ARTICLE I HAI.-IE This organization shall he kno\vn as -THE TAP AITO DIE INSTITHTE- ARTICLE II OBJECTS The purpose of this Institute shall he:- 1. The stinrulation of acquaintance, confidence and cordial relations amongst its memhers and throu^out the trade. 2. The improvement of the tap and die manufacturing business by striv- ing toward the correction by all proper and legitimate means, of unlntelli vences. faulty standardization and abuses in the trade, and the promotion of publicity in the transaction of business . 3. The development of methods for the removal of false impressions and in their place to disseminate correct infonnation and to collect and distribute accurate statistics regarding the entire indxistry. 4. To devise a scientific system of cost accounting, suitable for the industry , to the end that each manufacturer engaged in the industry may accurately knov/ the cost of his output. In this connection it is not the purpose of the Instituite to inn?ose upon any member any cost items or to use, in any manner, the cost system as a means for controlling: prices . 5. The encouragement of the true spirit of "cooperative conroetition” by bringing out into the open, all competitive conditions and introducing the open price policy. 6. To cooperate along the lines of metallurgical research in the secur- ing of better steels for use in manufacturing taps and dies, so that the result would be to raise the standard of quality to its highest point of efficiency, thereby making a great saving to the consiimer. J Further to cooperate in the standardization of sizes, dimensions and tolerances of the prodiict Kanufactnred.'by the Institute. 7. To avoid the use of the Institute as a price fixing or trade con- trolling device;- to this end, no information will oe received, distributed or exchanged relative to actual selling prices previous to the making of an actml and bona fide quotation or bid, or effecting an actual sale, - or relative to any customers with viiiom or territory in which the members intend to do business, and no member shall enter into any agreement, direct or indirect, with any other member that has to do with any prohibited practices, or any other arrangement that will interfere with free, open and active competition among members or with any other person. All information received and distributed sloall be abso- lutely accurate. 8. To cooperate with the Federal Trade Commission to expose and s\:px^r®ss unfair methods of competition. 9. To eliminate secrecy either as to the meetings or operations of the Institute. All its proceedings shall be reduced to writing and carefully preserved. ABTICUS III lE'IBERSHIP Section 1. Any individual, firm or corporation, engaged in the commercial manufacture and sale of taps and dies shall be eligible for mem- bership in the Institute. Section 2. All who have become members before July 1st, 1920, shall be charter members. Thereafter applicants for membership will require for election the affirmative vote of three-fourths of the members present at any regular meeting. Section 3. All memberships are for full periods of a year and are automatically renewed from ye^-r to year unless thirty days prior to the termin- 4 : f ‘ ' ■ V f 0 £& • VI , ■ . . ... '' - r, )i;, i . i n \fi4 . i •> <-T.v. ‘ ■ :y • • .■.• *1 O’ :o *&(■' ;* ; C . ■'■•'*'' vr V *. .V, i • * . " : . ; • * : , ^ i : ;* ■ . ■ t*"'- ‘•i '■ '.ifT t ation of a full year of membersMp a member shall give notice of his resignation in writing. A member may resign from the Institute at any time during his year of membership on thirty days' notice of his desire so to do, but no resignation shall be accepted imtil the members resigning shall have completed the payment of all dues for his then f-oll current year. ARTICLE lY OmCERS Section 1. The officers of the Institute shall be a President, a Vice President and a Secretary-Treasurer. Section 2. All officers shall be elected at the annual meeting and shall hold office for one year or until their successors have been duly elected . Section 3. The Executive Committee shall consist of the President, Vice President and three other members to be elected at the annual meeting. ARTICLE V I.EETDTGS Section 1. The Institu.te shall hold its regular annual meetings on the day as its regular monthly meeting in the month of April of each year; the first of such annual meetings to be held the year next following the meet* ing for organization of the Institute. The annual meeting shall be held at su.ch place as shall be determined by vote of the members. Section 2. The regular monthly meeting of the Institute shall be held at such convenient hour of the Thursday immediately preceedlng the second Friday, of each month and at’ such place as shall be designated by the Executive Committee. Special n»etings of the Institute may be called by the president, or on recjuest of three members to the President, but such call shall state the purpose of the meeting and no other business shall be transacted at the spjecial meeting excei)t ''v, • ‘iC ^ *4. 1 , , e I e TV. ^ • - ..X.i • V ^ J -». VA.. • ■ J j'.^ J •.• '■‘•o:- a ■ ' w.-j(A t.'l 'M t.,1 'v.*: /^XSJ, 7 j^' J'. ;• I .: i? :•-. r: IL . . . fu MyfA M' -■ lJUJi:zm (ft. V *10 rot . .i tj »•. I a' . i cJ. . ■. .1 'll W '««j :;....:} /» VoiiXc;;; i<^p ^ 1.- c: . *. ■ ■ Oil- i!^a. . . ^ •- eAi . -in . / JL as is amomoed in the notice. Notices of meetings of the Institute shall he niailed to members ten (10) days ‘before the day of meeting. Section 3. A quonjun of all regular and special meetings of the Institut shall consist of a majority of its mem'bers. AETICLE 11 MEMBERSHIP EEES AI-T33 HIES Tlaere shall "be t^;vo distinct funds, (a)- MEI,!BERSEIP EHIIP, (b) PRINCIP ^ The Mem'bership Pi.md shall "be provided "by the payment of a membership fee of One Hundred Dollars by each member, and this f'snad shall be maintained thereafter by ^oecial, equal assessments, when necessary, such fecial assess- ments to be ordered at any regular meeting of the Institute by a majority vote of all members present. The Membership Fund shall be within the custody of the Secretary^ Treasurer, but shall only be used on warrants drav«i against this j^^mbership Fund by the Secretary-Treasurer and countersigned by the President to cover the extraordinary exr-enses of the Instittxte such as luncheons or other enter- tainment expense, traveling expenses of the Secretary- Treasurer, postage and printing expense on all caterials mailed to the general public or to the trade, other than members, upon the instructions of the Institute, and all printed matter, etc. furnished to the members for their convenience in reporting etc. The expenditures under this fund shall be directly and entirely within the control of the Institute or its Executive Comtriittee. The Secretary-Treasurer shall keep an accurate record of all items of disbursements of the Ivfembership Fimd, and be prepared at all times to exhibit vouchers for such disbursements. The Principal Fi:nd shall be provided through the payment by each Is h \ 4 7 I p. . • 'j I fri^ 10 Ai'i:r.;'.c . *: •i'- i ^ -.'■. , ''.’jTi- ii[i > w*;,'.'': * > . • er.tM *. j' •JO Vie ^ \ > ,*:ov..r.. , *AA» i. ..^ .’■ ■' I • .'•■. •*: . s;*i *:■ 1 t r; I r::jct in- ■‘ •■ . i k r.2/1 9 ii 4 1 c : ; • ft t-'i.iri i _ . ri fi 1 .- .'yl • r i£iva I X— ..r-' member of monthly dues, payable on the first day of each month. The amount of dues to be paid by each member shall be in approximate relation to his ann-oal volume of sales; and be pro rated on a basis fixed by the Executive Committee. The Principal Pond shall be paid directly by the members to the Secretary-Treasurer, and such payments shall constitute the entire Principal Fund, and shall be used by the Secretary- Treasrarer to cover all expanses of the maintenance of the Institute, such as clerk hire, office rent, office eq^uip- ment, telephone and telegraph charges, printing, postage, exp res sage and the compensation of the Secretary-Treasurer; in fact, every expense incidental to the conduct of the Institute, except such items as are ^^ecifically covered by the Msmbership Fund. ARHCLE VII AIv'ISiroi.TSTTS TO THE CQMSTITUTIOIT Those Articles may be amended by a two-thirds vote of the members present at any regular or special meeting provided notice of such amendment shall be forwarded to each member ten (10) days in advance. BY-LAWS Section 1. PEESIDEl'IT MD VICE PEESIPEMT - The President shall per- form the usual duties of the chief executive officer of such an organization, and, in the event of his absence, the Vice President shall act in his stead. Section 2. SECHETAEY-TPEASUESE - The Secretary- Treasurer shall be t^ Q];ily naid officer and shall be from outside of the trade . It shall be the duty of the Secretary-Treasurer (a) To take care of the finances and funds of the Institute in accordance wlththe provisions hereinafter set forth. (b) To provide and operate a regular central office for the proper * ^ I ^ - Hi i’.v’Lv' • ' 1 ' - *..'■ *"' ■r.-.i'^ ' ) ,1 , >■ ; sMfJ .iciut : .. ' “I » 1 ■ *y “1- , XMe"' .-^/ S' ijfu'-: t . 1 • ' • X . 'I ' *■ : I. r .4^ avf. _ • i (Jb:u . . . « r: t i. ,T \ ; u f Ol >U-'i ; v * v\ *,v c •_ .' * -'« .'.*'.^41 ;li />N . S<^ n MS i 'vnX -■ ^ > . i - •• A .^r .4 w: i . .'r ':■'•» 1 •V.4.' j r.-fia * vi.''tc I 'JZM i 4 1 J. ' kin- ' 10 : . ■ ijlr> . • JfiJ •* "■^1 L-i fs; _ ;c jl ;. u.', - : 4 . . i*‘l’ i ^ ■ -»:•■ I (n> rtf 7 /-•; \ Tio | - ■ . nr< aS i 1 ' ■ . . [j ' " ■ ■ ■ . I, I r M B Section 6. RSGULAE COl^'flETTEE - Standing ConKittees may "be appointed by the Executive Committee sfubject to the approval of the Institute. Section 7. OEDEE OF BITSIIIESS - The order of business shall be, as follows (1) Calling of Eoll (2) Reading of minutes of previous meeting (3) Election of New Members (4) Reports of Officers (5) Reports of Committees (S) Conarnmi cations ( 7 ) ■ Unf ini she d Bus ine s s (8) New Business (9) Reports of Members on Conditions affecting the Industry. Section 8. GOVERNANCE OF MEETINGS - Roberts Roles shall govern at all meetings. Section 9. AI.'ENDJ.IQTT S TO BY-LAWS - These By-Laws may be amended by- a two-thirds vote of the members present at any regular or special meeting provided notice of such amendment shall be forwarded to each member ten days inadvance. We,’ the undersigned, endorse the purposes and subscribe to the Consti- tution and By-Laws of THE TAP AND DIE INSTITUTE. Upon notification from the Organization Service Corporation, we will pay to the Secretary- Treasurer of the Institute a membership fee of One Hundred Dollars and monthly dues thereafter as fixed by the Executive Committee. Name Name Address ( MAIl^^ H ICKORY PRODUCTS ASSOCI AT I ON. 2 9 SO. LA SALLE ST.. CHICAGO (Check which) QUOTATION Q CHANGE OF QUOTATION Q CONTRACT Q MADE BY (Mcmqer) REC'O AND AC K. BY H PA CREDIT RATING BY IN CON BY SALES' p. . . MAIL 1 1 TRACT [_) MAN U . . OPEN [] OR SEALED Q] trv^< REFERRED BY H P A TO REGARDING CUSTOMER . YOUR QUOTATION □ CHANGE OF QUOTATION □ CONTRACT □ REPORTED UNDER DATE OF_ HAS BEEN RECEIVED AND NOTED. IT WILL BE HANDLED AS IS CUSTOMARY. HICKORY PRODUCTS ASSOCIATION 29 SOUTH LA SALLE STREET, CHICAGO IL, mailed^y^HICKORY products ASSOCIATION 29 SO lasallest CHICAGO ICmfc-< whk m) OUO'^AriON ^ j change of -OUOTATI N contra -T ' MADE BY I Ml Mi.f n\ ■{ ■ C A N i K IJT M OPEN ■ I, r p : /C ' *■< OC f !• I I - . i. • ! U » H I’ A r \ REQUEST FOR INFORMATION ON PRICES QUOTED Mr. C. K. 'STEVENSON, Business Manager, National Bottle Manufacturers Association, 120 Broadway, New York City, N. Y. Dear Sir: — I desire information as to prices quoted and name of member securing the work on the proposal described below. Please secure this information by (a) Inquiry sent to entire membership. (Strike out clause not wanted) (b) Inquiry sent to selected members as checked on back of this sheet. Huyer’s Name Buyer's .\ddress_. QUANTITY DESCRIPTION capacity; weight PRICES WE QUOTED Delivery Conditions and Terms Offered by Us. Date or dates of shipments Freight .Mlowance... Terms of Payment... Signed R KM AUKS t tfi lBMA—9 4 J NATIONAL BOTTLE MANUFACTURERS ASSOCIATION C. R. STEVENSON, Business Manager 120 Broadway, New York City Open Price Exchange No REQUEST BY BUSINESS MGR. FOR INFORMATION To the Member Addressed: — VVe have received a request for information as to prices quoted and the member securing the order described below. * Please reply promptly using this sheet and filling in the prices, if any, to report. If you furnish figures, all figures secured will be reported to you. This file cannot be closed until you report. C. R. STEVENSON, Business Manager. Buyer’s Name — Buyer’s .\ddress. PRICES WE QUOTED WEIGHT lAPACITY ITEM NO. DESCRIPTION QUANTITY .(.Answer Yes or No) .(Answer Yes or No) .(.Answer Yes or No) Date or dates of sliipnient.s - I'Yeight Allowance If you did not receive order, do you know who did Answer (giving name of concern). Date Term.s of Payment. Signed. REMARKS Form NBMA-10 >#< W' LY" t' >> > ■‘4 t / • - V.. * > ■ t-Ii'. A" ir-Ji »'• :j ^ ‘J '. M. L-' •./.. ^rxri«T P*.V r» V ‘.<»S, Vi W'v ss r / !)•;■■ ,1. . - • , .■;■ y'V . •>* ■' •■■■■ ■■: , 'V." ■, /'3 Wi '■*t ' 'it :■!•■■ • . ' O IfVY Vi' '? «' 4 | %--:■ w'-^' •i" ■'.Vl« V 1.1 V S' T< '!■■ >'f.' i-vAS ’4 ,sf.i 0 , y:r’,' i/- i-^'’ ■‘"f.vty :p *f “a , ‘V.^ #! •• :•• -it,', '■•.i.j r<,,:vkv; /'C---..* ■/y- ' .IfJ .} I : iyfT: i ■«■. ’i’.'.'v'^'t:; .,yV', i^‘. NATIONAL BOTTLE MANUFACTURERS ASSOCIATION C. R. STEVENSON, Business Manager 120 Broadway, New York City REPORT OF PRICES QUOTED To the Members Reporting: — we received inquiry for information as to prices quoted on the pro- posal described below, liviuiry has been sent and information received from the members whose prices are shown and copies of this report embodying this information are being sent to all members reporting. Cuyer's ^ Ihiycr’s — — — PRICES QUOTED BY DESCRIPTION .CAPACITY WEIGHT .Members Reporting Total Bid The order was secured by- Dalcs of Shipmciit.s rreij;ht ,'Ulowance Terms of Payment fill, K PM ARKS .'\ny \.iriatum> in ^pccitn'ations, ijuantitir.s or terms will be noiei] below. , • r ' ' 9 , ' Business Manager. l e.rm NliMA-U MEMBERS REPORTING FORM Sheet 1. |0 Name of Member Date Reported Prices Effective. Remarks: N. B. Where “Box” quotations are made quote “Count Goods” except where weight is stated. Classification Style Package Memo. Wt. Count No.toLb. Price BUTTER CREAMS Corn, Small CARAMELS 60 46 26 Whipped Cream, Wrapt Whipped Cream, Wrapt COCOANUT WORK Caramels, Pure Crystallized.. Cheapest Caramels, Crystal- CHOCOLATES Machine Dipped Chocolate Drops Chocolate Chips Solid Pails Chocolate Chips Pails Nougats .. Peanuts Almonds CREAM BONBONS Crystallized CREAM WAFERS Plain Fancy Pails CREAM AND GUM MIXED -Crystallized 60% Gum Work 60% Cream Work Large Small Pails Pails GUM WORK A. B. Crystallized Sugar Crystallized A. B. Sugar Rolled Soft Sugar Rolled Spiced Drops and Strings Licorice Drons Pails Pails Bbls Bbls. Boxes Boxes 1 1 f:;re.- Glicets. ■ ote- o-on. CO .. 1 X % % .M A Y .i H t 'I , T V! t I i i I J in • J .** i WEEKLY MARKET REPORT Net Cash Basis at your Place of Business Reduce to basis named or state allowance made to do so F.O B. Cars Mill Price to Jobbers Carloads Bulk Local Mill Prices to Retailers L.C.L. 2454* Papef Local Kuying price bii., No. 1 wheat, Corn How is trade? Week’s output bbis. Wheat received from Producers bus. Wheat on hand bus. Flour on hand bbls. Remarks: EXHIBIT 12 N ame Address As of Saturday I * ?kiatat»iL9 dujrtfliMr h IMD* ^ ^ OrAara .^HA^re>4 U/ll»AO OrAar H»» jl] 3efA - 4 oars 1x10 a&Afti "iJrop^s*frm ^port Si'Tf - 1 oarlOaA.aa follows i* lz4Ti4ira4»mr 343S 1x6- 1 2l2 flAH "iirspf^frsm jsloot fH h 9»ttor 62T8 - 1 srjrv-jLvslnrs.aRSSvJnnbSyeto^ipe Hejeots 6^79 - 1 »rlesd,aa foUossz- 1x4 Qk^iit r Asorlnp - 3/4x4 "J” i.«r4i%isn - lx4»^/2 r siodow Jt^ l-3/»fr=l/;: Jsor /arabs - '^xt - 15cr.l4 SO/ifi .1 sA.i to ? X6 - 200,/lA 100^8 lOO/fO .1. to itd* 1. m te Zb'S ltd* 8260 - 8 mrm IxS 38 iAJM " .•jrtpftTtrm >jvort 8^81 - 1 Ob.rlo»4t,aa follows - 674x6 6 4/4x6^ ,1 Urnssad - 1x4 3%Bette follows - 10 Ao' 6/4x4Se8** JblPti-r Jr^s*)Od - 574x446'* " J* •• f/4il- A»tt r aSj - r/4.1- '»r 323 - l/x4 1 JMTMm >'lling - 3^8-w - 1 o r lx4^:^"-9*sr 18'Jlii)tr Oar tidlnr 6?84-./ - 1 " 1x6 f S ‘Jmntm *'341 - 8<.85-ff - 1 " 1x6 ” • 8286- '1 - 1 Jsnri<9n iir''s»od - X X 10 - locAo a 1 4 X 6 - 67^6 " 8 X 6 - 40 l8 " 8 X 8 - 60A6 •* 1 X I - 100 16 Si . 6 X 0-1. * ai pa.i* Lonr^L^t^f .Ottfdi rrimo - LiTsrsd - jjc - 80.76 - 81 - 18.80 70.00 40 - 69.60 66.00 - ” - 67.60 £9.60 m ” - 20.00 42.00 - 61 - 88.00 69.00 , ^ 42.6 - 60.00 67.76 «s - - 60.00 89.60 SS ” - 81.00 91.£6 m " - 83.00 30.60 m - - -8.00 36.60 m " - 87.00 ^8.60 m 40 - 19.00 76*T>0 a*60 86.50 71.50 43«00 ac»76 30.00 - 56^ - 60.00 — 23.00 24 - 70.00 «* - 6b.00 " - 80.00 •• - ::.00 •* - 40.00 - 60.00 48.6 - 16.00 4>.6 - :^ 0.60 L9.00 ao.00 27.00 30.00 46.00 :4.0c 13 .■* *»/• •• '' %' - f- ■ 1 4 •f DAILY SALES REPORT Fill in your Sales (Orders Received) on this blank and mail EVERY DAY to the North Carolina Pine Association, Norfolk, Va. In DELIVERY column under RAIL show the RATE BEYOND Norfolk, and under the heading WATER show POINT of delivery — such as Phila., N. Y., Long Island Sound, etc. In TIME OF SHIPMENT column state if sale is made for Future Shipment, Contract, etc. When no time is shown in this column it will be understood the order is for Prompt Shipment. Enter PRICE under the Proper Price Column, it being understood that the terms “Less 5%” and “Net” refer to the matter of Commission and have no bearing on the customary cash di.scount. The number below is your identification in the Secretary’s office. You need not sign this report. i Quantity DESCRIPTION DELIVERY PRICE — Ordered Feet (Give full pcrtieulars, usinR as much space as necessary) Rail Rate Point , Over Nfk. Water | Shipment Wholesale Less 5% Direct Net North ( aroi.ixa 1*ink ASS( K'lATION DAILY SALES REPORT 10 Members Reporting (7 of these November 30 made no sales) 1920 I Ouanmy i Ordered [ Feel DESCRIPTION lOOM 4/4 7r2Sdge Box 15 6/4 Stock Box 11 5M total rough 20H 2-t" 5'c. #3 Pig. 10 7/16 X xi.W. Clg* #3 10 7/1 6 X " ” ^f4 10 3/8 X ” ” 10 3/8 X " " Tf4 60M TOTAL DRS8S3D. POINT OF DELIVERY P,nil Water Balto . .Uorfolk Hew York Norfolk Wholesale Less 5% $ 42.50 :27.50 40 .00 85.00 Direct Net 30.50 37,00 53.00 T ime of Shipment List of Members Reporting Today; - Argent Lumber Co., Camp Mfg, Co . , Conway Lumber Co., Bargan-Wagoner Co . , Eureka Lumber Co « Foreman-Blades Lbr. Co., Hilton Lumber Col, | Greenleaf Johnson ^br» Co.^ Rowland Lumber Co . ^ | Surry Lumber Co . | | I i 4 I I allowances that have been made eitlicr directly or indirectly. i i i i i i \ I 1 Sales of Steel drums and Steel Barrels-Steel Barrel Manufacturers association I THE UNIIED STATES POTASH PRODUCERS’ ASSOCIATION Producer’s Monthly Report of ProAqe) ihe erThte 7Cf it i D.O. PagP #1 V7EST COAST LIMERMEN'S ASSOCIATION SAI£S REPORTING DEPARTMENT DAILY MARKET BULIETIN No. I<87 12/^7/feo DIRECT Total High Lcfft Volume Feet Price Feet Price FLOORING M M M 1 X U #2 VG 19 10 55 00 6 51 50 1 X U #3 SG 8 8 24 CO 1x6 #24B " 7 7 32 00 FINISH #24B ixS-io" i6 1 53 CO 15 51 50 CEILING 5/8x4 #24B 22 . 5 28 25 17 28 00 #3 3 3 20 50 1 X 4#3 11 11 24 00 DROP SIDIKO 5/8xb #4 6 6 15 00 1x6 #243 13 13 31 00 RDSTIC 5/8x6 #2&B 10 10 32 50 BATTENS Lin, 3" Flat 11 11 .75 2i" O.G. 5 5 .95 NAGON BOTTOMS Sets 13/16x38 V.G. 12 12 3 6o BOARDS 4 S/L 1x4 SIS #1 5 3 l6 00 1x6 6 4 18 50 2 i6 50 Rgh 2 2 17 75 1x8-10" 62 2 19 50 30 17 50 1x4&n sis #2 8 8 13 50 DIMENSION S4E 2x4 i2-ar~#i 15 15 15 50 PLK4 SHLTBRS 4x4-6 125 ^: 5 “ s4s 6 6 21 50 3x10-12" " " 2 2 23 CO TimRS Uhder 32 * bxb/dxlO S4S 4 4 26 CO UTH Fir- 15 10 4 CO 5 3 75 WHO ' L E S A L E Brovalllng Foot Prioo M If X7 28 CO 30 17 50 FLOORING 1 X 4 #1 VG 9 9 57 CO #2 " 44 5 54 CO #3 ’’ 10 10 33 CO 1^x4 #24B " 5 5 55 50 1x4 #24B SG 15 15 24 00 STEPPIliG #2&B 2 2 6o CO FINISH #24B lx8-10" 6 5 51 00 CASG 4 BASE 2 2 58 00 CEILING ■4x4 #24B 5 5 26 50 5/6x4 #24B 5 5 31 00 #3 . 5 5 22 50 1x6 #24B 5 5 32 50 DROP SIDING 1x6 f/24B ■ 8 8 31 CO BOARDS 4 S/L 1 X 4 SIS 13A6 #1 15 15 i5 00 1 X 12" " 15 15 19 00 1x6-8" ” " #3 30 30 i6 CO DIMENSION S4E 2x4 12-14 ■#! 13 13 12 CO PLK 4 SlIL TBRS 4x4 12 /i6 s4s 1 . 1 i6 50 CEDAR SIDING ^10 Clr Ccl, 6o 6o 70 00 NOTE; No Specified lengths prices are 5 U9 CO 1 50 CO ’I“IT ?.f Total volume for day in Bulletin and detail sales 1 288 a$U Ft. HERBERT S. BLAKE. THE COTTON THREAD MANUFACTURERS’ EXCHANGE SKCRCTARY-TRIASUReR BULLETIN No, 162 April 16, 1920, SUBJBCT: RULING PRICES To All Members •- Gentlemen: I sive you. herewith in the oxuct form received a list of ruling prices which i am informed have been quoted in the market INTRINSIC 4 Cord SILK FINISH GHEY ^ ^ ^0 12 16 20 24 30 36 40 50 60 70 80 90 , 165 139 121 114 106 97 92 89 86 600 832 605 552 490 411 358 337 312 288 271 263 2t5 siSS 646 479 ®24 618 501 4800 547 6000 498 7200 542 9600 640 536 12^)0 561 546 505 464 436 423 4C:^ Tubes 5^ lass. Sort finish la! less per 2400 Yds ~ — WHITE Nos, 8 10 12 16 20 24 30 36 40 5 0 60 70 80 90 ^ 166 140 122 115 107 98 93 90 87 600 835 608 555 493 414 361 340 315 291 274 266 258 ^’2 623 573 540 524 507 3600 547 481 4800 549 6000 500 7200 545 9600 644 540 . . , , 586 551 510 469 44 1 428 4j.< ■ruDes bf less, SoTt finish ij. less per' 24oo yds. ex::ipit 23 Ilote: The complete report is comprised of 8 pages. 1 ■r. .1 _ : WEEKLY REPORT * u. CUT— SHIPMENTS— ORDERS Member No. To NORTH CAROLINA PINE ASSO., Norfolk, Va. For week ended Saturday t ■ 1. Accepted orders for __feet ' . 2. Shipped total of _ . __fe€t *> Actual!}'^ produced during week --feet 4. Normal output per day of hours --feet (If this infoi’mation has been reported before you need not answer again unless capacity is increased or decreased.) NOTE: No signature is necessary on this report. Return it MONDAY in stamped envelope herewith. Your figures will be held strictly confidential. Our weekly summary will b^ mailed you Thursday. • Estimate cars at 14,000 ft. Rough or 20,000 Dressed. MAIL THIS MONDAY ' . 24 North Carolina Pine Association NORFOLK, VIRGINIA WEEKLY BAROMETER WEEKLY REPORT OF ORDERS, SHIPMENTS AND PRODUCTION PRODUCnOW ORDERS isHiPrlENTS No. 102 Norfolk, Va., November 18th, 1920. For Week ending Saturday, November 13th, 1920. 45 MILLS REPORT; AVERAGE TOTAL PER MILL 2,654,968 feet 58,999 feet 4,976,168 “ 110,581 “ 5,707,723 “ 126,838 “ 12,726,000 “ 282,800 “ Orders__i.. Shipments Production Normal Production Orders below Shipments Orders > below Actual Production Shipments below Actual Production- Orders below Normal Production.— Shipments below Normal Production Actual Production below Normal Increase in Orders compared with last week Increase in Number of Reports from last week PREVIOUS REPORTS WEEK ENDING NO. OF MILLS NORMAL PRODUCTION ORDERS SHIPMENTS PRODUCTION 5,227,500 feel Total 3 month: Total Year to Date percentai^e of Production, Orderri and Shipmen 1 .s above or below Normal h is shown as “Base.” or 100%, *r, oriKinntrd by the Brfrf)kmirc Economic Service to picture Fundamental Busi, used by this Asaociati o with tlieir permission. 25 Form No. 1 National Association of Chair Manufacturers original To be returned Date Mr. wm. B. Baker, Secretary 530 Monadnock Building Chicago Dear Sir:- FOR YOUR CONFIDENTIAL INFORMATION. WE REPORT THE FOLLOWING AS OUR EXPERIENCE IN THE MONTH OF Chair Groups Dining Bed Room Office Rockers Miscellaneous TOTAL SHIPMENTS $ S S S S $ ORDERS RECEIVED $ $ $ $ S $ CANCEL- LATIONS S s $ S s $ UNFILLED ORDERS I of thin nu'nih ^ $ s s s s ' Firm Herewith please find our i L'heck for 10/100 of r; of $ (Total shipments reported aho\’e) 5 r 1920 Number of PIECES ShippeJ above nionlh < i 1921 ’ I ’ 26 ,\. B. Failure to receive this rel’ort by soth oj month uurumts the Secretary to remind you by wire with charges collect. AccounLS not fiaid r-V^ 5 ^ ^ = ^.si^ft . ^)TSX3& ,.» . ... -■ V ^ ■ ;. j ':n '- '••y. 0 ‘j ■ '.'^ ., *^ ..t V ' s “ ^ Y V )I ■ ■ ‘ - ‘I > \is > > - 1>^, .i '.S#' *■. •i ■ \\- ' sJJ^ nJi'v! ^ ^^3 ;o-^ .^. V, V , ^ ^ ■.T' h »->w- ,<■ ►•' J r ' \/ K)‘' STOCK REPORT. JANUARY 1st, 1920 As reported by the members of the AMERICAN HARDWOOD MANUFACTURERS' ASSOCIATION MEMPHIS, TENNESSEE NOTE — The oversold column shows that some of the members are oversold on these various items. The Unsold January 1st” column shows that some of the members have these various aimounts unsold. FIGURES DENOTE THOUSANDS GUM FIRSTS AND SECONDS QUARTERED RED GUM FIGURED WOOD ian 1 Jan. 1 Jan. 1 Jan. 1 Jan. 1 Over* Jan. 1 Don. 1 Stank In* Ory Gretn Total Sold •rid Unsold Unsold •roaio r £K) 3S 12S as 9 109 35 74 1 1/4" 12 10 22 3 3 0»> 15 7 1 1/2" 4 4 3 3 4 4 2" 41 n 13 3 31 26 5 21/2" 12 12 12 12 3" 3 3 3 •> ToUl. 1(!2 48 210 47 18 181 91 90 No. 1 COMMON AND SELECTS QUARTERED RED GUM FIGURED WOOD !"■ 73 10 83 33 50 41 9 1 1/4" 21 21 21 9 12 1 1/2" 10 10 10 12 2 .VS* 18 IS 11 11 18 8 10 Total. . 122 10 132 44 11 99 70 31 2 FIRSTS AND SECONDS PLAIN RED GUM FIGURED WOOD 0/0 V' 100 27 12!7 127 129 2 1 1/4" 20 U) 30 30 23 7 I 1/2" 3 3 ; . . 3 3 V 13 ini 23 23 20 3 Total . 136 47 183 182 177 |0 4 No. 1 COMMON AND SELECTS PLAIN RED GUM FIGURED WOOD 1" 176 45 221 2 219 1.54 65 J 1/4" 13 13 13 11 2 2" 1 1 1 3 Total . 190 4.5 235 2 233 168 67 n LOG RUN PLAIN RED GUM FIGURED WOOD Iv nil"! IT 31 Ilote: Tills is the first page; the entire stock report comprises 63pages • * MONTHLY REPORT ON SALT w- Name of Company . General Office Address . . _ For Month Ending - Number of days of 24 Hours operated . _ _ Number of Men Report must reach Detroit by Tenth of Month succeeding that reported. MEDIUM GRANULATED PACKERS TONS TONS TONS TABLE & DAIRY TOTAL TONS TONS Maximum Capacity Made during Month Shipped Blk. During Month Pkgs. On hand end of Month NOTE:- Report above salt of your make only. MEDIUM TONS GRANULATED TONS PACKERS TONS TABLE & DAIRY TONS TOTAL TONS Bought during Month Shipped Blk. During Month ' Pkgs. On h: nd end of Month ■NOTE:- Report here all purchases of salt from other manufacturers. REMARKS:- Give here your opinion of months business and prospect for near future. DXSTRIOI TV.’ELVS of the HATIONAL ASSOOIAIION OF -BOX LlANUPAOTinGBS^ fcfc' .h ' Report of business conditions for month of 192 ^ unless otherwise stated, answers to questions should be based upon comparison with preceding month. ’ lEAHCST OPKDITIONS. 1 . What is the trend of business as indicated by: (Lighter (Lighter la) Demand on |£anQ Inquiries on (33^0 Contracts? (Heavier New Business? (Heavier (Higher^ (0) Selling (Sane Price? (L^^, 2. Are you In position to talce additional business? If so, (a) How much? : (b) What class of boxes?_ 3. List average prices per ll feet of all Sales during the month. ] Average price per Li feet for the i month, sales in lots of t SO boxes t 100 : 500 : 1,000 Material : or less : boxes ; boxes ; boxes . Hade up ; ; ; ! White Pine t Shocks : Made up *. : ! : Cum and Yellow Pine : Shooks ; : 1 : : Made up : Poplar and Cottonwood : Shooks : PAY/ I'lATSRIAL (Above Romal?_ (a) Is your lumber stock in yard and purchased (Nonaal? (Below Normal?, (b) For what period are your entire requirements covered by purchases? (c) *re you in the market .now, ( 11 feet Llaterial and if so, for what material ( U feet Material and in v/hat quantity? ( M feet ___________ Material (d) Do you wish to offer any of your lumber stock? If so, note quantity and description. M feet of • 5. (Lov/er? • (a) Is the market on Box Lumber (Same? (b) List all offerings of Bex (Higher? • Lumber. Offer made by :■ Quantity ! Description ; price per M : f.o.b. \^at point. 1 : : r.ri^I’^IT 33! j ; : (0) List of all purchases of Box Lumber. Purchased from : Quantity ! Description : Price Per U s f.o.b. what point. s ............. t 1 ; I ! 6. Summarize briefly labor situation. CffiNCRAL 7. Note any special questions you desire to have discussed at the next meeting. (Coir.pany) 'D. l^urr, 1553 Conway Luildinc, Chicago, Illinois. Lclc’w is a 3 tatcr.ient of hourly rate of vvacos pail by this ccrapany for the various classes of labor indicated durinc the month of 1920* ELiDlcvo Hour Rate of V.'afces Paid ... - m. Saw Filar _Cents per hour- Rip Sawyer Cut-off Sav/yor ilaner It M II i-lancr Helper II M ll Ra -Sawyer II II II Rfc-Sawj'er Kolpcr Llachiuu Uailer Llatchor It If If iratchor Helper It II It Printer Ccr.v.xn Labor ) Factory (Except V/omen) ) ) Yard ... II II II II II II ii'craon ViC are payinf; at rate of _____ Our factory is nov; v/orRint: cn a for overtime. hour par day basis. Space for additional remarks in explanation of wage figures ; SiG^!- d ) ' ■ f"' X ■i!" <■ ^ ^ 1 1 ) ,■ Nortk Carolina Pine Association (C’onctn or .\ur*.brrj 1 StumpaKC (HoarJ Mfa“iire) 2 I.tMiyiriK Kxp;-nsf .'1 I.o;; Transportation 1 TOTAI. ((1ST Ol- I.OtJS AT Mil. I. ( l.inc^ 1 , 2 , anit 2 .) II l)r\ Kilns VarcMn ' and Sliippini; !> TOT \l. ( (iST OF M Wl i'A.t TTUiNC il.a'.c' t. arm 7 .> f 111 : lira non and Ta\os 10 Dipir-i daliiin )i (ii •(;: t:;i i.i '.Oiri; •l-.i.-- 1 . . aim I,:.. l-'j i’iaaina Mill { i,s| I'i l or \ 1 , COS i ()! ! i\ i.sjirr; J r yiji ij j i» - M i-»l . 0 ., • . ’Yj . • NORFOLK. VA. Operatin(( Costs. For Month of («^ilh Analyi I- > Total for the .Mi/iilli AN \i.VSIS Other Kxpense.s . , .\v rt».t Amourl .. p,. iCT'.i, M'' ‘.il I |•;,’')|lt ( liii', (>; : > ■'I I'oru iii;i ■■■'i o ..lO-. i',;oi(( < sue, .o. ’■I !:■; '.ci: :i m';. i oo . Avrrser < fit I>i M. r.. *. t \ N ? ri Vi: (J.r M. ':».i \( i l M. Kl \ M\(; I IM ’ I . r I Ilf Nil nlh» I n.;r I ■ VK . Averajff Cost Per M. Ft. BIBLIOGRAPHY I. OFFICIAL PAI/PHLETS, REPORTS AND RECORDS Federal Reserve Bank of Philadelphia, How Is Basiness, Philadelphia, Federal Re- serve Bank of Philadelphia, 1920. Federal Trade Commission: 'l. Report on the Book-Paper industry, Washington, D. C. , 1917. 3. Report on the Causes of High Prices of Farm In 5 )lements, \ilashington, D. C., 1920. 3, Preliminary Report to the Senate and House on Lumber Associations, V/ashington, D. C. , Jann^ry 10, 1921. Forest Service, The, United States Departmert of Agriculture, Timber Depletion, Lumber Prices, Lumber Ex^iorts, and Concentration of Timber 0\'/nership, Washington, D. C. , 1920. Hew York Joint Legislative Conraittee on Housing, Record of Hearings, Hew York, 1920. State vs. Arkansas Lumber Co., et al., 260 Mo. 212, 1914. United States vs. American Column and Lumber Co. , et al. , Ho. 369, U. S. Supreme Court : 1. Transcript of Record, Supreme Court, October Term, 1920, Ho. 369. 2. Boyle, L. C. , Argument for the Appelants before the U. S. Supreme Court, October 21, 1980. 3. Brief for the Appelants, 1920. 4. Brief for the United States, Washington, D. C. , 1920. 5. Opinion of Judge IvIcCall, District Court of the U. S. , Western District of Tennessee, Western Division, J/larch 16, 1920. 6. Oral Arguments before the Supreme Court, October 21, 1920. United States vs. American Linseed Oil Company et al. : 1. Bill of Conrolaint, filed June 30, 1920, Northern District, Eastern Division. 2. Answer to Bill of Conrolaint. United States vs. Board of Trade, 246 U. S. 231, 1918. United States vs. Beading Co., 183 Fed. 427, 1910. United States vs. United States Steel Corporation et al., 223 Fed. 55, 1915. 1. Transcript of Becord, 59 volumes. See especially volumes 2, 3, 4, 5, 6, 8, 9, 12, 15, 19, 20, Defendants' ExliiBits 3. 2. Opinions of the Judges, 223 Fed. 55. United States Bureau of Corporations: 1. Farm I, Machinery Trade Associations, Washington, D. C. , 1915. 2. Trust Laws and Unfair Competition, Washington, D. C. , 1915. II. MISCET.LAI'TEOUS PA’/IPHLETS, BULLETINS AND DOCUilElTTS Ainsworth, A. A., Address before the We stem- Central Association of Stove Planu- facturera, 7 , 1917. (No. p. no- d. ) Amy, Louis W. , The Leather Belting Exchange, Address before the Babson Confer- ence on Cooperative Competition, Sept. 29-30, 1915, Philadelphia, The Leather Belting Excliange, 1915. Babson, B. W. , Beports on Cooperation, Wellesley Hills, Llass. , Babson' s Statis- tical Organization, 1915. Garside, Alston H. , The Value of Statistical Beports in Business, Address before the Annual Convention of Knit Goods I/Ianufacturers of America, Utica, N. Y. , Ivlay 20, 1920, New York, Clark IbKercher, 1920. Kellogg, B. S. , The Legitimate Functions of Trade Associations, Address before the Business Secretaries' Forum, Chicago, Jan. 25, 1918. Leather Belting Exchange, By-Jjaws. (No. p. no. d. ) McKerche r , Clark : 1. Open Door Coaptetition, Address oefore the National Association of Cotton Ivlannf acturers, Boston, April D8, 1915. 2. Decent Literature on Coorisration in Business. (No. p. no. d. ) National Coal Association, Illinois Coal Trade Associations, Washington, D. C. , j (no d. , prohahly 1920.) New England Builders' Supply Association, Annual Official Program, Boston, 1917. Ohio Millers' State Association, The, Directory of Ohio Elour Mills, 1920, (con- tains copy of constitution), Columbus, Ohio, Prank H. Tanner, 1920. Salt Producers' Association, Articles of Association and By-Laws, (no p. no d. / Society of Lknufacturing Confectioners, Constitution and By-Laws, (no p. no d. ) Steel Barrel Manufacturers' Association, Constitution and By-laws, (no p. no d. ) Spa^uLding, V/. V. , Experiences in Cooperative Cornpetition, Address "before the Bahson Conference on Cooperative Conraetition, Sept. 15, 1916, Phila- delphia, The Leather Belting Exchange, 1916. Stevenson, C. E. , The Elimination of Unfair Competition, Address Before t he Nat- ional Bottle Manufacturers' Association, Atlantic City, N. J. , l>2ay 1, 1920. Tap and Eye Institute, Constitution and By-laws, (no p. no d. ) . Transactions of t he National Association of Cotton Goods Manufacturers, Boston, 1866. West Coast Lumbermen's Association, Constitution and By-laws, (no p. 1811.). III. BOONS A^ID AETICIES Belt, Eo"bert E. , Inproved Accounting Miethods and Business Practices. American Lumherman, Feh. 3, 1917. (Volumes not numbered.) Black Diamond, The, How National Coal Association Reports Sales. Editorial, Oct. 1, 1919. Vol. 63. M . VT - i - . ' ■ • 'l^OC .jO’ l-r .••u,*;^4^ 03 o*vr*'. f ' • . . 1 ' s^ *' .*. :■ ...v'l . La- . ■-.• 1 i • . . . “ ■' * *.r 4 .* ■f • ;: , \ : ' ^ ‘ 4 i;/.; Braudels, L. D. , Cu.tthroat Prices tlis Coii^jetition that Kills. Harpers HJeehly Hov. 15,. 1913. Vol. 58. Clark, J. B., The Possiollity of Competition in Conmerce and Industry. Annals of tlie American Academy of Political and Social Science, July, 1912, Vol. 42. Coal Age, Open Price Bureau and Scheme to Sustain Price Declared Unlawftil. Edi- torial, April 8, 1920. Vol. 17. Coffin, ?/. C., Cooperation vs. Unrestrained Coirroetition. Iron Age, April 23, 1914. Vol. 93. Eddy, Arthur J? 1. New Competition, Uorld’ s Y/ork, October, 1911. Vol. 23. 2. New Competition, VJorld' s Y/ork, June, 1912. Vol. 24. 3. New CoEOpetition, World* s Work, July, 1912, vol* 24. 4. New Competition, The, New York, D. Appleton and Comoany, 1912. Electric Eeview, Open Price Competition Offers Hemedy For Overproduction; Sys- tem of Institute of Lighting Fixture f.fenufacturers. Editorial, Oct. 12, 1918. Vol. 73. Fayle, C. Ernest, Trade Combinations in the United Kingdom, Edinburgh Eeview, July, 1918. Vol. 230. Ferry, I/tontague, Intelligent Selfishness a Business Builder, Chicago, L. C. Wood- worth, 1919. Foote, Allen Eipley, Unregulated Competition Is Destructive of National Welfare-. Annals of the Anerican Academy of Political and Social Science, July, 1912. Vol. 42. Francis, Eobert T. , Observations on the Woolen lilarket. Journal of Commerce, llay 27, 1916. Gaunt, E. H! 1. Cooperative Competition. Providence, R. I., The Stevens Press, 1818 •;i’ u\a.j •x.i-t" ;:- • . *■> J ^ ! ♦\ I t ‘ 4 > "0 .-a 2. Open Price Plan for Woolens and Worsteds. Textile World Jotimal, April 8, 1916. Voltune 51, Part 2, Harley, E. Nt 1. The Awakening of Business. Hew York, Douhleday Page & Co., 1916. 2. Present Attitude of the Government tov;ards Trade Associations. Heating & Ventilating, Septemher 1916, Voltune 13. 3. Trade Associations and Business Methods. Metal Worker, Plumber & Steam Fitter, January 9, 1916, Volume 121. Jevons, W. S. , Theory of Political Economy, London, IfeicMlllan & Co., 1888. Johnson, Alvin S. Eeview of ”Hew Competition" hy A. J. Eddy. Political Science Quarterly, March 1913, Voluine 28. Keith, C>ias. S. , Organization and Cooperation. American Lumberman, January 22, 1916. (Volumes not nmhei'ed) Levy, F. H. The Shernmn Lav/ as Affecting Trade Association^. Domestic Engineer- ing, l^y 9, 1914, Volume 67. Lord, Fred W. The EtMcs of Contract ing & Stabilizing of Profits. New York, The Country Life Press, 1918. Ivlacllwaine, G. E. Address before American Specialty Manufacturers* Association. Journal of Comnerce, December 11, 1916. McKe rche r, Clark: 1. Progress Made in Applying Cooperative Competition in Testiles. Journal of Corrmerce, January 3, 1917. 2. Open Competition. Testile World Journal, December 9, 1916, Volume 52, Part 1. Montague, Gilbert H: 1. Business Competition and the Law. New York, London, G. P. Putnam's Sons, 1917. 2. Legal Pliases of Open Price Work. Journal of Commerce, lilarch 20, 1920. Moore, 0. L. The C^en Price Plan. The Business Secretaries* Foru.m, December 1919. Nation's Business, The Open Competition Plan. Editorial, April, 1920. Naylor, E. H. Trade Associations. New York, The Ronald Press Company, 1921. Palgrave, R, H. I. Dictionary of Political Economj'’. New York, London, Lfeic- Millan and Co., 1910. 3 volumes. Rohinson, M. H. Gary Dinner system. Unpublished Manuscript. Champaign, Illinois. Rohrhach, C. E. and Liurphy, • J.A.. 1. Qpen Price Associations. Printers Ink, Jiuie 3, 1920, Volume III 2. Reverse Side of Open Price Association. June 24, 1920, Vol\une III. Taussig, F. W. Principles of Economics. New York, The MacMillan Company, 1911. 2 volumes. Thonpson, H. B. iieystone of Open Price Theory is Publicity. Journal of Commerce, January 4, 1916. Tosdal, H. R. Open Price Associations. American Economic Review, January 17, 1917, Volume 7. IV. PERIODICALS American Lumberman. Chicago, Weekly. See 1912 et seq. Chicago Tribune, Chicago, Daily. See April 18, 1921. New York Journal of Commerce. New York, Daily. See November, 1915 et seq_. New York Times. New York. Daily. See December 29 , 30, 1920 and January 3, 1921. New York Tribune. New York. Daily. See December 29, 30, 1920. Southern Lumberman. Nashville, Term. Weekly. See 1912 et seq. Textile World Journal. New York. Weekly. See ISIS et seq. Wbrld, Tlie. New York. Daily. See September 13, 1920. 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