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entire country, farms are constantly coming into the hands of new men; this constitutes an agricultural problem of the first order. Farming, like every other industry, requires a continuity which is being interrupted by the failure of the present generation.
There was a time in agriculture when very little selection took place relative to products and stock. The entire agricultural régime was based upon a fairly primitive form of natural selection along these lines. During the last few years, and slowly throughout the generations that have preceded, artificial selection has been introduced in order that crops may be larger and better and in order that stock may conform in quality and weight to larger economies. In other words, the science of agriculture, promoted by scores of agricultural groups and governments and institutions, has been rapidly developed during the last few years. From the time of the clover and the turnip in the Middle Ages, when the three-field system revolutionized agriculture, down to the present day, when soil study, seed, and stock selection are important factors, changes have taken place in farming which require the mind of the master farmer. In no phase of agriculture is this more important than in dairying, where modern science has revolutionized the method of handling a modern farm plant.
In the light of the fact that in different communities broad cooperative forces are now thrown around many industries, each State or district faces the competitive necessity of making the farmer's position successful. In no way should such a semipaternalistic attitude be viewed with growing alarm, for every government has become well acquainted with different aids, bounties, tariffs, subsidies, and bonuses for different phases of industry. Aid to the farmers or
. to the dairymen is no less fundamental than aid to American shipping through subsidy; aid to the agriculturist introduces few new economic aspects as compared to a score of American tariffs. matter of fact, aid to the farmer may readily be more justified than support along many other industrial lines. The economic activity of the farmer is primary and basic; the hard work of the agriculturist has gained the sympathy of all people; the supply of the farmer's product has been inelastic, which accounts for wide fluctuation in market prices. It must be remembered that the farmer seldom goes out of business, regardless of the fact that the price for his products may be below the cost of producing them. This means agricultural supply does not readily adjust to changing conditions in demand. The economic position of the farmer is of great importance to society in general, bearing a very important relation to many political and social problems.
There are many lines of cooperation that might be introduced or advanced as helps to the farmer. Producer's credit for agricultural purposes has by no means been completely developed. It is true îhat this particular kind of credit has been more popularized than any other, yet in the light of changing productive methods this form of agricultural aid will have much to accomplish. Marketing credit has been much less advanced and constitutes the chief credit problem of the farmer at the present time. Throughout the large areas of agriculture, economic necessity has forced the farmer to market his product at a time when the supply has been much too large to main
tain a fair price for the product. Until a constructive, intelligent credit system has been created that will permit the farmer to store and hold until such time as the market will absorb the product, agricultural prices will be depressed and destabilized.
It has been estimated that for every dollar spent by the consumer for farm products about 50 cents on the average goes to the farmer, 10 cents for transportation, and 40 cents for the expenses, deterioration, and profits of the middlemen. At first glance wrong conclusions might be drawn from such a broad statement. As a matter of fact, the cause for this situation is to be found in quite a different analysis than might be expected. The 40 cents absorbed by middlemen does not necessarily represent abnormal profits, rather the failure to distribute farm products with economy. Throughout merchandising there are too many men of the wrong kind in business, which results in such a small turnover of business as to make impossible a low unit cost of distribution. If fewer merchandisers of a high type were to handle these products, making possible from two to four times the business of the average concern of to-day, the resulting low unit cost would make possible either a much higher price for the farm product or lower price for the consumer. The entire field of retailing needs careful scrutiny and elimination in order that greater economy may result.
Most agricultural problems may be traced to the fact that the supply of farm products is inelastic. In ordinary industry a market price which falls below the cost of production will very soon close that particular plant, or at least curtail its output. The manufacturer, by reason of cost accounting, is able to check any great difference between cost prices and market values. The farmer, on the one hand, due to the difficulty in arriving at farm product costs, and, on the other, due to the fact that he clings to the farm, continues to produce a supply which has already passed beyond the power of the market to absorb at a fair return to the cultivator. When prices for farm products do not represent a fair return to the farmer we do not find the agricultural population moving from the soil to the city in such numbers as to correct this condition. The farmer continues his work long after it ceases to pay a fair return upon his investment and his labor. As a matter of fact, he remains even though it be necessary to sell the stock, to market some timberland, or to receive a few cents per day for his labor. This inelasticity of supply of agricultural products constitutes one of the chief causes for agricultural depression.
Cooperation among farmers constitutes one of the most constructive steps in this great field of so many problems. Throughout the United States cooperation has faced many disappointments. A careful survey of this endeavor will satisfy the investigator that the future of this work is worthy of the painstaking steps necessary to make it a success. In the beginning it must be appreciated that results are proportionate to the education of the membership constituting the organization; that success is dependent upon a vision and esprit developed within the membership requiring a long period of time; that the final accomplishment is dependent upon forces little different from the kind and progress of any other large business concern. Cooperation in agriculture when approached in this broader
appreciation of time and vision has brought about well-defined marketing economies. First, cooperation standardizes the quality of the product, developing brands and good will known throughout the marketing world. If no other result had been accomplished through cooperation than this better standardization of quality, it would have justified most of the cooperative effort attempted. In the second place, cooperation tends to standardize quantity. A cooperative group will naturally become alert as to the acreage planted and the dairying outfits established in a particular region. There will naturally develop the desire and necessity to look ahead in terms of the added product in order that the market may absorb the growth along some agricultural line. The Raisin Growers Association keeps in constant touch with the new acreage commanded. The dairymen of a given locality will naturally be interested in the number of cows added to the total herd. In this way a broad, comprehensive program may be developed without the necessity of such curtailment as will lose the support of the buying public. În the third place, cooperation creates a better spread of the product upon the existing market. Throughout the entire United States experience upon experience has clearly demonstrated the fact that a proper market analysis has not preceded the marketing of merchandise. One of the great opportunities of the cooperative concern is such a detailed study of various markets as will permit the orderly absorption of a given supply. In the fourth place, cooperation in agriculture must eventually develop and expand the market for the product coming within the cooperative endeavor. Cooperative societies are more or less appreciating the value of publicity and advertising as outlets for their product. This broad market vision is the result of years of successful organization and constitutes the aim, and in a sense, the final purpose of a progressive marketing organization.
STATUS OF TRADE ASSOCIATIONS IN THE DAIRY INDUSTRY
FROM THE STANDPOINT OF ECONOMICS.
Roscoe E. LITTLE, secretary, international Association of Milk Dealers,
Chicago, Ill. Economics has to do with the wealth of nations. In what respect, if any, do modern trade associations have to do with or affect those fundamental factors of a nation's growth as studied in the economic field? Do they serve a purpose from the standpoint of a producer, or is their existence purely predatory or parasitic upon the industrial fabric of a nation? In either event, the fact that they are organizations of a nation's business, subjects them to study and analysis from an economic viewpoint.
If the former, they are vitally necessary to progress and will prevail. If the latter, they are an evil encumbrance and will fall of their own weight.
In America, various trade associations have been attacked by legislative and regulatory bodies on the theory that the activities of such organizations have interfered with free and open competition. The lawmaking bodies, therefore, clearly recognize the fact that our trade associations have materially to do with a nation's commercial affairs and that, in functioning, such group organizations must harmonize
in their activities with the economic benefits which must naturally flow from a competitive system of industry,
Out of its prototypes, the medieval guilds of England, the kartels of Germany, and the League of the Hansa Towns, the modern trade association has evolved from a union based upon necessity into an organization inspired by the best thought in the field of public service and economic endeavor, whose object is the good of all man. kind and whose field is the world.
The history of the guild movement begins with the Norman conquest, which, through its close union of England and Normandy, led to an increase in foreign commerce and stimulated internal trade and industry. With this expansion of trade, the mercantile element soon felt the need of joint action to protect its growing prosperity against encroachments.
The guild was doubtless at first merely a private society, having for its object the protection of its members, the tradesmen of the borough, and the maintenance of the newly invigorated trade interests. During the twelfth century it gradually became a recognized part of the town constitution, thus entering upon its second stage of development. The guild was called into being, not out of antagonism to existing authorities, but as a new institution by which the community controlled its local industries in the interest of the consumer.
Germany seems to be peculiarly the home of trade associations so far as the Continent is concerned. As developments of the early kartels, Liefmann, in 1897, writing regarding trade combinations in Germany, was able to mention those of international scope in 41 different branches of industry. The form of combination in Germany is ordinarily that of mere contracts among independent establishments regulating the amount of output for each and, in certain cases, also the prices. As in Austria and in France, a central selling bureau for all the members of the association is frequently found.
The Hanseatic League of the free towns of Germany seems to have dated from the year 1241. At the height of its power during the fourteenth and fifteenth centuries, it comprised from 60 to 80 cities, which became, at that early period, celebrated alike for the extent of their commerce, the magnificance of their buildings, and the wealth of their citizens.
The idea of protection was paramount in these early associations, hence, we find that, as in the case of the Hanseatic League, they became political powers, exerting a decisive influence upon the destinies of nations. Thus in the early part of the fifteenth century, the Hansa Towns, having espoused the cause of the Count of Holstein, who was at war with Eric X, King of Denmark, sent a fleet of upward of 200 ships, having more than 12,000 troops on board, to the assistance of their ally, deciding the contest in his favor.
The underlying idea of men with mutual interests associating themselves together to their common advantage is extremely old-how old I am not prepared to say—but the Bible contains several references to organizations of goldsmiths, apothecaries, spice merchants; and profane literature, almost as ancient, provides abundant references to organizations based upon similarity of occupation of their members.
The ancient guild may properly be regarded as the legitimate parent of the modern trade association, although there are, of course, wide differences of method and administration. But aside from these technical differences, the essence of the modern trade association as distinguished from the protective guilds and combinations of ancient and medieval times is that the trade association of to-day not only recognizes the need for intelligent and legal cooperation in industry, but has as its object public service in the field of economics in building up the wealth and influence of the nation as well as of its individual members. There is also this distincition between their methods of procedure. The former enforced their rules by regulation and penalty while the latter accomplished the same results through education of the member and the consumer.
The United States, however, so far as size, leads in the number of trade associations and financial resources. Germany, France, and Belgium have the advantage, however, in long use and experience and mature development. The movement is more recent in the British Empire, although there is evidenced an unusual degree of activity in trade association formation. In England alone it is said there are considerably more than 500 trade associations, with a modern tendency for their increase in every important branch of industry. Typical of such associations in the United Kingdom are those of the textile, brass, copper, tin, chemical, electrical, paint, and glass industries.
It is essential at this point to have a clear and comprehensive definition of the modern trade association, and this has been admirably stated at a recent meeting of the American Trade Association Executives:
A trade association is an organization of producers or distributors of a commodity or service upon a mutual basis for the purpose of promoting the business of their branch of industry and improving their services to the public through the compilation and distribution of information, the establishment of trade standards, and the cooperative handling of problems common to the production or distribution of the commodity or service with which they are concerned.
The United States Chamber of Commerce in a recent report defined a trade association asan association formed in a field of industry or commerce with a membership so representative that all problems pertaining to this field can be adequately presented for common consideration and solution, and with the purpose of developing this field so as to have the enterprises in it conducted with the greatest economy and efficiency.
No trade association has any excuse for existence unless it contributes to the material welfare of its members and renders them an economical service. Of course this proposes the utmost support and cooperation on the part of the members to the policies and activities of officers of the association. Every man owes a part of his time to the industry he represents.
While the activities of trade associations are necessarily many and varied, the following, recently compiled by the Secretary of Commerce, are likely to be found in any such association, any or all of which have to do with the immediate economic welfare of the members: