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1. Industrial research.-Manufacturing processes improve with understanding gained through actual operation. Industrial research is the study of such operation. The trade association functions with remarkable success in the promotion of scientific industrial research. More and more is the value of scientific research coming to be appreciated, but in many industries there is little hope of exhaustive research by the establishment of moderate-sized units. Therefore, in many trades laboratories are being supported jointly and are making large contributions to reduction of costs in raw materials and processes and in the better adaptation of products to consumer's needs. Industrial research, though not applicable to all industrial groups, will bring gigantic financial return to industry as a whole in its more general application through trade-association activity.
2. Commercial research.—Dissemination of market reports and information concerning business conditions and probable future trends; compilations and distribution of vital statistics of the industry, such as number of plants, capital investment, tonnage of shipments, stock on hand, wage scales and schedules; campaigns for eliminating waste, introducing improved methods of production, establishment of standards, cost and accounting methods, vocational education, and similar purposes; engineering.
3. Market expansion. -Promotion of the use of the products of the industry and development of new uses.
4. Legislative.—The interest of any one industry or trade, to be sound in the ultimate analysis, must be the public interest. In their legislative activities many trade associations have borne this axiom foremost. Greater uniformity as to State laws affecting the public and industry and commerce may be brought about and the views of a trade as a whole can be properly laid before legislative bodies only through association. The demand of legislatures for the views of the different trades upon all sorts of questions of public interest is incessant, and the open preparation and presentation of such matters is far more consonant with proper development of public life than the private lobbying of the few or powerful.
5. Transportation.—Business can not be consummated until goods readily find their way to market. The way must be direct and unobstructed. It must be efficient in its operation and economical. To insure all this the individual can not work single-handed. His interests must be pooled with those of others, and the united group then operates for the efficient transportation of the world's commodities. The trade association traffic bureau thus has many, many problems in constant retrospect before it. There are rate matters. classification, car supply, auditing of transportation bills, the study of competitive transportation agencies, and the real force of such competition. The trade association speaks as the voice of industry in transportation problems.
6. Protective work.-Gathering and disseminating credit information among members. Mutual fire and liability insurance, sales education, and sales schools for members and employees.
Credit is the vehicle of trade. Without mutual confidence buyer and seller can not transact business. Misdirected credit must be corrected through proper and legal collection procedure. With its particular broad-visioned and unbiased perspective of the business transactions of its own group, the trade association becomes a peculiarly well-fitted agency in these service functions of business conduct. The basis is one of mutual service and return. The trade association becomes a trusted and reliable clearing house for the industry's vital credit and collection information. While it is true that credit information has been used for restraint of trade, this is not its primary or usual purpose and obviously should be prohibited.
Considering the vast sums expended in insurance against risk and loss, it is no more than logical that trade association activity has taken root in this important field. This has not grown, however, so much from a competitive business point of view, but rather as a matter of education and analysis. Items of costs of doing business must be understood, adjusted, and cut to the lowest point commensurate with efficiency and satisfactory accomplishment. Strange to say, there has been little uniformity in State legislation affecting insurance. Here in particular the trade association has been instrumental in the reasoned elimination of waste and unnecessary expense.
7. Prevention of trade abusés.-Business has always entailed the strife of competition. It always will and it always should. However, there are rules and principles of fair play that must be regarded in trade relations, and in the development, establishment, and maintenance of these rules the trade association has come to be a potent factor. Take commercial arbitration, standard contract forms and trading rules, trade terminology and nomenclature each is a direct step toward saner business practice. The stamping out of unfair competition and misrepresentation and the adoption of fair practice principles-codes of ethics—have been real accomplishments of scores of trade associations in the direction of better business.
8. Simplification and standardization.—Waste in industry is acknowledged. Its elimination in a vast area of problems can only be accomplished by collective action in a trade. The simplification of dimensions in articles and parts, the establishment of definite grades and qualities, not only reduce the cost of production and the volume of goods required in distribution but they also increase the actual basis of competition. Hundreds of millions of dollars have been saved through the adoption of principles laid down in such programs, not alone to the business groups concerned but to the ultimate consumer. They have brought about lower prices, through attacking. directly the costs of raw material, inefficient plant operation, and unnecessary stock maintenance. The very large movement in this direction is to-day the most promising field for reducing the margins between the producer and consumer, but no progress can be made without collective action.
9. Publicity. With the growth of specialization in business contact with the ultimate consumer or purchaser has become more and more complex. Buyer and seller no longer have the personal relationship that prevailed in generations passed. Public relations-publicity and advertising—have become an exact science. Thus each industry, each trade, has its peculiar problems attendant upon mer
chandising itself or its wares, and just so, each trade association is proving itself the dominating factor in the development of the public relation of its own business group. It may be cooperative advertising or it may be something more complex. Whatever it is, it always needs the scientifically trained and guided hand of the trade association specialist backed by unanimous support of the group in telling its story to the public, who must know the truth, the whole truth, at all time.
10. Employee relations. Perhaps the individual business concern or manager has taken more frequently and at earlier periods the initiative in forward policies of employee relations. Nevertheless, trade association after trade association is now developing the necessary preliminary stages of more equitable and advanced phases of employee relations. In most cases it is largely a matter of research into the tremendous problems involved-selection of personnel, education, welfare work, accident prevention, employment principles, and collective agreements. The associations will recognize that in the years of devotion to improving the processes of production and distribution there has been great oversight of the human factor and its mass relation. Shall it be approached blindly and without preparation and knowledge? Not if the present-day indications of trade association activity have real meaning.
11. Government relations. Whether the attitude of business be to “ keep government out of business” or to the contrary, it nevertheless is true that the Government in its manifold activities directly impinges upon commerce and industry at many points. The control of public utilities, the restraint-of-trade acts, the large volume of Government expenditures, all materially affect business, not to mention the legislative problems thrust upon the Government as the result of after-war reorganization. Official trade information, official industrial statistics, official standards, procedure, and practice are being sought by the trades, and the Government is constructively active in cooperation with business to develop these fundamental services.
The following types of associations are frequently mistaken for trade associations:
1. Associations with a membership consisting of business houses engaged in a variety of businesses, as, for instance, an association consisting of manufacturers of miscellaneous commodities not connected with a specific industry.
2. Professional and technical societies consisting of individuals in their technical or professional capacity rather than business units, such as societies of credit men, accountants, sales and advertising managers.
3. Nonmutual associations, in which any surplus of income over expense is neither returned to the members nor used directly or indirectly to increase the service to members.
4. Associations organized for a single purpose or a limited number of purposes, such as associations of manufacturers which are traffic service bureaus.
Associations which are organized as trade associations, but which undertake activities within a limited field only, are not trade associations in the full sense of the term. It is impossible to distin
guish between a real trade association and a limited one of this type by definition; the distinction is a matter of fact. If it is the general policy of an association to undertake within its means and power any type of activity which the development and protection of the industry or its members require, it is a real trade association; if it generally gives serious consideration to activities of a certain type only, it is not a real trade association. However, such limited associations usually perform a desirable function from the standpoint of both their members and the public.
Clearly again the purposes of corporations and of trade associations are different. Trade associations complement the corporations. Corporations, or other firms, exist to do business, to capitalize service in business, to manufacture, to sell, to distribute. Trade associations are not " in business.” They do not manufacture; generally they do not distribute or sell. Their aim is to facilitate these and other commercial or governmental processes.
From the national point of view it is worth noting that the Government, in the nature of things, must look upon each industry as a single permanent unit. If the Government wishes to do what every Government department often has occasion to do—to deal with one or another industry, to get its views concerning a matter of trade strategy or trade development abroad; to inform it about this or that or to be informed by it-about a matter of trade technique or trade custom, or trade ethics, or trade data-obviously it can not easily interview or correspond with the existing tens of thousands of individual firms comprising the industry.
A century ago, did the occasion ever arise, such a thing would have been simple. But now it is next to impossible. So the trade association meets the need of a link serving as a medium of expression of, and a means of expression to, an industry.
As illustrations of the economical service there may be cited the efficient services rendered by the National Canners' Association, in i he protection of their members and the public through their research and inspection department, in the production and distribution of canned foods; the packing industry which has done extended research work through their laboratories; the International Typothetæ, the laundry owners, and numerous other organizations which have developed and established for their industries uniform methods of cost finding; the implement industry, the brick industry, electric light accessories, and numerous others which have cooperated with the Department of Commerce in standardizing and reducing types and dimensions, and the extensive research work of this and a similar kind that is being done by the various national associations within the industry all serve as illustrations of the great economic service that is being rendered to their members and the positions they are assuming in the great economic fabric of the country in which they have been organized.
And here are other industries, stalled because uncertain about matters of policy or nomenclature, and turning at last, through their trade association representative, to the Federal Trade Commission. At the suggestion of the trade association representatives, the Federal Trade Commission asks the industries concerned to meet in Washington to discuss the problem in hand, and the trade in many cases is
able to adjust itself to a situation cleared up without any intervention, disturbing and disastrous as it often proves, of the police powers of the Government.
Virtually every alert industry has come to accept the principle that its success turns on reliable and complete trade information or statistics—in a word, commercial intelligence. As well try to run
. an ocean-going steamship without navigation charts as direct any modern business without guidance. In other words, each industry needs a watchtower to keep its program stabilized.
For the want of such a watchtower service, one corporation of a great industry went on producing blindly through the period of overexpansion following the war; writing off a loss of approximately $30,000,000 as a result. Here is another that also got caught because it did not know that stocks were on hand in America and imported millions of dollars worth of a product that it could not use.
On the other hand, here you find an industry seasonal in nature yet operating without hazard because of its intelligent use of trade information. At first this industry was “ either overproducing or broke.” Now it knows at any moment not only its own capacity, the existing stocks on hand, but also the current demand for its products in comparison with those of other methods or other years.
Here, then, is the larger view of trade associations, since experience shows that the trade association in the United States, as well as in the countries of Europe, is a link of indispensable kind between the Government and the business public, thereby taking their places as great economic factors in modern business.
Here you find the Department of Agriculture deeming them to be invaluable, and Congress accepting them in the changing scheme of things in which individuals have lost their voice and the new representation rests with organized groups. And here, again, you will find them accomplishing, in cooperation with the Government, the elimination of freak varieties of production and collective wastes in industry which mean a loss of 30 per cent of our national energies.
Particularly has the International Association of Milk Dealers been active with other organizations and the United States Department of Commerce in its program of simplification and standardization of the sanitary pipe and fitting and the glass milk bottle. Other items, also, are on the schedule for similar treatment with a view of increasing the efficiency and economies of milk plant operation.
Here you will find trade associations doing invaluable educational work for their members. For instance, many of them are doing a large service that can be performed in no other way in promoting the establishment of proper methods of cost accounting; for clearly it is to the good of no one for a manufacturer to go on producing at a loss, and adequate statistics can not be gathered in any industry without uniform methods of cost accounting. It has often been well and truly said that a manufacturerer and a dealer need not fear the competition of the man who knows his costs, but, rather, the one who wreaks havoc in an industry-the man who does not know his costs and thinks he can undersell the man who does. In other words, cut-throat competition is more generally the result of a manufac