Association of Brass Manufacturers may be added to the list of associations which have adopted the open price plan.

In the leather trade, the National Association of Tanners is urging the formation of open price associations among its members. At present, only one of the sub-groups, the upper leather group, is operating under the plan, but it is expected that other groups of leather manufacturers will follow shortly.16 The Cut Sole Manufacturers Association has been in existence for about six years. Following unsuccessful attempts to fix prices in 1909 and 1910, the Leather Belting Exchange" was started in August, 1915, as an open price organization with a membership which has subsequently grown to include thirty-eight concerns engaged in leather belting manufacture and representing about 65 per cent of the total production of the United States.

18

A number of territorial associations employing open price methods are said to exist in the milling industry.' Among asbestos manufacturers, the Asbestos Textile Manufacturers Association, the Asbestos Brake Lining Association, and the Asbestos Paper Manufacturers Association have adopted a modified plan for reporting actual sales, prices, and stocks. Many members of the American Faced Brick Association have united to carry out in part the open price methods through the central office of the trade organization.19 Michigan salt producers have adopted the open price form of coöperation in the Salt Producers Association; so also the manufacturers of optical goods.20 It is unnecessary to proceed further with the enumeration. It is sufficiently clear that the importance of some and the wide variety of industries affected render this type of organization deserving of detailed study.21

16 E.g., the heavy leather, fancy leather, and the upholstery leather groups. 17 For information upon the Leather Belting Exchange, consult printed copies of two speeches held at the Babson Conferences on Coöperative Competition, one by the secretary of the Exchange, Louis W. Arny, Sept., 1915, the other by Mr. W. V. Spaulding, Sept., 1916.

18 Of the half dozen millers associations said to be operating upon an open price basis, specific information could be secured concerning only the Ohio Millers State Association.

19 Cf. in this connection the speech of Mr. J. Parker D. Fiske before meeting of New England Builders Supply Association, Feb. 20, 1917. Outlined in the Annual Official Program, pp. 84 et seq.

20 The Optical Manufacturers Association adopted the open price plan in June, 1916. Thirteen firms located in Massachusetts, Rhode Island, New York, Pennsylvania, New Jersey, and Michigan are at present included in the membership.

21 To the open price associations mentioned above, may be added the National

Organization and Operation of Price Associations

Origin. The associations of competing firms through which the open price plan is put into operation may be organized specifically for that purpose, as some of the textile associations.22 The larger number of associations are developments of trade organizations, which either have been fully converted into open price associations, or have established departments for the interchange of information as to prices obtained in actual sales, stocks, etc., and encourage their members to participate in the work.28 Often information is cleared through the office of the secretary of the trade association, but in other cases special secretaries and agencies are employed.

Objects. The ultimate purpose of every open price association is to effect greater stability and increased profit in the business of its members through coöperation along certain lines. The immediate object as declared in the articles of association is usually to provide means whereby the final result is to be accomplished. Provision for the collection and distribution of information is essential. To quote from the plan of the Hardwood Manufacturers Association,24 the purpose 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; to make competition open and aboveboard instead of secret and concealed; to substitute in estimating market conditions frank and full statements of our competitors for the frequently colored and misleading statements of the buyer." More specifically stated is the fifth object of the Bridge Builders' Society "to establish frankness regarding bids, terms, and prices actually made. "25 Although in some cases, the objects are stated in very general terms,26 the

Association of Stationers and Manufacturers and the Tobacco Merchants Association; others are said to be in operation among manufacturers of rigid electrical conduits, powder, beet sugar, and knives. A portion of the membership of the National Association of Steel Furniture Manufacturers is also operating under the open price plan.

22 E.g., National Association of Finishers of Cotton Fabrics, local associations at New Bedford and Fall River. The Pressed Metal Association and the Leather Belting Exchange are also examples.

23 E.g., the National Association of Tanners, Western Pine Manufacturers Association, Hardwood Manufacturers Association.

24 American Lumberman, Feb. 3, 1917, p. 42.

25 United States v. U. S. Steel Corporation et al. Transcript of Record, vol. II, p. 807.

26 For instance, the object of the Cut Sole Manufacturers Association is "to promote social intercourse and general prosperity of those engaged in the cut sole business." By-laws, art. I.

larger associations specify with considerable detail what they intend to do. In addition to the main purpose of providing machinery for the exchange of information, bringing about standardization of product and facilitating the adoption of a uniform cost accounting system are often mentioned. Both are desirable for the effective operation of open price methods. The objects of the Cotton Finishers Association" include others also; but only three of

27 Article II of the Constitution of the National Association of Finishers of Cotton Fabrics reads:

"The objects of the association are as follows:

"A. To promote publicity in the transaction of business, and to promote cordial and friendly relations among members, by means of monthly and other stated meetings, thereby removing, so far as possible, misunderstandings and ill feelings due to the spreading of false reports and baseless charges, and to ignorance of conditions prevailing in the industry.

"B. To collect and disseminate accurate information relating to the finishing of cotton fabrics, to the end that each finisher, however small his output, may be placed, in so far as data for the intelligent conduct of his business goes, on a footing of equality with other finishers.

"C. To cooperate with customers in the maintaining of high standards in the manufacturing and finishing of cotton fabrics.

"D. To devise a scientific system of cost accounting, to the end that every one engaged in the industry may accurately know the cost of his output. In this connection, it is not the purpose of the Association to impose upon any member any cost items or to use in any manner the cost system as a means for controlling prices. The sole object is to secure, if possible, the adoption of a scientific system of cost accounting, without in any manner seeking to have disclosed the actual costs of a member. In this connection the Association is in hearty accord with legislation now pending in Congress looking toward the adoption of uniform scientific cost systems.

"E. To take up and carefully consider sanitary, hygienic and safety measures and appliances and, in this connection, the insurance and pensioning of employes and the welfare of employes generally, and to coöperate with legislative and other public bodies in the framing of laws along these lines.

"F. The bringing out into the open of all competitive conditions and the introduction of the open price policy, to the end that whatever price information is distributed to producers and consumers, it will be absolutely accurate. "IMPORTANT: There are no penalties of any kind or character connected with the operation of the Association. Members may or may not file information called for by the Reporting Plan hereafter set forth; if they do not file they get no information; if they do file, they get like information in return. "There is nothing secret about either the meetings or the operations of the Association. All its proceedings are reduced to writing and carefully kept in the minutes. Customers may attend meetings and become familiar with the operations of the organization. Members are free to invite competitors, who are not members, to attend meetings of the Association.

"Nothing in the plan or operation of the Association shall be understood or

them are closely connected with the open price plan: (a) to promote publicity in the transaction of business, (b) to devise a scientific system of cost accounting, (c) to introduce the open price policy. Other purposes are not peculiar to open price associations and may be attempted by organizations having nothing to do with costs or prices.

31

Membership. The membership of open price associations may include firms located in all parts of the country.28 More often members are drawn from a smaller area, a large section,29 or a single state,3 30 while some associations are confined to firms in a small locality. Nevertheless, for successful operation it is important that territory be sufficiently limited to permit ready exchange of information and meetings of members at frequent intervals. As a consequence, associations whose membership covers a wide area have found it advisable to divide into smaller sections.82 Also, where there is much specialization among members of a large organization, sub-grouping of members may be made upon a product basis, as in the case of the Tanners Association.

Membership in open price associations is ordinarily open to any firm, corporation, or individual in good standing engaged in the particular line of business in the territory covered, which will agree to comply with the provisions of the constitution and bylaws and other rules of the organization, and to pay the required dues and fees. Where trade associations have taken up the work, membership in these is usually a prerequisite for participation in the open price plan;33 but membership in the former is in most construed as directly or indirectly restraining the freedom of any member to at all times quote such prices and terms as he pleases, each member being as free to compete for business as he would be if the Association did not exist." 28 E.g., Hardwood Manufacturers Association of America, National Association of Finishers of Cotton Fabrics, Leather Belting Exchange.

29 E.g., Bridge Builders' and Structural Society, Pressed Metal Association, Optical Manufacturers Association.

30 E.g., Ohio Millers State Association.

31 Local associations at Fall River and New Bedford, Mass.

32 The Leather Belting Exchange divides its members into Eastern and Western groups. Spaulding, p. 5.

The members of the American Faced Brick Association participating in the open price plan are subdivided upon what is nominally a product basis, i..., according to varieties of brick, but for practical purposes is also roughly geographical, because of the difference in the varieties produced by different sections.

33 E.g., Western Pine Manufacturers Association, Hardwood Manufacturers Association.

85

cases unrestricted. Application to the secretary, agreement to abide by the constitution and by-laws, and the payment of dues satisfy the requirements for admission to membership in the Ohio Millers State Association. Unanimous election is required for entrance into the American Tack Manufacturers Association. To become a member of the Cotton Finishers Association, a concern engaged in the trade must be proposed for membership by a member, be approved by a majority of the executive committee, and be elected by a majority of members.36 Since it is to the advantage of open price associations to have as complete a membership as possible, restrictions upon membership are practically non-existent. To defray the expenses, certain associations require the payment of an initiation fee in addition to periodical dues.37 Others confine their financial requirements to annual dues and assessments which vary in amount according to the scope of association activity. The initiation fees are fixed in amount, but the annual dues are often graded according to the capacity of members.88

Members pledge themselves to give certain information regarding their business to the central office and have the right to receive information so long as they live up to their part of the agreement. No penalties are imposed for failure to make reports except the withholding of information reported by other members. Outside of the agreement to give information and to pay dues, no obligations are imposed upon the members of an open price association.

34 Constitution, Ohio Millers State Association, art. II, sec. 1. Section 2 provides that firms or corporations other than those engaged in manufacture of flour or meal may become associate inembers, having all privileges of regular members except voting. This is unusual.

35 Articles of American Association of Tack Manufacturers, art. I.

36 Constitution, National Association of Finishers of Cotton Fabrics, art. IV, sec. 1.

37 For instance, the initiation fee required by the Pressed Metal Association is $50.

38 The annual dues of the members of the Pressed Metal Association are based upon the volume of sales of metal stampings and range from $200 to $1,000 a year. The American Tack Manufacturers Association levies dues of 5 cents per 100 lbs. The Ohio Millers State Association has a graded list of annual dues according to the daily mill capacity, from $10 for mills of less than 60 bbls., $15 for 100-200 bbl. mills, and higher for larger capacity. (Constitution, art. IV, sec. 1.)

The Cut Sole Manufacturers Association requires a fixed annual payment of $70 (By-laws, art. 5). In the National Association of Sheet and Tin Plate Manufacturers, the dues vary from $100 to $200 per hot mill per year.