in grain binders were seeking the support of manufacturers and wholesalers in the establishment and maintenance of resale prices. In 1915 the Western Association of Implement and Vehicle Dealers indorsed the Stevens bill1 giving manufacturers the right to fix resale prices.

The nature of many articles handled by the stationery trade and the fact that the manufacturers are members of the National Association of Stationers and Manufacturers has made for a more or less general adoption of a policy calculated to fix resale prices. This policy has been greatly strengthened by the cooperation and support of the association's price committees covering the various classes of goods, and by agitation and discussion at the annual conventions. It seems fairly clear that in a number of cases at least, the initiative. in forming such a policy rested with the retailers.

Section 19. Supplying insurance to members.

Many of the trade associations interest themselves in the question of insurance. Heretofore this has been confined almost entirely to fire insurance, but the passing of employers' liability laws in many of the States has caused some associations to turn their attention to industrial indemnity insurance.

The reasons which have caused associations to take up the matter of insurance are twofold-the seeking of lower insurance costs, and the increasing of their membership by increasing their usefulness. In their activities in this field the associations may be grouped under two heads, viz:

1. Those which seek mainly to lower the rates of the regular insurance companies.

2. Those which have established special methods of insurance for their members.

Most of the associations fall under the first group. Their work is generally carried on through committees or insurance departments and consists largely of education among the members in methods of reducing the fire risks by the use of safety appliances and the elimination of possible causes of fire. On account of such improvements the insurance companies are asked to reduce their rates in the particular industry. Some of the associations also seek to reduce the rates by acting as agents for particular companies in securing the insurance of their members, thus eliminating for the insurance companies the usual cost of securing business.

The more important work in the insurance field is performed by those associations which fall under the second group. This includes not only those associations which have established their own insurance companies, but those which subscribe to the insurance companies

1 H. R. 13305, 63d Cong.

of other associations. There are a considerable number of such companies. They have saved their members large amounts which would otherwise have gone for the expenses and profits of regular companies, and some of them have also greatly reduced the fire loss and the fire hazard of their members by investigation and education.

Section 20. Foreign trade.

Some associations have given considerable attention to the matter of foreign trade. Many have made it the subject of discussion at their conventions, and some have appointed permanent committees to deal with the questions arising in connection therewith. A number of associations have recognized the importance of obtaining the assistance of the Government in extending the foreign trade of their members. Information based on the Government's consular reports is distributed by some associations.

Section 21. Publications.

The associations publish a variety of material. Some of the smaller associations limit their publications to letters sent to members, weekly or monthly or without regular time of issue. Many publish occasional bulletins, reports, or circulars on topics of interest to their members. A number of the associations publish books, such as yearbooks, rating books, records of proceedings, and the like. Many, especially of the larger, publish weekly, monthly, or quarterly magazines or bulletins as their official organs. Others merely adopt some current publication as their official organ.

JUDICIAL ATTITUDE TOWARD ACTIVITIES OF TRADE ASSOCIATIONS AFFECTING COMPETITION.

Trade associations, from the legal point of view, are subject to the same restrictions and limitations imposed on individuals, with the additional limitation that "an act harmless when done by one person may become a public wrong when done by many acting in concert in pursuance of a conspiracy."1

Trade associations, being nothing more than combinations of individuals, firms, or corporations, engaged in a particular line of trade and acting usually under some kind of formal organization, are not of themselves obnoxious to the law. There are, in fact, many worthy and legitimate purposes for which such associations may be formed; for example, protection against insolvent debtors, prevention of dishonest practices, publication of statistical data, social intercourse, etc.; but no matter how innocent the purpose, or how plausible the profession of good faith, if its actions result in restraining the legal

1 Grenada Lumber Co. v. Mississippi, 217 U. S., 433 (1910); Eastern States Lumber Dealers' Association v. United States, 224 U. S., 600 (1914).

rights of either comembers or others, such actions will be condemned by the courts.1

An interesting example of an association whose purpose was held to be legal, while certain of its acts were condemned, is found in United States v. Southern Wholesale Grocers' Association. The purpose of this association, as stated in its constitution and bylaws, was the promotion of harmony between the members of the association and the manufacturers of food products, to the end

1 A very interesting exposition of the law relating to cooperative effort is found in the following letter by an eminent member of the American bar:

[Letterhead of Lehmann & Lehmann, attorneys, St. Louis, Mo., Apr. 8, 1909.]

Mr. GEORGE K. SMITH,

St. Louis, Missouri.

DEAR SIR: I have given due consideration to the matters we talked about on Tuesday and have found no occasion 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 details as to 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 altogether 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 therefore no course of conduct from which such an agreement or understanding 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 or promised was communicated to the others and if this were followed by a limitation of the output, a court or jury would be very likely to infer, despite all protestations to the contrary, that the limitation of output was the result of an agreement or understanding.

So, too, if one lumberman after another declares that he will hereafter curtail his production and they inform each other of this purpose and then they act in accordance with their declarations, a court or jury would be very likely to infer that this was all in pursuance of an agreement or understanding.

What 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 daily newspapers. They show, for example, the daily receipts of grain and live stock, the prices received, information as to visible supply, etc., and farmers individually govern themselves accordingly. The man not pressed for money does not ship his grain or live stock to a glutted market. The lumberman may undoubtedly get like information as to his business and may determine his conduct by it.

If

But the action based upon this information must be individual and independent. he concludes for himself that the market is overloaded and that he can not 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 he will continue as he is doing, unless his competitors will also curtail or cease production, and there is a curtailment or cessation as the result of any sort of preconcert, agreement or understanding, the law is violated.

The conditions of the trade, however bad; the price of lumber however low; the persistence of lumbermen in cutting an amount above the market demands; will not legalize an agreement among any number of them to limit the output 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 competitors. This does not prohibit any producer from taking into account all the conditions of business in determining his own conduct, and it does not forbid cooperation for the purpose of obtaining information that is useful to each and to all.

I repeat, however, that beyond the collection and distribution of information as to what is being done, you can not go, and can not state too strongly that any agreement or understanding, no matter how indirect the means by which it is brought about, falls under the ban of the law.

Respectfully, yours,

207 Fed., 434 (1913).

F. W. LEHMANN.

that the wholesale grocers might be recognized as the economical channel of distribution of the products of the manufacturers. In a suit against the association to restrain alleged violations of the Sherman Antitrust Act, the decree, after enjoining certain acts, expressly provided that the association was not restrained from maintaining the organization for social or other purposes than those therein prohibited. It was further held that the addressing of legitimate argument to manufacturers to procure the abandonment by them of a certain policy and the continuance of another did not violate the Sherman Antitrust Act, nor a decree enjoining violations of that act.

In contrast to this case may be cited United States v. Jellico Mountain Coal Co.,1 wherein the purposes of the association, in the opinion of the Federal Court, "could hardly have been more successfully framed to fall within the provisions of the Act of July 2, 1890 [Sherman Antitrust Act], had the objects been to organize a combination, the business of which should subject it to the penalties of that statute."

Consent decrees in suits brought under the Sherman Antitrust Act, namely, decrees in suits wherein defendants have submitted without contest to injunctions prayed for by the prosecution, have, in some instances, exceeded in scope injunctions granted in contested causes. Thus, the "Association of Coaster Brake Licensees," composed of owners of certain patent rights, some of whom also dealt in unpatented articles and all of whom acted under a number of uniform patent-license contracts fixing prices, was declared a combination in restraint of trade and an attempt to monopolize, etc. The decree, after enjoining certain acts (see p. 729), enjoined each of the defendants who had been members of, or who had a share in the business operations of said association from further maintaining the association, or thereafter creating, or participating in any manner whatsoever in, any other association or organization of similar character.2

An abuse of the proper functions of trade associations is found where they are formed ostensibly for legitimate purposes but used as a means for carrying out unlawful ends. Thus, for the purpose of supplying honest information, it is legal, at least under the Missouri antitrust statute, for trade associations to publish statistics giving actual bona fide sales of products and the prices thereof; but the Supreme Court of Missouri has declared that such statistics ought

3

143 Fed., 898, and 46 Fed., 432 (1891).

2 Consent decree, United States v. New Departure Mfg. Co.

Consent decrees affecting trade associations are treated herein rather as showing the attitude of the Government with respect to prosecutions under the Sherman Anti-trust Act than as binding legal precedent.

3 State ex inf. Attorney General v. Arkansas Lumber Co. et al., 169 S. W., 145, 177; 262 Mo., 212 (1914).

to represent current prices based on actual sales or offers to sell or to buy, and "not to misrepresent such prices with a view of boosting any prices of any item or items."

Another instance of abuse is found in a Missouri case which condemned an association maintained ostensibly for social purposes but in reality used for the purpose of fixing fire insurance rates.1

A description of the variety of purposes for which trade associations might legally be formed, or the countless differences in the methods of attaining their ends, is not attempted, but some of the more important judicial decisions relating to associations having some degree of formal organization are summarized below, for the purpose of showing the judicial attitude toward trade association activities, the legality of which has been questioned. Probably the greatest number of these decisions treat of activities which have for their purpose (1) the controlling of prices by direct agreement or by the publication of price lists, or, in lines of business where conditions change with each transaction, such as contracting, by either refraining absolutely from submitting bids or by submitting them in such a manner that the contract will be awarded according to a prearranged plan; (2) the prevention of sales by manufacturers to consumers and to so-called "irregular dealers"; (3) the limitation of output; (4) the allotment of customers and the division of territory; and (5) the refusal to extend credit to delinquent debtors. The most usual means by which associations have sought to prevent direct and irregular sales is by boycotting, ordinarily effected through blacklisting or whitelisting, although other forms of coercion have been employed.

The decisions are treated chiefly according to the five purposes mentioned, because this arrangement lends itself more readily than a more formal legal arrangement of cases to the purposes of this part of the chapter, which is intended to describe (a) what purpose the association attempted to accomplish by the acts complained of; (b) what means it took to accomplish that purpose; and (c) what class of law, namely, common law, Federal statutes, or State statutes, was violated thereby.

Section 22. Price control.

As shown in the first part of this chapter, a primary purpose common to various classes of trade associations is to increase returns, usually through increased prices. Association activities having for their purpose the fixing of prices, whether the result is to increase or decrease them, have generally been judicially condemned under the common law and under State and Federal stat

1 State ex rel. Crow, Attorney General, v. Firemen's Fund Insurance Co., 52 S. W., 595; 152 Mo., 1 (1899).