to secure full protection. There can be no question of the legality of such helpful work as this.

Designs. The Association of Dress Manufacturers has in a similar way created a style registration bureau.23 This bureau sketches and records the original creations of its members as a means of protecting their rights. It is hoped that this agency will be of aid in eliminating the style pilfering prevalent in the industry. A bureau of this kind could be of considerable value in protecting its members from unfair competition in the form of imitative designs of articles or containers.

Insurance. Some associations have found the organization and operation of insurance agencies not only a means of securing a reduction in rates, but also a valuable means of financing their organizations.24

The Paint Trade Mutual Fire Insurance Company is under the control of the Paint, Oil and Varnish Association. This company started without capital, now carries $5,000,000 of insurance in force, and during its first ten years has built up a surplus of over $50,000. The purpose behind its promotion was to lessen paint fire hazard and reduce insurance premiums by having rates fixed and risks rated by men who knew something about the industry. It has succeeded in reducing the hazards, and has cut down the rates in many places very substantially. This work is viewed by the association as one of its most successful coöperative achievements.25

The silk association due to an increase in transit liability insurance in 1918 formed a stock company under the name Textile Transit Insurance Company, the stock being taken by members of the association.26 The purpose of this organization is to provide transit insurance at a rate determined by actual

23 National Trade Associations: A Study by the National Assn. of Manufacturers, 1922, p. 33.

24 The following associations handle insurance directly or in an advisory way: Silk Assn. of America, National Paint, Oil and Varnish Assn., National Assn. of Farm Equipment Mfrs., National Assn. of Sheet Metal Contractors, Associated General Contractors of America, Southern Pine Assn. and American Coat and Suit Mfrs'. Assn.

25 Report of Fire Insurance Committee: Reports of Committees, Paint Mfrs'. Assn. of the U. S., Nov. 18, 1920, p. 13.

26 The Silk Worm, February, 1921.

losses plus a minimum overhead. Statistics compiled by the association on losses occurring while shipments were en route proved that an immense saving can be made for the members of the association, who prior to the formation of this company were bearing the burden of undesirable risks. Various state hardware associations have also formed mutual fire insurance. companies.27 The Associated General Contractors of America have formed a corporation known as the Contractors' Service Corporation, all of the stock of which is owned by the association or its directors.28 This corporation is licensed to act as a broker to handle insurance and bonding business. The dividends in the company in one year amounted to $4,500, although only a few of the members did business through the corporation. The insurance bonding committee of this association asserts that if the membership were to give the corporation ten per cent of their business the entire work of the association would be financed without the assessment of any dues. There are several associations who handle employers' liability insurance. Mutual insurance companies organized within an industry, even though maintained in a simple way may exert a very healthy influence in keeping down rates by reason of their competition.

Other associations deal with insurance in an advisory way only. The Refractories Manufacturers' Association has recently employed insurance experts to make a general survey of plants owned and operated by the members. The purpose of this survey will be to suggest improvements to members which will reduce fire hazards, to secure complete data as to the risks in order to present comprehensive information to the insurance rate bureau, in an effort to secure reduced rates, and also to study policies in order to secure the maximum of coverage for a minimum premium.29 The Southern Pine Association, whose members pay out in insurance premiums annually over one and one-half million dollars has likewise established an insurance department in the association.30 Extensive plans of saw mill

27 Proceedings, National Assn. of Sheet Metal Contractors, 1914, p. 9. 28 Bulletin of Associated General Contractors, February, 1921, p. 13. 29 National Trade Assn.: A Study by the National Assn. of Mfrs., 1922, p. 55.

30 Ibid., p. 157.

properties have been prepared upon which fire insurance rates have been reduced. Policies of the members are examined to assure them proper protection, and the association has also represented its members in the adjustment of fire losses. The National Association of Farm Implement Manufacturers also retains insurance advisors to protect its membership in the placing of insurance.31

Work of this general character may be of great value. The Insurance Committee of the National Fertilizer Association report a saving in insurance premiums of over $40,000 on the rates of stock fire insurance companies for 26 members of the association through association handling of their insurance.32

Missing Property Bureaus.-Due to an alarming increase in silk thefts the silk industry was faced with the necessity of coöperative action to cope with the evil. The missing property bureau was therefore created.33 Bulletins were sent to members advising them as to the precautions to be taken in making shipments, regular bulletins are issued in which are reported all goods reported missing, stolen or in the no-mark department of the common carriers, the publication of each item being repeated in each issue until located. Rewards are being offered for the prevention of thefts. Records of suspects and convicted thieves are being kept, express and freight terminals are being watched, and every effort is being made to make the stealing of silks a hazardous and unprofitable venture.3

34

The Vigilance Committee of the National Jewelers' Board of Trade has also worked out an efficient system of protection against theft.35

Other Activities.-The value of credit bureaus to the members of an association has already been discussed. Distributors of bulk commodities also often find themselves seriously embar

31 Letter, H. J. Samert, Secretary, April 27, 1922.

32 Proceeding, Twenty-fifth Annual Meeting, 1918, p. 32.

33 Forty-sixth Annual Meeting, Silk Assn. of America, 1918, p. 36. 34 "Organizing Against the Silk Thief," C. P. Russell, Printers' Ink, Jan. 15, 1920 (vol. 110), p. 49.

35 "Queer Trade Problems Manufacturers Are Unravelling Through Cooperation," C. H. Rohrbach and John Allen Murphy, Printers' Ink, Sept. 23, 1920, p. 76.

rassed by rejections of shipments. Some buyers of the unscrupulous type do not hesitate to take advantage of the seller who is located at a distant point and refuse shipments merely to secure a reduction in price. Demurrage, penalties, and other charges of the carriers compel the shipper to make a sacrifice or pay excessive storage charges. To protect their members the wholesale lumber dealers have investigated and reported to their members the storage yards throughout the United States which will store lumber at a reasonable charge.36 To further protect its membership, this association, through its counsel, has made arrangements with attorneys in every important producing and distributing lumber center to handle the cases of its members.

Thus, in one way and another business men without losing their spirit of competition can work together in the protection of their rights. Such work stabilizes business conditions by eliminating unintentional imposition on the rights of others and by putting the whole force of an industry against those who would violate the law or the rules of business decency. Government itself is in considerable part founded on the idea of protection of property. Organized industry as it aids in the protecting of property rights of its members and others, supplements and makes more effective the protection which Government proposes to give to industry.

36 Bulletin, American Wholesale Lumber Assn., Jan. 13, 1922.

CHAPTER XII

COMMERCIAL ARBITRATION

In every industry, there are many things constantly creating disputes and misunderstandings. The products of the industry may not be standardized with the result that the parties are not really agreed as to the subject matter of their transaction. The general practice in making sales in some industries in this country is so informal that important parts of the transaction are not even reduced to writing, which creates endless possibilities for misunderstanding. Trade terms may have a varied or indefinite meaning in different localities. The customs of a trade may be vague and uncertain, one party assuming the other party in making the contract has in mind a usage which the other party in fact in no way recognizes as existent. A buyer's market or a seller's market, as the case may be, may enable one party to force an unfair advantage even though his action violates the law applicable to the transaction. The cumulative effect of these and other facts sometimes creates a condition of extreme distrust between the producing and distributing branches of an industry, which is most harmful in its effects. In such a situation, the costly, tedious and provoking lawsuit is an irritant, rather than a remedy.

Development of Arbitration.-Centuries ago, the merchants in European countries sought to arbitrate their trade disputes through informal tribunals of their fellow tradesmen. The judges in those days, often dependent for their income on the volume of cases in their courts, did not look on such action with a generous or philanthropic spirit, seeing in it only what they felt to be an attempt to oust the courts of jurisdiction over such matters. By their decisions they attempted to restrict the use of arbitration. The precedents thus established in jealousy, have carried down through the common law to modern times, greatly hampering and delaying the development of the use of arbitration. But modern courts over-burdened with work