force government officials to draft regulations, which they are under a legal duty to promulgate, with only a partial knowledge of the facts because of the failure of the industry to cooperate in furnishing complete data, the sure penalty is unintelligent and restrictive regulations. In the shifting social, economic and political movements daily affecting commerce, should not every industry for its own interest, as well as the public interest, be effectively organized to see that the true conditions of an industry are at least brought to the attention of our legislators and our commissions. The voice of an organized industry is greatly strengthened when it fortifies its opinions with facts.

Value of Organization in Relations with Government.-An industry which is thoroughly organized can function effectively in all its relations with the Government. In tariff hearings, its cost accounting work enables it to present accurate data on labor costs and on the details of any items of cost. Taxes, likewise, are of immense importance to most industries. In the formulation of legislation with reference to luxury taxes, sales taxes, excess profits taxes and what not, an association's expert statistical and economic organization can quickly gather relevant data and make an effective portrayal of the certain economic effects of such legislation. Facts, not theory, with reference to such matters as depletion, depreciation, average profits, valuations, and so on can be mustered to avoid unreasonable tax regulations. Transportation rates, in view of the highly specialized organization of the carriers for handling such matters, can be held at a reasonable level, only by a convincing proof that proposed rates or changes are unreasonable,-sometimes a difficult task, unless expert traffic men schooled in the facts of the industry are instantly available to make a strong presentation. Proposed regulations affecting competition, by such bodies as the Federal Trade Commission, can be supported or combated by proper action, if the industry knows and presents its facts; otherwise totally inadequate evidence in a single proceeding may mislead the commission and result in the establishment of hampering rules of law. In the formulation of government standards, association research bureaus whose experts are also fully informed as to factory operations and trade conditions, can substitute for mere assertions irrebuttable data.

Expert coöperation with the agencies of government, as, for example, such as that now carried on by several associations with the Department of Commerce, may save enormous economic waste to the industry and to the public. In endless ways, with the growing complication of society, every industry faces restrictions and demands for restrictions, which can only be defeated or directed along constructive channels by convincing proof of their harmfulness. And in many industries, effective organization can make possible the realization of constructive plans for the good of the industry and the general public.

Some of the great associations of the country, such as the National Automobile Chamber of Commerce, the National Association of Lumber Manufacturers, the American Railway Association, the Southern Pine Association, the Portland Cement Association, the Silk Association of America, the National Association of Manufacturers, the National Coal Association, and others, are organized in this manner, and their comprehensive organization and presentation of business and economic data, has repeatedly been the means of preventing the enactment of unwise legislation, of defeating harmful regulations, and of saving their industries huge sums of money. The organization of all branches of an industry into a single unit greatly strengthens the industry in its relations with the government. Typical of such organizations are the National Dairy Products Committee, the American Lumber Congress, and the American Construction Council. Every industry needs such an organization for the study of common problems and for the personal contact between leaders of the industry which corrects misunderstandings and betters trade relations.

National legislation and regulations have the most far-reaching effects for good or ill. They can work immeasurable harm or great benefit. It seems strange indeed that each industry does not maintain an efficient organization qualified, by reason of ability and possession of facts, to cope with the constantly recurring situations which arise in their relations with the Government. Sometimes, of course, an industry thrives on the concealment of facts. When an association, for example, endeavors to secure an excessive duty per pound on a commodity which sells in the market on a tonnage basis, as has been attempted,

such an industry naturally wants to conceal facts, but such an attitude is representative of very few industries. The lack of effective organization is due in part to the apparent impossibility of convincing many business men that there is such a thing as an indirect or intangible benefit, which is of practical benefit to him. The greatest benefits from association activities, are often the intangible benefits, such as, the stabilization of the industry, the elimination of unfair trade practices, or the defeat of regulations which may work great harm without a corresponding public benefit. The greatest difficulty faced by every association in the conduct of its work, is to convince its own membership that the value of coöperative effort, effectively organized, is worth to each member at least one-half the salary of an office boy. But the exceptional organizations of some industries are an earnest of the future. Ultimately, beyond doubt, every industry of any importance in this country will be so organized that it can perform the duty it owes itself to coöperate with the Government in working out a constructive program, based upon facts, in order that the exercise of government control may be reasonable, fair and in the interest of both the industry and the general public.

CHAPTER XVI

COLLECTIVE ACTIVITIES PROHIBITED BY LAW1

A TRADE association as such is not unlawful. Society itself is an organization and it does not object to any business organization the purposes of which are lawful. The courts recognize the necessity of associations for the improvement and progress of industry and no legislation or public policy forbids such asso

1 The activities of a trade association are the acts of its combined membership. A member of an unincorporated association having knowledge of the policies of the association and acting in conformity with them, is a party to such action and is liable if the action is unlawful. Loder vs Jayne, 142 Fed. 1010, 1018 (1906). Indeed, such liability attaches if he knows of the illegal purpose of the association and its illegal methods, if he remains a member without objection to any illegal action, even though there is no proof of his individual participation in any overt act. Knauer vs United States, 237 Fed. 8, 20 (1916). A member whose association is an illegal combination in restraint of trade is liable for damages to another resulting from the unlawful acts of the association, even though he had no direct contractual relationship with him. City of Atlanta vs Chattanooga Foundry & Pipe Works et al., 127 Fed. 23, 26 (1903). An association is under a duty if members under its control commit unauthorized acts in furtherance of a general program of the association, to disavow such acts by causing such offending members to be disciplined or expelled or the association will be deemed liable for such acts. Alaska Steamship Company vs International Longshoremen's Assn. et al., 236 Fed. 964, 972 (1916). By Section 14 of the Clayton Act, directors, officers and agents of a corporation authorizing or doing acts in violation of the anti-trust acts are liable to fine and imprisonment. Stockholders in an incorporated association who directly participate in the unlawful acts are individually liable. Fletcher's Cyclopedia on Corporations, Vol. 6, Section 4138. Every member of a trade association ought, therefore, to know in a general way the types of combined actions which are prohibited by the anti-trust laws, and every association should have as its counsel an attorney fully informed as to the scope and purposes of this legislation.

In this discussion not only court decisions, but also indictments, petitions, and consent decrees are cited. While not controlling or legal precedents, indictments and consent decrees are persuasive evidence of the attitude of the government which no association official can afford to ignore. 2 Gompers vs Buck Stove & Range Co., 221 U. S. 418, 439 (1911).

ciations when organized and maintained for proper purposes.3 But the test of lawfulness of an act by a trade association is more severe than the test applied to individual acts. There is a potency in numbers either for good or evil which causes the law to view with extreme care any associated action which may affect competition. This view is expressed in the following language by a Pennsylvania Court quoted by Justice Harlan in the Knight Case:

"The increase of power by combination of means, being in geometrical proportion to the number concerned, an association may be able to give an impulse not only oppressive to individuals but mischievous to the public at large; and it is the employment of an engine so powerful and dangerous that gives criminality to an act that would be perfectly innocent, at least in a legal view, when done by an individual." 4

This difference between individual and associated power may be so great in its effect upon public and private interest as to cease to be simply one of degree and to reach the dignity of one in kind. Therefore, an act harmless when done by one may become a public wrong when done by many acting in concert, if the result is hurtful to the public or to the individual against whom the concerted action is directed. When an association adopts unlawful purposes and does unlawful acts, the association itself becomes unlawful and the original good purpose of its members is not a defense."

The manner in which a restraint of trade is effected is not material, for the courts do not hesitate to disregard the form

3 United States vs U. S. Steel Corp., 223 Fed. 55, 154-155 (1915); United States vs American Linseed Co. et al., 275 Fed. 939, 942 (1921). See also, United States vs New England Fish Exchange, 258 Fed. 742, 749 (1919).

4 Commonwealth vs Carlisle, Brightly (Penn.) 36, 41; United States vs E. C. Knight Co., 156 U. S. 1, 35 (1895).

5 Martell vs White, 185 Mass. 255, 256.

6 Grenada Lumber Company vs Mississippi, 217 U. S. 433, 440 (1910); Eastern States Retail Lumber Dealers' Assn. vs United States, 234 U. S. 600, 614 (1914).

7 United States vs Workingmen's Amalgamated Council of New Orleans et al., 54 Fed. 999, 1000 (1893).