The Functions of Trade Associations
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Representative Bodies are Growing in Number and Importance, Therefore By These Observations on Their Status and Work are Worthy of Consideration " T antalus" THE roles and functions of trade associations form a subject which is muchto the fore at the present time, Considerable interest has been created, and heated controversy aroused, by protagonists and opponents alike, and the subject is one which concerns the public generally. Usually, when reference is made to a trade association, the mental picture created by the term is one in which industrialists and manufacturers are engaged in _price fixing and the control of production and output, and whose main concern it is to protect the particular industry and processes, to safeguard monopoly interests and build bulwarks around cartels.
It should be borne in mind, however, that the functions of trade associations are not concerned wholly with the control of prices and kindred matters. The activities of such bodies should include research, improvement 'of labour relationships, negotiations with Government Departments, and a tirst-class service bureau for the supply of information and advice to members. If such, objectives be pursued with zeal and determination, members, surely, must benefit and, moreover, the community as a whole will do so, from the results of a well-planned and efficient organization. If, however, a trade association seeks to interfere with the natural laws of competition, then it becomes a danger instead of an instrument for good.
Undoubtedly, these associations have an important part to play in the future, but they must acknowledge and accept their obligations to all parties concerned. Activities must not be confined to taking measures to further the interests of a powerful minority, nor should they be used as a medium to promote the selfish desires of individuals. The aim and object should be to bestow upon .the majority of members the greatest number of benefits. Added to this there should be an efficient service, and the maxim should be: " One for all and all for one."
Awakening Government Interest It is generally accepted that, in the future, Governments will be more deeply interested in all matters concerning trade and industry and that, consquently, they will wield greater influence than in the past. The natural sequence is that the Governments will rely to a great extent upon trade associations for reliable information and a faithful reflection of the wishes of the members concerned. This closer relationship between Governments and, industry, via trade associations, assuredly will be an important development in the post-war era. Therefore, it is incumbent upon associations to keep step with the march of time; to be up to date and alert, progressive in thought and action. There is rather a tendency for them to become autocratic and dictatorial bodies, seeking to impose the decisions of the few upon the general body of the members. Herein lies a danger in the matter of discussions or negotiations with Government Departments.
In the "New Order" any possibility of such danger must be eliminated. Full provision must be made and every precaution taken to ensure that the views and wishes of the members are sought before negotiations are opened or decisions made. Further, no important agreement with a Government Department or any other body should be arrived at before approval has been obtained from the members.
Autocratic tendencies are 'often in evidence in matters relating to price-fixing agreements. A means for enforcement -favoured by trade associations is that of the with-P holding of supplies from members who, 'it is alleged, sell articles below the prices fixed. In such cases monetary penalties are imposed and the offending members are black-listed. By such means monopolies and cartels attain power and strength and, accordingly, are able to maintain price levels which may be prejudicial to the consumers. In effect it means that only he who observes the code will be permitted to trade. It is stated authoritatively that powerful groupings inflate the prices of some 2,500 different classes of goods which are sold over the counter, thus levying a private tax upon the consumers. Already the Board of Trade has indicated its concern at the growth of these practices It may be remembered that, some time ago, the proposal was made that a code of conduct should be imposed upon members of road-transport organizations. The suggestion, however, was accorded such a cold reception that nothing more has been heard in the matter. This does not mean, of course, that the questiOn may not he revived at some 'future date'and, in any such event, it should be opposed most strenuously.
The opinion of Mr. George W. Lucas, president of the Motor Agents' Association,, is well worth recording. He believes that trade associations formed for the purpose of fixing and maintaining prices should be compelled, in future, to carry out their operations in public. This, at least, would allow the-consuming public to know the cost of extravagant and wasteful methods of production and distribution. Mr. Lucas feels that there should be greater willingness upon the part of industries and trades represented by associations to produce, for the information of the public, the fullest possible statistical facts regarding costs and profits. Should this proposal be carried into effect it would succeedin lifting the veil of secrecy surrounding the activities of such bodies.
Work of F.B.I. Committee
Regarding the role of trade associations, added importance is lent to the subject by a report on " The Organization of British Industry " adopted by the Grand Council of the Federation of British Industries. This has been submitted to the Board of Trade for the consideration of the Government. The F.B.I. Committee, in examining the scope and structure of. industrial and trade associations, received evidence from some 130 bodies, which included ths following valuable observations and suggestions:— Satisfactory co-operation with the Government will be impossible unless industry is adequately organized through trade associations. The ideal, from the national point of view, would be that the Government should confine itself to producing a framework of national economic policy, leaving the details to be filled in by working associations provided by the industries themselves."
As to the functions of trade associations, the following are some of the more important suggestions offered:— " To act as an official channel of communication between the industry and the Government on any matter of commercial or econothic policy affecting the industry.
" To enable an industry to act as a unit, whether for co-operation with other interests or industries or for dealing with subjects which concern their section of industry as a whole.
"To assist in solving the problem of trade-cycle fluctuations.
"To maintain the conditions of trading and to regulate trade practices within the industry.
"To collect statistics and promote interchange of information between members.
"To promote the technical and general knowledge of those engaged in the industry.
"To assist in the improvement of service to the customer.
" An effective association must be staffed by persons trained through knowledge and experience to handle the, technical and commercial problems involved."
The final suggestion is well worth noting and is to the effect that, as a general principle, membership of an association should not be compulsory.
Much of the foregoing can be applied to the road transport industry, and the National Road Transport Federation would do well to give serious consideration to the report of the F.B.I. Committee.