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Treasurer: Henry Abbott, Calculagraph Company, New York City.
General Counsel: James A. Emery, Union Trust Building, Washington,
D. C.

Associate Counsel: John C. Gall, Union Trust Building, Washington, D. C.
Secretary and Economist: Noel Sargent, 11 West 42nd Street, New York
City

As one of its many services to members and cooperating bodies the National Association of Manufacturers assists in the formation and guidance of trade and industrial associations, and with advice on labor relations.

Single copies free upon request addressed to the National Association of Manufacturers at 11 West 42nd Street, New York City or Union Trust Bldg., Washington, D. C.

TRADE ASSOCIATION

ORGANIZATION UNDER THE PROPOSED "NATIONAL INDUSTRIAL
RECOVERY ACT"

Wagner bill introduced.-On May 17th, 1933, Senator Wagner of New York, introduced in the Senate a bill (S. 1712) "to encourage national industrial recovery, to foster fair competition", etc. Hearings have been completed by the Ways and Means Committee of the House of Representatives and are now under way by the Senate Finance Committee. The bill will be reported to the House for action at once. (A copy of the bill and a brief section by section analysis may be obtained free upon request from National Association of Manufacturers, Union Trust Building, Washington).

Importance to trade associations.-This measure is of extreme importance to trade associations. Both the address of President Roosevelt prior to the introduction of the bill, and the terms of the bill itself, evidence a clear intention on the part of the Federal authorities henceforth to deal with organized industry-speaking through representative trade associations.

The following language of the bill is highly significant, indicating not only a purpose to deal through established trade organizations, but to promote organization of trades and industries not now organized:

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SEC. 1. Declaration of Policy.-"It is hereby declared to be the policy of Congress to promote the organization of industry for the purpose of Cooperative action among trade groups.

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SEO. 3 (a) "Upon the application to the President by one or more trade or industrial associations or groups, the President may approve a code or codes of fair competition for the trade or industry or subdivision thereof, represented by the applicant or applicants

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SEC. 3 (b) "After the President shall have approved any such code, the provisions of such code shall be the standards of fair competition for such trade or industry or subdivision thereof.

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SEC. 3 (d) "Upon his own motion, or if complaint is made to the President that abuses inimical to the public interest and contrary to the policy herein declared are prevalent in any trade or industry or subdivision thereof, and if no code of fair competition therefor has theretofore been approved by the President, the President, after such public notice and hearing as he shall specify, may prescribe and approve a code of fair competition for such trade or industry or subdivision thereof, which shall have the same effect as a code of fair competition approved by the President under subsection (a) of this section."

Prompt organization essential. There are other provisions referring specifically to trade associations, but the foregoing quotations are sufficient to show an intent that trades, industries and subdivisions thereof not now organized shall set up adequate machinery for dealing with the governmental agency or agencies to be created for administering the act. Indeed, self-organization and self-regulation are the only alternatives to the Federal government actually writing the rules of conduct for industries under the proposed law. Preliminary questions.-Several questions naturally arise with respect to organization of trade associations. Is it better to incorporate or to operate as a voluntary unincorporated association? Should dues be a flat sum, or graduated on some such basis as capital, number of employes, tonnage, or some

other factor? Should headquarters be maintained in Washington, or elsewhere? What are the qualifications for an executive, to manage the affairs of the association?

There are no standard answers to these questions. Each group contemplating organization must answer them in the light of its own situation, and in the light of the things it hopes to accomplish through an association. There are many incorporated associations; there are perhaps more unincorporated ones. The above and many other dues bases are now in use. Our counsel, located in the Union Trust Building, Washington, will be glad to provide information, upon request, which may assist manufacturers desirous of answering the above pre-organization questions.

Cautionary provisions in proposed law. The proposed law provides that any association offering a code of trade practices for approval must file a statement containing such information relating to its activities as the President shall prescribe, and he is authorzed to prescribe regulations "to insure that any organization availing itself of the benefits shall be truly representative of the trade or industry or subdivision thereof Furthermore, such organization must "impose no inequitable restrictions on admission to membership therein".

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Constitution and by-laws

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In contemplation of law, all those provisions made by a membership association for the conduct of its internal affairs, regulating admissions to membership, prescribing dues, and describing rights and obligations of members, are by-laws. For convenience, however, they are often divided into two parts, the one termed a Constitution and the other By-Laws. This is not essential, and is a matter for decision according to the character of organization, the nature of its objects, etc.

The Membership Corporations Law of New York, under which the National Association of Manufacturers is incorporated, provides (Sec. 8) :

"By-Laws.-The by-laws of a membership corporation, created by or under a general or special law, may be divided into different classes and designated as constitution, by-laws, rules, regulations or otherwise, and may provide different methods for amending and repealing such classes, respectively.

"The by-laws of any such corporation may make provisions, not inconsistent with law or with its certificate of incorporation regulating the admission, voluntary withdrawal, censure, suspension and expulsion of members; the fees and dues of members and the termination of membership on non-payment thereof or otherwise; the number, times and manner of choosing, qualifications, terms of office, official designations, powers, duties and compensation of its officers; what shall constitute a vacancy in the office of any such officer and the manner of filling it; the number of members, not less than one-third, or if one-third be nine or more, not less than nine, whose presence shall be necessary to constitute a quorum at its meetings; the qualifications of voters at its meetings; the eligi bility of members to be directors; and the classification of its directors into not more than five classes, so that the term of office of all the directors of one class only shall expire each year, and that the term of office of their successors shall be as many years as there are classes, but not so as to change the terms of office of any director then in office.

"Such by-laws may authorize holders of the bonds of the corporation secured by mortgage upon its property, to vote for the directors thereof, and may appor tion the number of votes each such bondholder may cast to the amount of such bonds held by him."

An examination of the by-laws of more than fifty leading trade associations discloses that fully half of them follow the practice of having by-laws only, in name as well as in fact, and have dispensed with divisions into Constitution and By-Laws. Where the rules are separated however, the Constitution ordinarily embraces only those things which are more permanent in character, e. g., nam of the organization, objects, membership qualifications, officers, meetings, and a provision for amendments. More detailed regulations for the internal govern ment, fixing amount of dues, prescribing duties of the several officers, and mak ing provision for the various committees, are embraced in the by-laws.

Below we have outlined suggestions for a set of by-laws for a trade association. The purpose is merely to suggest the form, together with a specification of subjects almost uniformly covered in association by-laws. Infinite variations are of course possible. If, however, the form outlined proves helpful to those desiring to proceed promptly to take advantage of the pending bill as soon as it becomes operative, our purpose will have been accomplished.

To existing trade organizations.-A word of caution to existing trade associations may not be amiss: Now is a good time to look over your certificate of incorporation, if you are incorporated, and see whether there is anything in it which may preclude you from taking full advantage of the proposed law. If so, you may be able to secure needed amendments. And you may wish to review and revise your present by-laws.

Functions of a trade association.-Each trade association must, of course, adapt its own set-up to the conditions and requirements of its particular industry. But, eliminating the purely scientific and technical aspects of an industry, each association will find it advisable to carefully consider the best means of dealing with the following subjects (assuming that the particular problems are of real importance to the industry). The first seven of these subjects are suggested as parts of the codes of fair competition, and are there dealt with more fully. 1. Labor

2. Costs and Prices

3. Production Control

4. Marketing

5. Trade Ethics

6. Relations with Other Industries

7. Relations with Government

8. Legal Department

9. Legislation

10. Statistics

11. Tariff

12. Taxation

13. Transportation

14. Foreign Trade

15. Joint purchasing

16. Interchange of patent rights

17. Cooperative insurance.

18. Public Relations and Publicity

19. Field Work and Membership

20. General Management (including correlation of other activities)

A newly-formed association should consider which of the above (and any others deemed necessary) divisions it should cover; the best means of covering them; the personnel involved.

Every existing association should carefully examine its operations in the light of the present situation and the future outlook.

Suggestions as to codes of fair competition.-A trade or industrial association or group "truly representative of the trade or industry or subdivision thereof" (section 6b) is authorized to present for approval a "code or codes of fair competition for the trade or industry or subdivision thereof" (section 3a). The President of the United States may prescribe a fee for the filing of codes of fair competition (section 9a).

Such codes must tend to effectuate the general policy of the Act and must not be designed to (section 3a):

(a) promote monopolies; or

(b) eliminate or oppress small enterprises; or

(c) discriminate against small enterprises.

Such codes must provide (section 7a):

(1) That "employes shall have the right to organize and bargain collectively through representatives of their own choosing;"

(2) That no employe and no one seeking employment "shall be required as a condition of employment to join any company union or to refrain from joining a labor organization of his own choosing";

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(3) That employers "shall comply with the maximum hours of labor, minimum rates of pay, and other working conditions, approved or prescribed by the President"; and must also provide

(4) That the President may "cancel or modify any competition" (section 9b).

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code of fair

Every association which has a code or is preparing one should immediately see to it that the code is in accordance with the foregoing.

It is suggested that in connection with any existing or proposed code every association or group should appoint a committee on each of the following subjects (and such others as may be pertinent to its own trade or industry); (1) Labor (wages, hours, conditions);

(2) Costs and Prices (to consider prevention of sales below cost of production; it might be necessary to provide for determination of average and marginal costs, either directly through the association or through an impartial outside firm of auditors and accountants; consideration of requiring reports on individual sales to statistical bureaus existing or to be formed; development of uniform cost accounting; development of uniform trade terms).

(3) Production Control (balancing of production to current demand; possibly also distribution of production as between territories or individual plants; use of statistical bureau or special accountants).

(4) Marketing (group selling; division of consuming territory into marketing areas, providing for plants best equipped to serve particular markets to concentrate sales efforts in such districts; adoption of uniform grading of products; simplification and standardization of products; cooperative advertising for industry; collection and interchange of credit information).

(5) Trade Ethics (provision for uniform adherence to all provisions of codes; standardization of terms of sale, to prevent circumvention of minimum price provisions; elimination of unfair selling methods; commercial arbitration).

(6) Relations with other Industries and Government (integrate trade with other industries of country; maintain contact with Government Administration; advise members of attitude of Government, industry as a whole, public and labor, towards the industry and all proposals for new or modified governmental or self-regulation).

ARTICLE V-DUES

SECTION 1. Each individual, firm, or corporation holding active membership shall pay to the order of the Treasurer of the Association $------ annually in advance so long as such membership shall continue.

EXHIBIT 5314

NATIONAL ASSOCIATION OF MANUFACTURERS OF THE UNITED STATES

General Offices: 11 West 42d Street, New York City

Law Department: Union Trust Building, Washington, D. C.

NEW YORK CITY, May 25, 1933.

To Executives of Local Industrial Associations:

A conference of extreme importance to local industrial associations throughout the country will be held at the Mayflower Hotel, Washington, D. C., 10 A. M., Standard Time, Thursday, June 1, 1933, to discuss:

HOW CAN INDUSTRIAL ASSOCIATIONS OPERATE TO BEST ADVANTAGE WHEN THE INDUSTRIAL RECOVERY ACT BECOMES EFFECTIVE?

State association executives will meet jointly with local association executives, the meeting being confined to general industry associations as distinct from the single trade association. All who come should be prepared to participate in the discussion.

In addition to the subject mentioned above, an analysis will be given of the Labor Provisions of the Proposed Legislation.

This is not a general conference of manufacturers, but is primarily for industrial association executives. We urge that your association be represented by both president and managing executive.

Please advise at your early convenience as to the names of your representatives at the June 1 Conference.

Very truly yours,

ROBERT L. LUND, President
NOEL SARGENT, Secretary

EXHIBIT 5315 1

Preliminary Draft

May 31, 1933

A "MODEL CODE" FOR SELF-GOVERNING INDUSTRIES UNDER "THE NATIONAL INDUSTRIAL RECOVERY ACT"

By Dr. A. P. Haake, Managing Director, National Association of Furniture Manufacturers, Special Advisor on Codes of Fair Competition to the National Association of Manufacturers

Issued by the NATIONAL ASSOCIATION OF MANUFACTURERS, New York City and Washington, D. C.

Extra single copies free: Union Trust Building, Washington, D. C., 11 West 42nd Street, New York City

In cooperation with the American Trade Association Executives, Hotel Statler, Detroit, Michigan

MAY 31, 1933.

FOREWORD

In the preparation of this "code" liberal use has been made of materials and assistance from the Bureau of Foreign & Domestic Commerce of the Department of Commerce.

I also acknowledge the cooperation in the preparation of this pamphlet of John C. Gall, Associate Counsel, and Noel Sargent, Economist, both of the National Association of Manufacturers.

TABLE OF CONTENTS

[Charts omitted]

A. P. HAAKE.

Chart I. The bill as a whole.

Chart II. The Trade Association provisions-

Introduction ---

Sources of information of assistance in adapting this Code to your Industry; and a Warning....

"The code of fair competition"

Purpose

Participation--

Divisions of the Industry.

Powers

Names of Divisions_.

Executive Committee

Division Regulations_

Labor Code----
Production Codes.

Cost Codes___.

'All footnotes in this exhibit are a part thereof.

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