GIFT OF
«
THE PRINCIPLES OF
TRADE GO-OPERATION
CHART OF TRADE CO-OPERATION
I Individual | | Individual | j Individual j | Individual]
GOOD-FELLOWSHIP
(Organization)
COMPREHENSION
(Education — Information)
UNIFORMITY
(Trade Opinion)
HARMONY
(Community Interest)
VOLITION
(Teamwork)
Ethics { [ Methods [ [ Systems | Technics
COMMUNITY EFFICIENCY
(Trade Progress)
THE PRINCIPLES OF
TRADE CO-OPERATION
By R. H. BENNETT
"Co-operation is the Watchword of
Our Day — Co-operation among
Business Men, Co-operation between
Employer and Employe, Co-operation
between Business and Government"
"Awakening of Butiness" by E. N. HURLEY
THE TRADE-LETTER
SAN FRANCISCO
COPYRIGHT, 1918
By R. H. RENNETT
H 1 6 * Market Street
San Francisco
TO THE AWAKENING BUSINESS MAN
THIS WORK IS HOPEFULLY
DEDICATED
888345
A commercial organization philosophy,
clearly defined principles, recognized standard
methods of procedure, absence of trial and error
of experience, method of learning rudiments and
specialized preparation — (not necessarily, but
increasingly academic) — must constitute the
basis of efficiency in commercial, industrial and
civic development of American communities.
Prof. ALFRED L. SMITH of Dartmouth College.
It (business) is not now a frontier of axe and
plow, nor of engines and machinery, but of
Principles and Policies.
To make education effective, we must estab-
lish the principles and policies which are to be
mastered, so that training may form the mind of
the executive more certainly, more rapidly than
unregulated experience can do.
Prof. E. D. JONES, University of Michigan.
PREFACE
THE most urgent need of the times is a revision
of the code of business ethics with community
welfare as the point of attainment. Economic
necessity, in fact, decrees such revision.
The age demands efficiency which cannot be
attained under the unbridled competition now
existing in the trade community.
Competition must be dethroned as the dom-
inating factor in business affairs and selfish
individualism in business must go with it.
Trade development along lines of stability,
efficiency and progress, calls for co-operation —
some true system of co-operation — in which the
principles and facts invoked may be understood
and business men inspired to curb the evils of
unrestricted competition.
Effective co-operation has been lacking in
business because, first, of the absence of known
and accepted fundamentals and, second, of the
lack of some comprehensive educational system.
It is therefore the purpose of this work to
set forth the fundamentals of trade co-operation
and define the lines of the needful education, so
necessary to impress upon the business man's
[v]"
PREFACE
conviction, if he is to emancipate himself and
his trade from the traditional competitive dom-
ination and eventually gratify his aspirations
to elevate his business to the plane of efficiency
and to the standard of morality to which it is
entitled.
I therefore submit to the business man "The
Principles of Trade Go-operaiion" which rep-
resents the cumulative result of many years of
striving in the cause of trade co-operation, with
the sincere hope that it may prove successful in
its purpose.
R. H. BENNETT.
[vi]
CONTENTS
PART I
INTRODUCTORY
Page
All arguments are in favor of co-operation . . .3
Trade organization ...... 4
The matter of education . . . . .5
The groundwork ...... 7
The Trade Secretary 8
The urgent necessity ..... 9
PART II
THEORY, PRACTICE AND EDUCATION OF
TRADE CO-OPERATION
The theory of co-operation . . . . .13
The practice ....... 17
The education . . . . . . .22
General argument ...... 26
PART III
TRADE CO-OPERATION
Its rudiments and philosophy . . . . .33
Business . . . . . . .33
Competition . . . . . . .83
Co-operation ....... 34
Modification of competition . . . . .35
Effect upon results from business .... 35
II
The Trade Association . . . . . .36
Does it lessen competition? .... 36
Does it impose obligations? . . . . .37
[ vii ]
CONTENTS
Page
Does it compel obedience? .....
Majority rule . . . . . . .37
Trade opinion ...... 38
Objects attained 38
III
Price 39
Can co-operation control price? . . . .39
Does co-operation lessen price competition? . . 40
IV
The obstacle 41
What is the matter with the business man? . . 41
Can obstacles be overcome? . . . . .41
Is it possible and practical? .... 42
How can good-fellowship be induced? . . .42
Does co-operation introduce the Golden Rule? . . 42
Economic law . . . . . . .43
What causes the economic changes? ... 43
The effect of economic changes . . . .44
VI
The law and trade co-operation .... 44
The Sherman Anti-Trust law 45
The Clayton law ... . . . 45
The Federal Trade Commission law . . . .45
View of the Federal Trade Commission . . 45
View of the Administration 46
VII
The advantages of trade co-operation and association . 46
What education is necessary? . . . . .47
How is it to be obtained? ..... 48
VIII
The summary . . . . . . . 49
[viii]
CONTENTS
PART IV
THE ESSENTIAL PRINCIPLES OF TRADE
GO-OPERATION
Good-fellowship: Page
Courtesy and cordiality .... 63
Frank and open discussion . . . .63
Fair dealing ...... 63
Comprehension:
The necessity for co-operation . . 64
Co-operative principles . 65
Trade conditions . . . 65
Competitive conditions .... 65
Economic conditions . . . . .65
False theories 66
The law . . 66
Uniformity:
Standardization of methods . . . . 67
Technical standards . . . . .67
System . ... .68
Harmony:
Functional relations . . . . .69
Trade distribution ..... 69
Ethics — Moral principles . . . . .70
Volition:
Teamwork 71
Conduct 72
Self-control . 72
The argument:
The democracy of business . . . .73
The first principle ..... 77
The second principle . . . . .80
The third principle ..... 83
The fourth principle . . . . .85
The fifth principle 87
PART V
COMMENTARY
The transition of business ..... 93
The business man . . . . . .94
Economic conditions ..... 97
Political conditions . . . . . .100
Legal conditions . . . . .102
Conclusion . 105
[ix]
PART I
INTRODUCTORY
Ideas are to be found on every hand in Ameri-
can business — admirable ideas but isolated,
each known to only a handful. For while the
peaks of efficiency are high in this country, the
valleys of inefficiency are notoriously low and
wide. What is needed on behalf of common
progress is to put the elements of efficiency, now
known only to the few, into the hands of the many.
* * * *
The wasteful individualism in business, each
concern hewing its way alone with little aid or
counsel from the rest, is undoubtedly due to no
set opposition to co-operation but rather to the
lack of an adequate agency to stimulate it.
A. W. SHAW.
INTRODUCTORY
Trade co-operation has every argument in Opening
its favor — save perhaps one. Personal incom-
patibility is that exception, and experience
shows that with the proper education of a
community in the essential principles of co-
operation, even that possible exception may
be overcome.
Economic necessity, science, morals, ex-
perience and common sense all sustain the
argument for the application of co-operation
to business.
It is logical, with the continually increas-
ing complexity in economic conditions, that
the policy of "each for himself" (individ-
ualism) must needs end disastrously for all.
It is reasonable, where such complexity of
conditions exist, that some scientific basis is
necessary to furnish the comprehensive solu-
tion.
It is manifest, if the standard of business,
demonstrated now by unmoral competitive
strife, is to be elevated to a plane commen-
surate with the times, that co-operation is
the necessary foundation.
[3]
INTRODUCTORY
It is rationally certain that the experience
of mankind in obtaining results from co-
operative work in every one of its other com-
munity affairs, dictates the application of
co-operation to business also.
And is it not plain common sense that more
could be accomplished for each individual's
welfare, were the experiences, the brains, the
energy of all interested individuals concen-
trated upon a given purpose, co-ordinated in
the reciprocal policy of "one for all and all for
one," than where each takes his chance in the
competitive scramble ?
The question, then, is not why trade should
co-operate, but how!
The Trade Trade Associations which are organized
Association for ^Q purpose of co-operation are of two
classes, national and local.
A national association (assisted perhaps by
a state organization) operates for the welfare
of the trade at large, while the local association,
as the designation indicates, operates in the
interest of a local community.
In a national association the broader
principles and policies which should govern
the trade are formulated and announced,
standards are established for guidance and
[4]
INTRODUCTORY
uniformity of usage, and the interests of the
entire trade unified, advocated and protected
by national representation.
In the local organization, not only are
the principles as announced by the national
association accepted and its standards
adopted, but they are here to be applied and
placed in practical operation.
The national association can treat of the
solution of trade problems only in the abstract,
without reference to local conditions or per-
sonalities, while local organizations have not
only to deal with the concrete questions but
also with personal pecularities.
It is the local particularly to which our
arguments are directed, for it is to solve the
problem of the practical adaptation of co-
operative principles which is our object, and
while of course the principles must apply
equally to the broader co-operation of the
national, it is only within the local where we
meet the vital issues face to face.
The question of effective co-operation is Education
purely a matter of education, the community
problem of — how to effectively instruct and
drill its individuals.
There is a lack of mutual understanding
[5]
INTRODUCTORY
amongst men, a lack of comprehension of
facts, a lack of adequate information regarding
the personal, moral and economic elements in
business.
Business must be reformed from its scram-
bling competitive methods, to an equitable
system of co-operation. Its sordid, grasping,
disorderly strife must be replaced by an orderly
system embracing the principles of the
equality of opportunity, community progress
and common welfare, and the rule of thumb
must give way to exact methods.
System Unquestionably the solution to such a
problem lies only in a proper system of educa-
tion. To be effective, such a system must pre-
sent to its students a substantial foundation,
and outline to them such a clear comprehen-
sive plan of superstructure that the perspec-
tive of the results to be attained may be
plainly convincing; for the business man is
skeptical of theories and, while knowing
the practical side of his business and its
needs, he is deeply imbedded in the rut of
habit.
Any education undertaken must be a post-
education which will result in a re-educating
process which will discard old methods only as
[6]
INTRODUCTORY
the new demonstrate that they will stand the
test.
Therefore, only a system which is based
upon practical principles and plain funda-
mentals is possible of success.
The Principles of Trade Go-operation as The
set forth in this work constitute the ground- Groundwork
work for the development of practical co-
operation.
These principles, together with the philoso-
phy and the rudiments of the subject, are
concisely stated. In fact, the context has been
confined to essentials. Everything, including
explanations, arguments and illustrations not
necessary to the clarity of the subject, has
been omitted in order that the business man
may more readily scan its simple scope.
The work is and can be only elementary
inasmuch as the matter of business is a very
deep and broad subject and one which must
be treated minutely and exhaustively to
properly cover the requirements of each de-
tail.
The seeming reiteration herein of certain
statements is for the purpose of emphasizing
their importance and to impress upon the
reader their invariable necessity to the subject.
[7]
INTRODUCTORY
The object of the work is to submit in an
orderly and logical manner the essentials of
co-operation so as to prepare the business man
for some system of community education sup-
plementary to this elementary knowledge.
Without the groundwork here presented
such education would be fragmentary, in-
coherent and consequently lacking in effect-
iveness.
The Trade While he is not specifically mentioned in
Secretary ^e work, it is due to the Trade Secretary to
say that his professional services are indispen-
sable to any organization for successful accom-
plishment of co-operation.
The secretary represents the embodiment
of a trade community, while lending to it his
personality. He is largely responsible for
successful co-operation as an interested, im-
partial arbiter and executive, whose single
purpose is the community interest. As he is
an adviser or counselor only, his authority
cannot be commensurate with his responsi-
bility, for it is impossible in voluntary co-
operation to delegate to him any authority to
compel. If his constituents are loyal to com-
munity interest and obedient to the decrees
of their trade opinion, he is enabled to guide
[8]
INTRODUCTORY
them very readily into effective teamwork.
If, however, any of them exhibit traits of
individual incompatibility which render co-
operation ineffective, he is helpless beyond his
ability to persuade or convince.
Therefore, he will appreciate the help and
added influence which a definite knowledge
of orderly principles of co-operation, upon
the part of his constituents, will undoubtedly
have upon his efforts in promoting harmony
and the progressive development of his
trade community. The moral support of ac-
cepted principles will greatly help to reconcile
the gap between his responsibility and his
authority.
If the world is to be "safe for democracy" The Urgent
from autocratic rule, so must the democracy Necessiiy
of business be made secure from the rule of
paternalism, socialism and plutocracy.
Business is in jeopardy from one and all of
these dangers — government control, govern-
ment ownership and the power of concentrated
wealth.
The welfare of the Nation is best preserved
and its democracy made secure only where in-
dependent units prosper, and this will be im-
possible under any domination which will not
[9]
INTRODUCTORY
give full sway to the freedom and equality of
individual opportunity in business.
Underlying This does not and cannot mean unlimited
Cause competitive freedom (a false theory), which
tends to that waste and destruction which is
the underlying cause for the tendencies to-
ward governmental control. It does, however,
require that business must be characterized
by community interest, efficiency and economy
if it is to be effective in producing the best re-
sults for its individuals and for the public.
Individualism in business like autocracy
has reached its end, but democracy in busi-
ness like the democracy of a nation must be
effective if it is to be enduring. If not, it is
bound to lead on to anarchy and eventually
back to autocracy.
Paramount Community efficiency is the paramount
issue jssue) an(j community efficiency can be at-
tained only through co-operative effort made
effective by individual obedience to its fun-
damental laws, for the citizen of a trade com-
munity like a citizen of a democracy must be
both informed and obedient.
"The hope of democracy lies in education."
[10 ]
PART II
THEORY, PRACTICE AND EDUCATION
"The desire for organized efficiency has always
been particularly strong in Americans, and
possibly no other people has ever carried organi-
zation and efficiency in an individualistic
sense farther than have we. Now it is rapidly
dawning upon the cleverest thinking of our
citizens that there is still a higher kind of effi-
ciency than that of competitive individualism,
namely, the efficiency of properly devised and
safeguarded co-operation.1'
ELBERT F. GARY.
I. TRADE CO-OPERATION
THE THEORY — The theory of co-operation The Theory
1 is based upon the evident fact that "two heads
are better than one" where both are working to
the same end; and this fact is confirmed by the
law of self-preservation which dictates that
when the effort of a single individual fails to
produce the desired result, his next move is
to seek the help of another or others whose
purpose is the same as his own.
This theory, as applied to trade co-opera-
tion, works upon the hypothesis that as man
has made great progress by co-operative work
in many things, it is logical that he can also
make progress by co-operation in business.
And the theory upon a further hypothesis
assumes: that the individuals working to-
gether are inspired by a common purpose, that
they are friendly, that they possess a common
intelligence of their business and of their pur-
pose, and that each will direct his action to
accord with that intelligence.
THE theory of co-operation, as applicable to
trade, does not require much argument to
sustain its desirability. Its necessity, too, is
very evident. There is not a trade, business
or vocation within the scope of the industries,
of commerce, of transportation, of finance, or
TRADE GO-OPERATION
of the professions which will not attest to the
necessity and to the benefit to be derived from
the organization of its co-operating units.
It is not a question, then, of necessity, but
of means to effectively accomplish the co-
operation.
Unorganized business is in the identical
position of a mob without order or discipline.
It is incapable to cope with any organized
efficiency, no matter how much less in num-
ber or in justness of cause such opposition
may be. It is organization alone which gives
unity and an opportunity to gather strength,
knowledge and efficiency. It is organization
alone which can accomplish results, but only
by proper co-operative work, that is, through
the co-ordinating teamwork of its individuals.
Compared Our own Federal Government affords the
Wlih, best example of applied co-operation. Forty-
Government . j- j • +• • ij
eight free and independent sovereignties yield,
for the "community of interest," some portion
of their inherent rights to the centralized
National Government, rights which other-
wise would interfere and clash.
Public welfare is the object of this co-
operation and in that welfare each State
acknowledges its own beneficent interest.
TRADE CO-OPERATION
Public welfare, by which is inferred that
the common rights of individuals are pro-
tected, is the object of government and public
opinion is its determining influence. In like
manner, trade welfare, which implies that the
common interests of individuals are equitably
protected, is the object of organization and
trade opinion must be its directing influence.
Trade opinion and public opinion differ only
in degree, the one entitled to the willing
obedience of the business man equally as law-
abiding citizens loyally yield to the other.
Friendliness, knowledge or comprehension, Requisites
and obedience, are the requisites of both these
democracies — National and Trade. Govern-
ment, however, has authority to enforce obe-
dience to the public opinion, which is crystal-
lized into law, while trade organization has no
such authority to enforce obedience to trade
opinion. The only force which can be exerted
is the moral influence of that trade opinion,
i. e. trade ethics. The more necessary, there-
fore, is it that the business man be learned in
the necessities of his trade community that he
may see therein his own interests and more
willingly obey the decrees of his trade opinion.
As a government demands some individual
TRADE CO-OPERATION
sacrifice to the public welfare — the common
interest of its citizens — as it enacts public
opinion into law, and as it requires every
citizen to obey that law, so should a trade
Voluntary organization of co-operating individuals expect
obedience jtg mem]3ers ^o yield their contrary personal
advantage to the community welfare, in
which each has an indivisible interest. As
Trade Opinion is the valid substitute for
community law, it is presumed that the self-
interest of the individual will cause him
voluntarily to obey that law.
[16]
II — THE PRACTICE
Co-operation to be successful requires that The Practice
the working hypothesis of a community object,
of mutual friendliness, of common knowledge,
and of voluntary individual action be made
facts.
As co-operation means the co-ordinating
work of individuals, the success of practical co-
operation depends first, last and always upon
individual volition.
Each member of a co-operating body is re-
sponsible to his colleagues (as to his own
interest) for the proper performance of his part.
An imperfect link determines the strength of the
chain.
This responsibility implies the necessity of
willing effort upon the part of the individual to
the extent of self-sacrifice. Self-discipline there-
fore should be an accomplishment of every
member.
Hence, the conditions for practical trade co-
operation demand: That there is a community
interest in the purpose, that good-fellowship
exist between and among the members of a trade
organization, that a ready willingness to impart
and acquire requisite knowledge be the attitude
of all, and that voluntary obedience be given to
the decrees of community opinion. Such will
procure that effective teamwork through which
alone is the purpose in view obtainable.
[17]
TRADE CO-OPERATION
It may readily be seen that the conditions
necessary to obtain co-operative results are
not easy. The human will is often divided
by conflicting opinions which interfere with
that unison of effort which community interest
is supposed to inspire. Business men also are
overcome by conservatism, careless com-
placency or by competitive habits. There-
fore, unless the individual willingly lends his
earnest effort to correct these traits within
himself, they are bound to obstruct the pur-
pose in view.
Obstacles The American business man as he is at
present mentally equipped and competitively
trained, is not in shape for immediate prac-
tical co-operative work.
To be "brutally" plain: If he is self-
satisfied by reason of his past independent
success, or is skeptical either of his neighbor's
ability or honesty, so that he cannot or will
not stoop to the common necessity, and drill
with his competitors in learning his "hay
foot" from his "straw foot" in the rudiments
of co-operation, he is unfit!
One of the greatest obstacles to the prac-
tice of co-operation, apart from inherent
narrowness, is apt to be the "big house" whose
[18]
TRADE CO-OPERATION
importance is magnified in its own estimation,
considering beyond argument that its prom-
inence, its judgment, its knowledge, its analy-
sis of situations are so superior that it "cannot
be wrong"! Or a selfish interest in its prom-
inence will not permit of yielding to com-
munity opinion for fear that equity may
destroy its prestige.
It is an indispensable condition to practical
teamwork that every one in the team, be he
big or little, broad or narrow, must first learn
the lesson of humility in the fact that his house,
no matter how large, is only a "unit" in the
trade community and as such it must be sub-
servient to the opinion of that community.
In practice, co-operation means teamwork, Teamwork
and teamwork implies the knowledge of his
part by every member of the team and his
application of that knowledge to actual prac-
tice. It is the principle which is applied to
military service, to baseball and football and
any other affair of man which calls for co-
operation. Teamwork is an indispensable
necessity to successful co-operation.
Before teamwork can be made effective,
however, it is evident that the individual must
be educated and trained and that he must
TRADE CO-OPERATION
assume a willing responsibility for his part.
As much of this education is reciprocal, it is
bound to bring into play conflicting opinions.
Where the common object is lost sight of in
this conflict of opinions, the greatest danger to
co-operation lies. It is natural that men's
opinions should ofttimes be incompatible, so
it is imperative that the policy of "give and
take" should always be uppermost in mind.
Correct This policy of "give and take" insures the
Policy average of equality, and every unit, whose
opinion is but a fraction of the whole, should
be content in that he will receive his fair pro-
portion of consideration in the welfare of the
whole.
The The effect of co-operative training is to
elevate the plane of business conduct, setting
a higher mark for both moral and technical
standards, so that the individual units grad-
ually develop a voluntary desire to meet these
standards.
When this voluntary desire becomes the
rule of action, then will teamwork dem-
onstrate the effectiveness of co-operation.
Effective co-operation cannot fail to estab-
lish a business upon a scientific basis, which
[20]
TRADE CO-OPERATION
means simply the application of economic The
knowledge to the community understanding, Effeci
of moral ethics to business conduct, of effi-
ciency to methods and of co-operation to
friendly intercourse.
III. THE EDUCATION
The The business man then must approach trade
Education co-operation with an open mind. He must be a
student for a time while he learns the rudiments
of a new course in business.
This education involves a reconstruction of
principles, policies and methods in business
along lines totally different from those under
competition in which all business men have been
trained.
It will involve the unlearning of old ways-
while replacing them with the new. It will
mean the acquiring of a thorough understanding
of trade affairs and of all conditions pertaining
to them. It will eliminate all secrecy, all per-
sonal advantages, and necessitate personal
training in self-control to eliminate selfish de-
fects as a parallel accomplishment to the knowl-
edge acquired.
Such education cannot be acquired in a day,
a month or perhaps a year. It must proceed
„, step by step, for to short-cut is to stumble.
The technical and scientific application of
this education while a community requirement
must be applied by individual initiative.
To accomplish such education effectively
requires a system of educational training as an
indispensable prerequisite.
The business man must realize that co-
operation is not a matter of rapid accomplish-
ment, but of steady acquirement. It is not a
TRADE GO-OPERATION
method to be applied, but a system to be de-
veloped. It is not a lesson to be passively
absorbed, but actively learned by close per-
sonal application.
The reform of business conduct requires
not only education, but training in teamwork,
and this demands diligence, patience and
forbearance.
The business man must know that any
individual action contrary to trade usage or
opinion imposes upon the trade community a
changed condition. This change is bound to
intensify competitive strife, and disturb uni-
formity of method, which increases unneces-
sarily both expense and effort — pure waste.
The license of individual right to impose
upon community harmony in adopting revolu-
tionary measures, whether from ignorance,
spite or bullheadedness, is unfortunately
sanctioned by our laws, provided only that
such measures do not constitute unfair com-
petition.
It was stated in the foregoing chapter that Reciprocal
much of the education necessary to co-opera- Insiructwns
tive work is "reciprocal." It is this reciprocal
education which is vital to trade progress and
is practically impossible under open com-
TRADE CO-OPERATION
petition. Reciprocal, as the word implies,
necessitates an interchange of trade infor-
mation. Without such reciprocity, — com-
prehension, uniformity, standardization and
harmony, — the materials necessary to con-
struct a system of co-operative efficiency,
cannot be obtained. It is this information,
mutually contributed to the common fund of
trade knowledge, which will place the business
upon a scientific basis.
Open Business under open competition is a con-
Q^ Q£ in(jiyiduai experiences and experi-
ments, guided by the "rule of thumb" and
surmise. It is hardly necessary to state that
the elimination of the rule-of-thumb and guess-
work, and the co-ordinating of these individual
experiences and experiments, will result in turn-
ing the direction of business methods into a
system which will codify trade knowledge and
increase the possibility of results to be ob-
tained from the business.
In order to lay the foundation for reciprocal
education, we must first unlearn and demolish
the old competitive policy of "each-for-him-
self" and its "dog-eat-dog" methods.
There must be constructed from the best
parts of every contributor's information a
TRADE CO-OPERATION
solid system of principles, policies and facts.
This must be molded into trade knowledge,
guided by trade opinion and applied in indi-
vidual practice to produce that teamwork
which is the object of co-operative education.
It must then be plain that trade co-opera- A Readjust-
tion is not a superficial application of some- meni
thing to business as it now exists, but a radical
readjustment and a reconstruction of its princi-
ples, its policies and its methods. Anything
less than reconstruction would result in failure
or in a lack of results which is equally as bad.
So radical a change, especially in the moral
situation, must require some time to show
results, during which time misgivings, mis-
takes are bound to occur and recur, but as it
is from such backsets that we gain experience
it should not discourage us as to the ultimate
good to be accomplished.
What must be impressed above all things
upon each member of the organization is that
it is his education and his application of the
knowledge resulting, co-ordinated with that of
his fellows, which will produce community
welfare — the result in view.
Therefore Trade Co-operation actually
requires re-education, and instruction in its
TRADE CO-OPERATION
principles really constitutes a postgraduate
course in business.
GENERAL ARGUMENT
The General The economic reasons for trade co-opera-
Argument tjon are too extensive for mOre than a passing
mention in this book, but the logical reasons
forming the groundwork for the principles
herein outlined are fully given as they are
essential for a thorough understanding of the
subject.
These logical reasons make plain why
trade should co-operate, apart from the eco-
nomic reasons which decree that trade must
co-operate, in order to solve the problems
presented by existing and prospective
conditions.
Democratic Trade co-operation is essentially the appli-
ca^jon of democratic principles to business.
The present competitive system, if system it
can be called, is feudal in effect.
Anyone familiar with the principles of
democracy as applied to government must
freely admit that in a democratic community
there are two sets of rights to be considered
— individual rights and community rights.
Where there is doubt as to which is entitled to
[26]
TRADE CO-OPERATION
preference, the benefit of the doubt must be
given to the community — as of interest to the
greatest number.
In the business community, where there is
an absence of established community rights,
there is a constant conflict between individual
rights, which competition intensifies, and
which results in the supremacy of the strong,
"the right of might," — in other words, the
result of feudal contest.
The object of democracy being to consti-
tute a condition to make possible the enjoy-
ment of the "unalienable (individual) rights of
life, liberty and the pursuit of happiness,"
such condition must afford an equitable oppor-
tunity for all individuals, in which com-
munity rights will be recognized as paramount
to any individual right or license, which is
always prone to selfish aggrandizement.
In order to guarantee the distinction Legal
between the rights of an individual and those Rights
of the public, government is established to
enact laws for the definition of these respec-
tive rights and courts of justice are constituted
to determine the equity.
A trade community, however, being but a
portion of the civic community (the public),
TRADE CO-OPERATION
has no distinctive legal standing, and hence
its individuals, while observant of public
rights, too frequently ignore the rights of their
trade community.
In fact, in the absence of established or
recognized trade community rights, the in-
dividuals are actuated solely and entirely by
selfish impulse.
Apparent therefore must it be, that trade
community rights should be established, and
this can only be possible where the indi-
vidual units convene, co-operate, and deter-
mine such rights, and, further, there being no
legal way to enforce these rights, they must
be recognized and observed by individual
volition.
True Form There is but one true form of trade co-
operation, and that is distinctly voluntary, in
which it is assumed all individuals will will-
ingly strive to attain the object in view. If
their liberty of action is restrained by any
authority or an enforceable obligation, such
so-called co-operation becomes impracticable
and probably unlawful. It is impracticable
because of the independent nature of the
business man which repudiates coercion, and
it is unlawful as it implies restraint upon
[28]
TRADE CO-OPERATION
freedom of action of the individual by means True Form
which seem compulsory.
The voluntary form of co-operation is truly
democratic and depends for its success upon
the willing acquiescence of all minds to their
community opinion, just as in a political
sense even the contrary-minded yield obedi-
ence to public opinion.
This democratic form of co-operation there-
fore requires intelligent co-ordination of mind
and of effort upon the part of its members and
without a power to compel. The organization
must be composed of superior citizens whose
broad intelligence will require no greater
force than that of community interest, as
proclaimed by trade opinion, to put into
operation by individual volition the requisite
teamwork to accomplish its ends.
This, then, is the problem which re-
education has to solve.
PART III
THE RUDIMENTS AND
FUNDAMENTAL PHILOSOPHY
A business man should be interested in the
efficiency, not only of his own business, but of
his competitor's business. Rivalry in some lines
is not inconsistent with co-operation in others.
A proper balance of the two makes successful
business. Too much of either leads to destruc-
tion. Rivalry without co-operation means
reckless, destructive competition; co-operation
without rivalry means price-fixing — the dry
rot of business, deservedly condemned by the
law.
The state of mind which makes us fear to
associate with our competitor and which makes
us suspicious of him must go. It does not be-
long to the new era of American business upon
which we are entering. Our competitor is not
such a bad fellow after all. If we talk over
with him once in a while the big things in our
business, we will hate him less! We must re-
alize that inefficiency in any factory in our in-
dustry is very likely to react seriously on us and
on all others in the same business. * * * The
way to protect ourselves is to help our compet-
itor to become efficient; for industry, like a man,
is reformed from within. It is the duty of each
of us to preach as well as practice the gospel of
efficiency and to co-operate and work with
others to raise the standards of producing and
selling. — "Awakening of Business."
E. N. HURLEY.
There should be more to business than "buy,
barter and sale," with ill-assorted parts to pro-
duce friction, lost motion and a minimum of
results.
It should be a "system" with standardized
gearing and with co-ordinating action so that
the results therefrom may express the maximum
of efficiency — and the first requisite in building
such a system is mental adjustment. — ED.
THE RUDIMENTS AND PHILOSOPHY
What is business?
Business is the game of breadwinning — the Business
vocation of every man — which has become a
contest for supremacy in a race for patronage.
What occasions this contest?
Competition.
What is competition?
Competition is a natural law which, competition
through its process of contest for the survival Defined
of the fittest, provides the incentive for pro-
gressive development. As is evident, its un-
bridled tendency, if permitted to continue to
its consummation, would result in destruction
through the mutual annihilation of the sur-
vivors.
In business, as the field of opportunity
narrows, unbridled competition occasions a
vicious scramble for individual advantage,
producing animosity between competitors
and waste from their extravagant efforts to
excel.
To make competition a rational and con-
structive force for intelligent development
[33]
TRADE CO-OPERATION
therefore requires that its natural tendency be
curbed or modified.
Competition will always be in evidence
where there are free and independent interests
in pursuit of the same object, but only when
it is properly bridled (governed by ethics) can
it be productive of that condition in which
reposes an equity of opportunity.
What is necessary to modify the unbridled
tendency of competition?
Co-operation.
What is co-operation?
Co-operation Co-operation is the teamwork of interested
Defined individuals in combined effort to accomplish
some mutually desired result and is therefore
logically the natural modifier of the competi-
tive tendency to strife. The very nature of
co-operation demands order and organization
and consequently is opposed to the chaos and
anarchy of unbridled competition. Only
through co-operation has mankind become a
civilized community and able to overcome the
disasters of intense competition so as to ad-
vance. Co-operation between independent
units, however, can go only so far as the com-
mon interests of these units permit. Therefore,
[34]
TRADE CO-OPERATION
the effect of Trade Go-operation is to main-
tain an equitable balance between individual
liberty in competition and the community
interest.
How does co-operation modify competition?
Co-operation, by establishing a common Modifying
viewpoint for all individuals from which can E&eei
be shown that the community interest is also
the best interest of each individual, thus
modifies competitive strife.
How is this demonstrated?
The common knowledge acquired through a
free and open interchange of information, and
through frank discussion, eliminates the differ-
ences and misunderstandings so prevalent
under secretive competitive methods, and
enables a true perspective of the conditions.
Knowledge thus gained further demonstrates
that practically many problems in business are
community problems which may and can only
be solved by co-operation.
How does co-operation affect the result from
business?
Under competitive strife the results from Resutt
business are scattering, divided and diminished,
[35]
TRADE CO-OPERATION
on account of friction, unnecessary and ex-
travagant service and by wasteful methods
naturally attendant upon such strife; whereas
under proper co-operative teamwork the re-
sults are conserved, multiplied and therefore
increased. The uniformity introduced induces
both efficiency and economy.
It is the difference between results from
divergent interests under unknown conditions
in competition and the results from the known
and understood conditions of community in-
terest.
Co-operation opens up a wider scope of
possibilities in the development of business.
II
What is a Trade Association?
The Trade It is the * 'machinery of co-operation" as
Association appiied to trade.
Does it tend to lessen competition between its
members?
In part, because it holds competition
within rational bounds, by which is meant
the removal of the misunderstandings which
cause conflict, through the reciprocal exchange
of information. It does not obstruct the free
[36]
TRADE CO-OPERATION
play of orderly competition which questions
of superiority occasion.
What obligation does it impose upon its members?
Not having the power to bind, it cannot
obligate, but it reasonably implies the observ-
ance of "the ethics of the trade" as expounded
by trade opinion, co-operative principles and
the purposes expressed in the constitution, to
all of which self-interest dictates obedience.
Has it no force to compel obedience ?
None, except moral force. Any other kind Force vs.
of force opposes the principle of co-operation. Obedience
Voluntary obedience to trade opinion and the
knowledge gleaned from education constitute
the only force necessary and when members
are schooled in the principles of co-operation
it becomes a very strong force. Comprehen-
sion of matters of self-interest inspires loyalty
to community welfare, which is sufficient to
dictate voluntary action by the individual.
Agreements, understandings or compacts
of any kind where they affect the freedom of
individual action, are barred by the nature of
true co-operation. Besides, they are unlawful.
How about majority rule?
The majority rule cannot be used to force
[37]
TRADE CO-OPERATION
a minority. It is used to ascertain and test
trade sentiment, and if the sentiment is pre-
ponderant, it has the force of trade opinion
which in teamwork is sufficient to claim the
obedience of the minority.
What is Trade Opinion?
Trade As stated above, trade opinion is the
°Defined PrePonderant sentiment expressed by a trade
community upon matters of common interest.
It is the impelling force in trade co-operation,
as it constitutes the moral authority to which
every individual member owes allegiance.
Broadly, what objects are to be attained by
Association work ?
objects The objects of trade organization are—
Attained ^o determine and establish the community
interest, the standardization of trade senti-
ments, methods and customs, and the unifica-
tion of knowledge. This is accomplished
through community education and the inter-
change of trade information. The effect is to
produce harmony, efficiency and economy in
trade matters — in brief, the betterment of
business.
[38]
TRADE GO-OPERATION
III
What about price ?
Price — selling price — should be the final Effect Upon
result of computation after all fixed, dependent Price
and incidental expenses in conducting business
have been determined. It is the individual's
"inalienable" right to make his selling price
without restraint, and it is unlawful for two or
more individuals to combine in fixing price by
agreement, understanding or by any other
form of compact.
Can co-operation control price competition?
It does not pretend to control it. Its
effect, however, is to establish a valid doubt as
to the necessity for indiscriminate price com-
petition.
When through co-operation, every member
of an Association is enabled to know all condi-
tions, especially as to expense, each is able to
determine his own commensurate selling price.
A member's judgment being based upon cor-
rect knowledge he is relieved of doubt as to
competitive possibilities and motives, so that
his conclusions are rational. Under unbridled
competitive conditions this knowledge is im-
possible and his judgment is blinded by the
[39]
TRADE CO-OPERATION
unknown conditions and presumptive possi-
bilities.
The Bone of Price is the "bone of contention" in
Contention competition and it follows the leadership of
guesswork. Under co-operative influences it
becomes the result of the knowledge of facts
and it follows judgment.
It is a very different matter when you know
from an exchange of views what a competitor
really thinks and knows from that condition
in which you both surmise and suspicion what
the other is likely to do. It is the difference
between steering a ship by a compass and with-
out one.
Co-operation, then, actually tends to lessen price
competition?
It does, certainly, and how could it be
otherwise, when competitive abuses are cor-
rected and a common and uniform compre-
hension of facts is established?
The Result The effect of rational price determination
under such conditions is to maintain necessary
margins over the cost of production and han-
dling, tending nominally to establish a stable
selling figure, i. e., a "right price."
[40]
TRADE CO-OPERATION
Only in the absence of understood co-
operative principles, and in the ignorance of
facts, do individuals thus working in the dark
use their right as a license to make haphazard
prices to the demoralization of their com-
munity and to their own loss or destruction.
IV
// co-operation is so necessary to business,
wherein is the obstacle to its accomplishment?
The Business Man.
What is the matter with the business man?
Simply those inherent traits and taints of Obstacles
human nature which are ever obstacles to
man's progress. Beginning with the incom-
patability of minds, we find some men are far-
sighted, some short-sighted; some are deep,
some shallow; some are broad, others narrow.
Then we have the natural taints, such as
avarice, deceit, doubt, envy, suspicion, selfish-
ness, etc.; and finally, the acquired habits —
competitive habits, careless complacency,
lethargic conservatism.
Can these obstacles be overcome?
Yes, by re-education, meaning a higher The
education in the principles of co-operation, Correciwn
TRADE GO-OPERATION
which indicates the knowledge obtained
through an open interchange of information.
With constant contact between men
differences of opinion become reconciled,
knowledge establishes confidence by dispelling
the doubts of ignorance, and community
thinking eliminates personal pecularities and
inspires loyalty.
Is this possible and practical ?
Yes, when necessity dictates, and when
good-fellowship permits rational thought to
overcome competitive prejudices, it is both
possible and practical.
As you cannot choose competitors, how can you
induce good-fellowship ?
When men know each other as men, and
not as competitors only, they are invariably
surprised to learn that it has been like circum-
stances in the experience of each which have
been the causes of misunderstanding, and also
to find that others are actuated by the same
principles which they themselves entertain.
Then does co-operation introduce the "Golden
Rule" into business ?
The Golden In a way, perhaps, for after all, that rule
Rufe
TRADE GO-OPERATION
merely implies that men should think "fair,"
act "fair," as well as talk "fair," and this they
will do when they are made to realize, by
comprehension of the facts, that it is to their
best interest to be fair.
V
What has caused competition to become so
vicious that co-operation is now necessary
to control its effect?
Simply the changes wrought by economic Economic
law. ^
What is Economic Law?
It is that natural law which determines the
development and distribution of wealth. Busi-
ness is intimately affected by the changes
evolved by this law. We are at present pass-
ing through the greatest economic change in
the history of the world.
What are the causes for this change?
1st: The result of scientific research, dis- The Causes
covery and invention.
2nd: The readjustment of industrial and
social conditions, due to the rapid develop-
ment and adaptation of steam and electricity
[43]
TRADE CO-OPERATION
to communication, transportation and manu-
facture.
3rd: Acquisition of wealth by the people
and its accumulation by individuals and
corporate interests.
4th: The World War.
What are the effects of these changes?
The Effects 1st: The stimulation of production and
manufacture, the cheapening of conveniences
and luxuries, and the improved facilities for
distribution, the result of which is the intensi-
fying of competition.
2nd : The incessant demand by the people
for convenience, luxury and innovation, and
the friction between so-called classes for an
equitable division of the results of industry,
both of which effects tend to elevate the stand-
ard and increase the cost of living.
3rd: The readjustment of international
relations affecting commerce, finance and
transportation and the impending growth of
international competition.
VI
How does the law view trade co-operation ?
The statute It does not hold it as contrary to the public
Law interest so long as acts under its influence do
[44]
TRADE CO-OPERATION
not violate the law. If the acts of a trade body
are kept true to co-operative principles they
cannot in any way conflict with the law.
The Sherman Anti-Trust Law ?
This law forbids combinations, contracts,
etc., "in restraint of trade" and it forbids
"monopoly," neither of which are possible
under the principles of true co-operation.
The Clayton Law ?
This law forbids certain inequitable dis-
criminations in trade practices. One of the
objects of trade co-operation is to eliminate
all unjust discriminations and inequalities in
trade.
The Federal Trade Commission Law ?
This law, which establishes the Federal
Trade Commission, also forbids unfair meth-
ods which unduly restrain competition, the
prevention of which is yet another of the
purposes and effects of trade co-operation.
How does the Federal Trade Commission view
trade organization?
"Go-operation is the watchword of our Opinions
day — co-operation among business men,
[45]
TRADE GO-OPERATION
co-operation between employer and employe,
co-operation between business and govern-
ment. * * * * Trade associations and similar
organizations are among the most hopeful
agencies of efficient industry. Their field of
activity should be extended and their work
made more efficient."— E. N. Hurley, formerly
Chairman Federal Trade Commission.
And the Administration?
"Your suggestion that trade Associations
* * * should be encouraged in every feasible
way by the government seems to me a very
wise one." — Pres. Wilson to Mr. Hurley.
VII
What are some of the practical advantages of
trade co-operation in association work ?
Advantages The elimination of trade abuses, evil
practices and unfair competition; — the estab-
lishment of uniform trade customs ; — the adop-
tion of standardized methods and improve-
ments in technical equipment; — the unification
of system (accounting, credits, costs, distribu-
tion, etc.) ; — and the harmonizing of sentiment
into an understood Community Opinion as a
guide to individual conduct.
It should be evident that the efficiency and
[46]
TRADE CO-OPERATION
economy resulting from the reconstruction of a
trade upon these lines must eliminate that "un-
unknown quantity" about which competi-
tive strife always centers, and establish in the
conduct of business a higher development.
What education is necessary to attain the objects
of trade co-operation ?
1st: Realization that the game of bread- Necessary
winning should be a fair game and that com- Krmakd^
petitors are men built upon the same lines.
2nd: Knowledge of economic conditions
and the reasons for competitive misunder-
standings affecting business. Understanding
of the principles of co-operation and knowledge
of the law.
3rd: Technical knowledge to produce effi-
ciency and economy in a trade community.
Uih\ Establishment of community opinion
and trade ethics so that the individual may
intelligently play his part in the teamwork to
develop and defend community interests.
5th: Realization that patience and some
sacrifice of personal advantage is necessary to
attain and uphold the high standard demanded
by success.
The sum and substance, the letter and the and
r ~ "I Substance
TRADE GO-OPERATION
spirit, of co-operative education is: that the
individual's best interests are in his com-
munity interest, and as trade opinion is the
expression of this interest, that the opinion
be so firmly fixed in his understanding that
instinctively he will direct his acts to ac-
cord therewith, in friendliness, in harmony,
in uniformity and in loyalty.
Such education requires that the business
man must be re-educated, must take a "post-
graduate" course in business, in order to re-
adjust his mental attitude, his methods and his
actions to the new conditions, and, like all
proper instruction, this should proceed step
by step. Education in co-operative work is a
community accomplishment, but it must be
individually acquired.
How is this instruction to be obtained?
Systematic Naturally the question arises — if the logic
instructions fe correct and the economic necessity sustains
it — what process of education is necessary to
place in effect the principles of co-operation?
This is the critical question to which there is
but one answer — a system of instruction.
Some system of instruction to produce uni-
formity of education; some method of impart-
ing and exchanging information, so that a
[48]
TRADE CO-OPERATION
common comprehension of trade conditions
may be acquired; some basic principles upon
which the science of business may be estab-
lished; are indispensable requisites to the fit-
ting of business men to the task of co-opera-
tive trade building.
VIII
THE SUMMARY
The preceding discourse was designed to The
bring out as clearly and distinctly as possible Summary
the rudiments and philosophy of trade co-
operation. m
In reviewing we may readily outline the
deductions :
1st: We are made to realize that business Deductions
is a necessary everyday condition in man's
life; — that its process is governed by a natural
law of development, known as competition; —
that competition without human regulation
is bound to follow its natural tendency to pro-
duce "the survival of the fittest"; — that in all
affairs of man, excepting business, competition
has been modified, controlled or regulated by
means of co-operation between fellow-work-
ers; and — that if business is to be relieved of
the burden of unbridled competition it there-
fore must also be made co-operative.
[49]
TRADE GO-OPERATION
Community 2nd: That in order to accomplish this, com-
interest munfty opinion must be formed as a means
to determine community interest, with which
all individual interests may be content; — that
the establishment of community interest will
produce uniformity and community efficiency
which is the object of trade association; and—
that the accomplishment of these conditions
depends upon and necessitates the co-ordina-
tion of individual acts.
obstacles in 3rd: That the obstacles in the way of
Way accomplishment are natural, moral, economic
a*id legal, which indicate that the individual
must be re-educated in a higher plane of duty
and of technical knowledge; — that he must
understand through reciprocal interchange of
facts and experience all economic conditions
so that he may correct the errors of individual
methods and establish in their place uniform,
efficient standards ; and — that the false theories
underlying the statute law be dispelled by the
broadening of community intelligence.
Forming To further gather together the ends of the
Trade preceding discourse it will be well to elucidate
Opinion x ° . , ..
certain points touched upon.
The determination of the community in-
terest in order that it may be saved from the
[50]
TRADE GO-OPERATION
waste of competitive warfare, so that all Forming
concerned may share its benefits equitably, is Jj0^6
J n j > Opinion
the ultimate purpose of trade organization.
To determine just what constitutes the
community interest requires the focal influence
of trade opinion, and in order to ascertain this
focal point a common viewpoint must first be
found.
There is but one way to find this common
viewpoint and that is to compile the facts and
aggregate the experience of all individuals
and through discussion and argument to sift
therefrom that upon which community opin-
ion rests. This infers a reciprocal interchange
of opinions and experiences between and
among the individuals of the trade, each con-
tributing to the common fund of information.
It is very evident that this interchange will
require the elimination of all competitive se-
crecy, and necessitate a very open, comprehen-
sive and frank discussion upon all points if the
true community opinion is to be ascertained.
In combinations there is either an active
or latent force which compels, as illustrated
in producers' associations and labor unions,
both of which have been made exceptions to
the effect of the Sherman Anti-Trust law.
With trade association it is different,
TRADE GO-OPERATION
because it is not aimed to force action or obedi-
ence, but to make clear the reason for both.
No action, therefore, can ensue unless there
is a clear comprehension of the subject — in
other words, an established trade opinion,
which is the only authority valid in co-opera-
tion. Hence the necessity to establish such
opinion, as the focal point, by which to de-
termine community interest. Hence also the
futility of agreements or compacts in any
manner of form to take the place of trade
opinion as they simply have the effect of an
armed truce, repugnant to true co-operation.
Community opinion is the preponderant
sentiment of a trade. Where there is a "twi-
light zone" between individual interests and
community interest, or where there is a valid
minority upon any question, until such time
when conditions change, the subject of con-
troversy should be tabled, shelved or made
taboo.
Scientific Economic law is the great arbiter of busi-
ly/op- negg conciitions. The world in these days
moves rapidly. It is no longer possible to
compare impossibility with the act of flying,
because today men do fly.
Science is continually and incessantly
TRADE GO-OPERATION
discovering, improving, applying, so that irre-
sistibly the conditions change in sympathy
with development. Competition under the
pressure of science is moving nearer and nearer
the extremity of endurance. It must be mod-
ified, regulated or controlled to serve the
business community and the day of readjust-
ment is at hand.
We know that we cannot fight the battles
of today with the weapons and methods of
our fathers and yet still we cling to the tra-
ditional competitive "freedom" inherited from
past generations to meet the intricate eco-
nomic changes of modern times.
It is absurd, it is inane, for it is impossible!
The greatest problem in co-operation is the The Personal
"personal equation." Equaiion
To correct the habits of the business man
contracted through years of competitive strife;
to relieve him of the fears of his competitor,
inherited from his ancestors of the stone age;
to convince him that in community interest
his individual interests are best protected,
is to practically change his nature — a very
difficult task.
Then again, the independent man of busi-
ness has faith first in his own judgment. To
[53]
TRADE GO-OPERATION
prove to him that the community judgment
is superior to his own, is another, also a dif-
ficult task.
But all men are susceptible to reason, some
slower perhaps than others, so reason must
in time broaden their intelligence and convince
them that in community interest is the indi-
vidual's best welfare, that in community
opinion is the best judgment and that it is
up to the individual's own acts to prove it.
It should be perfectly evident that if a
trade community is not prosperous, its indi-
viduals cannot prosper, and as a trade com-
munity is composed of competitors, if these
competitors prevent each other from prosper-
ing, that the community cannot and will not
prosper.
If, therefore, the conditions in a business
are not satisfactory, it is alone within the
power of its individuals to make it so. They
can regulate the conditions of competition so
that the community and its individuals may
prosper, but only if they establish first the
common groundwork of community interest.
individual A component part of the solution to this
ReSPbUit an^ to every otner problem, is in the possession
of each individual, and that individual who will
[54]
TRADE CO-OPERATION
not set aside his private opinions or his indi-
vidual interests where they plainly conflict
with community opinion or interest, blocks
progress with evident purpose to make capital
at the expense of his community.
The only way to get rid of an obstructing
limb is to cut it off. A man who stands aloof
from assisting in co-operation will hamper
progress just so long as he is considered a part
of the community. No man can afford to be
cut off from his trade community, not even
the biggest, for where he loses the consideration
of his community, whether on account of
anger, pique or selfish interest, he will even-
tually become a forgotten and negligible
quantity.
In competitive business, price is the natural Price
bone of contention. It is so because of the
mystery or secrecy surrounding the motives
and unknown facts under open competition,
and such are bound to breed both skepticism
and reprisal.
Under a co-operative system, where "every
card is played face up," where light is thrown
upon every transaction, where all information
is open to individual scrutiny, the matter of
price resolves into a simple question of cost,
[55]
TRADE CO-OPERATION
plus expense, plus such profit as may be
determined by individual judgment with all
points known and considered.
Co-operation cannot eliminate price com-
petition but it does render it rational and the
harmony of relations removes its sting.
Under proper co-operative influence the
subject of price assumes quite a secondary
aspect, efficiency and its application by in-
dividuals becoming the vital subject.
False False economic theories, bred during the
s immaturity of modern business development
together with the ignorant following of these
theories, are responsible for the legal strictures
by which business liberty as to community
rights is, in many ways, restricted.
The law is unquestionably behind the times
as it follows and cannot keep pace with eco-
nomic development, hence there is a discon-
certing gap between the law and the economic
necessities of trade.
The Law The "Law Merchant" by which, in ancient
Merchant times, the equity of trade customs and neces-
sities were recognized and established, through
both usage and evidence, should be revived,
modernized and made elastic. It is the sadly
[56]
TRADE CO-OPERATION
needed basis for laws enacted to regulate The Law
business.
In such direction (unconsciously perhaps)
is the trend of the Federal Trade Commission,
and it is sincerely hoped that in time the de-
cisions of that tribunal may evolve a new law
merchant. The force of economic change is
persistent and no doubt will assist in hastening
the happy day.
[57]
PART IV
THE ESSENTIAL PRINCIPLES
Co-operation may be classified under the
science of government, for the object of each is
similar. Every successful co-operative effort
is founded upon scientific principles.
Business inexactness has been the prime
cause for discomfiture and lack of proper re-
sults, so it too must be anchored by scientific
principles before it can be made effective as an
efficient community process.
Trade co-operation which supplies the means
to this end must therefore be based upon prin-
ciples.
If we take the military science, the oldest
form of co-operation, by which to illustrate, we
readily conceive that its essential principles
must contain— physical fitness, discipline, pre-
cision, obedience and loyalty.
Likewise the essential principles in trade
co-operation are: — Good-fellowship, comprehen-
sion, uniformity, harmony, and volition.
THE ESSENTIAL
PRINCIPLES OF TRADE GO-OPERATION
WITH COROLLARIES
GOOD-FELLOWSHIP
COMPREHENSION
UNIFORMITY
HARMONY
VOLITION
Courtesy and cordiality.
Frank and open discussion.
Fair and square dealing.
Necessity for co-operation.
Co-operative principles.
Trade conditions.
Competitive conditions.
Economic situation.
False theories.
The law.
Standardization of methods.
Technical standards and
equipment.
Systems — (credit, costs, etc.)
Functional relations.
Trade distribution.
Trade Ethics — Moral princi-
ples.
Teamwork.
Conduct.
Self-control.
[61]
I — GOOD-FELLOWSHIP
Good-fellowship signifies mutual friend-
liness— within a community. It is the founda-
tion of co-operative work, without which effective
results would be impossible. Organization is its
sequel.
(A) COURTESY AND CORDIALITY are in- Friendliness
tegral parts of good-fellowship and when you
know your co-operator as a man like yourself,
and forget that he is a competitor, you can ful-
fill the first requirements of this principle.
(B) A FRANK AND OPEN DISCUSSION Upon Open
any and all matters and conditions pertaining Discussion
to the trade is the second indispensable requi-
site for good-fellowship. There must be no
secrecy in co-operation. Secrecy is the pitfall
used by competitive spite to ensnare upright
business. It is only from an interchange of ex-
perience, ideas, opinions and methods that
knowledge of true fads is obtainable and con-
fidence can be established.
(G) FAIR DEALING — surely it must be re- Fair
alized that fair dealing is indispensable to co- Dealin9
operation. To be fair and square in thought,
word and deed, is the final and crowning
necessity in the principle of good-fellowship.
[63]
TRADE GO-OPERATION
Business is the serious game of bread-
winning, and like a game between good fellows
it should be fair and square and according to
rule. There is keen pleasure in fair rivalry,
where skill is the only possible offset to the
average of benefits derived; but there is
neither fun nor profit where unfair methods
are employed, — methods which speak of the
cad and the cheat. Therefore, always, the
rules of the game must be observed before any
play is made for personal advantage, and—
good-fellowship is the first rule.
Organization is obviously a necessary con-
dition for business fellowship, as only through
the means of organization can definite results
from it be obtained.
II — COMPREHENSION
Comprehension signifies understanding of
the principles of co-operation and of the science
of business as adapted to trade. It means knowl-
edge as opposed to ignorance, guesswork and
the rule of thumb. It implies education and in-
formation.
Intelligent (A) THE NECESSITY FOR GO-OPERATION.
Understand- Primarily the necessity for co-operation is to
establish an understanding of what consti-
tutes the common interest of community wel-
fare, in which each and every member of the
TRADE CO-OPERATION
trade community shares equally. That both
trade progress and individual success are
dependent upon this welfare should sink
deeply into the understanding.
(B) GO-OPERATIVE PRINCIPLES. These Principles
principles constitute the points of the compass
by which it is necessary to steer the ship of
trade into the port of community interest.
(G) TRADE CONDITIONS. Knowledge of Trade
trade conditions, which cover a wide scope, is Condlilons
made possible only by that open interchange
of trade information through frank discussion,
which creates a common understanding. You
cannot know these conditions unless you know
your co-operator's policy, his opinion, his ex-
perience and his methods, and he, yours. The
interchange of information reveals the true
conditions.
(D) COMPETITIVE CONDITIONS. Com- Competitive
petitive conditions must also be subject to Conditions
frank discussion and interchange of facts.
Reports and hearsay evidence against each
other's conduct must be clarified by such
interchange.
(E) ECONOMIC CONDITIONS. (Here we Economic
diverge from learning from the interchange Conditions
of information to reading and study.) Eco-
nomics is nothing but a study of the in-
TRADE CO-OPERATION
fluences of the times upon business. It is
necessary knowledge which every up-to-date
business man should possess. Without such
knowledge (i. e., an understanding of the
whys and wherefores of all conditions in his
business and around his business) the busi-
ness man interposes mere expedients against
the mighty flood of economic law. With an
understanding of the effect of these laws he can
adjust his course with the current and steer
his business in a progressive direction.
False (F) FALSE THEORIES. False theories are
Theories constantly attacking business. They are the
evil spirits which prey upon legitimate busi-
ness, disturbing influences which turn popular
ignorance against a trade or its methods. They
are the tools of fault-finding busybodies of
trade. They will be found in unfair competi-
tion, in newspapers, in muckraking magazine
articles, in the legislature, and in the laws.
Trade efficiency and a proper amount of
publicity is the best protection against them.
The Law (G) THE LAW. Every business man should
be well acquainted with the laws which affect
his rights and his actions. It is absolutely
necessary that each individual should under-
stand the Sherman law, the Clayton law, the
Trade Commission law, as well as the State laws.
[66]
TRADE CO -OPERATION
The opinions and decisions of courts and of the
Federal Trade Commission are also necessary
in order to understand individual rights and
restrictions.
Ill — UNIFORMITY
Uniformity signifies system-*-an orderly
arrangement of trade methods, obtained through
Trade Opinion and adopted by the units of
trade. It constitutes the code of business pro-
cedure, the manual of training.
(A) STANDARDIZATION OF METHODS. There standard^
can be no co-ordination in trade relations zation
without uniformity of purpose. Trade meth-
ods are innumerable and should be carefully
considered in order to eliminate from them
abuses, evil practices and careless habits.
When a bad practice becomes a habit it means
demoralization — a good habit becomes a
wholesome custom. Therefore, it should be
the constant aim to reform indifferent habits
and establish regulated customs.
(B) TECHNICAL STANDARDS. Standardi-
zation means also the adaptation of efficiency
and economy to the entire business system.
If, of a manufacturer, it should include factory
machinery, equipment and methods; other-
wise, as of a distributer, the general and
TRADE CO-OPERATION
departmental management, the purchasing and
sales systems.
System (Q SYSTEM. There are two or three sys-
tems which ought to be uniform in application
in order to be thoroughly co-operative in
nature. The accounting system, a classifi-
cation of goods system, a system of cost de-
termination, and the system of profit sharing,
should be identical, or as nearly so as practical,
with those of other members of the community.
Another important system which can only
be adopted as a trade system, is that of credit
interchange and investigation.
It can be readily discerned that such uni-
formity is dependent upon the determining
influence of trade opinion.
IV — HARMONY
Harmony signifies the application of the
knowledge gained through the principles of
good-fellowship, comprehension and uniformity.
It indicates established community interests.
Harmony (A) HARMONY signifies the operation in a
trade of uniform standards, customs, methods
and systems.
In addition to this it includes the rela-
tionship between functions in trade distri-
bution, and the observance of trade ethics.
[68]
TRADE CO-OPERATION
(B) FUNCTIONAL RELATIONS. Many lines Trade
of trade are distinctly divided into functions, RMion8
i. e., manufacturing or packing, wholesaling
or jobbing, and retailing.
A harmonious relationship between and
among these factors is of prime necessity for
co-operation between them, for to every func-
tion should be known and respected the ethics
of its lateral branches, as well as of its own.
(G) TRADE DISTRIBUTION. Particularly is Distribution
the observance of proper trade distribution in
inter-co-operation necessary to the preserva-
tion of the trade unity and welfare. If you
are a manufacturer your policy of distribution
should be announced and adhered to. If you
elect the jobber as your distributer you should
be as loyal to him and to his interests as the
jobber should be loyal to you. The jobber
should sell to the retail trade exclusively, or
if elsewhere, only where it does not affect the
interests of that function. If you are a re-
tailer you should buy only of the jobber and
not attempt to pass over his head. The lack
of observance of this principle encourages that
revolution in trade methods (quite apparent
today) which demoralizes legitimate trade
relations. It is the disloyalty of individuals
to their trade functions and hence to the
TRADE GO-OPERATION
established channels of distribution which sus-
tains false theory and causes disturbance of
uniform conditions. This may be illustrated by
mailorder houses, chain stores and co-operative
buying clubs, which are made possible only
by breaking down established customs. Loy-
alty to trade interests, which incidentally are
one's own interests too, should govern the in-
dividual at all times.
Morals (D) MORAL PRINCIPLES. And now we pass
to the particularly ethical principles in co-
operation.
Your highest standard is the Golden Rule,
modified:
Do unto others for thine own sake what thou
wouldst that others do unto you and in so do-
ing accept a law from which thou canst not
escape. — THOMASIUS.
When for our own sake we do those things
which others desire, and who reciprocate in
the doing, we are following the natural law
from whose penalties for neglect we cannot
otherwise escape.
The following of this law would cleanse
business of its abuses, its evil practices, and
correct in the business men those traits of
character which mar humanity and which
[70]
TRADE GO-OPERATION
are so especially evident in business inter-
course.
Unless we follow such standards how can
the community interest, which denotes those
things which are necessary for common welfare,
be made stable and secure?
For any higher attainment it is necessary to
have an ideal and while we may never reach it,
the inspiration derived from its influence, is a
constant incentive to greater effort. The gait
which one advanced member of a trade
assumes will influence the pace of others.
If one or more cannot keep step, patience, for-
bearance and example will in time show, lead
and impress them. The tendency in competi-
tion is to follow the lower standard of morality,
whereas progress must be in the direction of
the higher standard.
V — VOLITION
Volition is the motive power of the individual
will — to follow co-operative principles through
the guidance of community opinion. Its effect
is teamwork.
(A) TEAMWORK. Here is where the results Teamwork
of Association education, training and work
prove out. If the individuals all reflect com-
munity opinion in their voluntary acts, the
TRADE GO-OPERATION
acme of co-operation is attained. If your act
co-ordinates with the acts of the other
members of your community then all have
attained efficiency in teamwork.
Conduct (B) CONDUCT. Each individual in Associ-
ation work is alone responsible for his own con-
duct. There can be no coercive measures by
majority rule or otherwise in voluntary co-
operation, neither can resolutions bind mem-
bers to act in accordance therewith. The
freedom of the individual to act as his desire
dictates is paramount in co-operative princi-
ples as well as in the eyes of the law; there-
fore, the conduct of the individual must be of
his own volition in following any enactment
of his association as well as in observing the
principles established by community opinion.
You, as an individual, are then an essential
part of the machinery of your organization,
without whose effectiveness the other parts can-
not operate as a community. Hence, there is
the responsibility of the community welfare
upon your individual conduct. This conduct
of the individual is the dominant cause for
failure or success in any co-operative move-
ment and business cannot be an exception.
Self-Control (G) SELF-CONTROL. Self-control means the
use of the principles of co-operation by you.
TRADE CO-OPERATION
If you do not keep up with every principle, you
become a drag upon your community, you
lower the possible standard. It will unques-
tionably require sacrifice of personal privilege
and private advantage, as it will require serv-
ice of an earnest character, to make good any
community purpose.
Can you not now realize what is dependent
upon your self-control? Without it, you may
not act and teamwork is obstructed, commu-
nity opinion is violated, harmony is disrupted,
uniformity is disorganized, comprehension is
nullified and good-fellowship is forsaken. Co-
operation absolutely depends upon you and your
self-control.
THE ARGUMENT
The Spirit of Democracy is the Spirit of Spirit of
Go-operation. Both are inspired from the Democracy
same point of view by the same necessity, and
the principles governing each are identical.
In a democracy it is public opinion which
rules; in co-operation, community opinion.
The former determines public welfare, the
latter the community interest of the trade.
The similarity between the federal prin-
ciples of our country and the co-operative
principles of trade is striking and the very
[73]
TRADE GO-OPERATION
arguments of constitutional authorities fit per-
fectly the requirements of trade co-operation.
In 1805 — Thomas Paine wrote:
Secrecy and It is by keeping a country well informed
Mystery upon its affairs, and discarding from its coun-
cils everything of mystery, that harmony is
preserved or restored among the people and
confidence reposed in the Government.
Substitute trade community for the word
"country" and co-operation for the word "gov-
ernment" and we can adopt the truism as
exactly applicable to trade co-operation.
A century later (1916) David Jayne Hill,
an eminent authority on Constitutional law,
wrote "The Foundation of the State" (North
American Review), and his analysis furnishes
exactly the basis for trade co-operation:
Self- The very idea of government implies a re-
Renuncia- straint placed upon the volitions of men,
tion which are of necessity not only different, but
conflicting. The true secret of good govern-
ment lies in the spirit of self-renunciation;
and the word "self-government," which we
are proud to repeat as a watchword, has no
other meaning. It signifies government by
self-restraint, as distinguished from govern-
ment under compulsion. A people that is
incapable of renouncing personal and private
advantage in the interest of the public good
[74]
TRADE CO-OPERATION
is incapable of self-government, and will
sooner or later seek and find a master. * * *
There is in every human being capable of
social organization a conception of justice as
a principle wholly apart from personal de-
sires or volitions. Attending this concep-
tion there is a sentiment of obligation to
respect this principle, regardless of personal
interest or advantage. It is this that renders
men fitted for human society, and makes
possible the organization of the State as the
embodiment of public authority. The State
is nothing else than the body of which this
principle is the life.
This "self-renunciation" which causes the Self
relinquishment of personal and private ad- ^enuncia-
vantage to the community interest is obedience
to that community opinion whose voice is
the voice of authority.
Clearly do these excerpts interpret the ne-
cessity for a comprehensive intelligence, upon
which the stability of a democracy is founded,
and which also must be the foundation for
successful trade co-operation.
A trade community really is a "little de-
mocracy" of which the individual is a citizen,
and to whom community or trade opinion
should be as valid a guide to his business deal-
ings as public opinion is the valid basis for the
[75]
TRADE GO-OPERATION
laws which are made to govern his conduct as
a citizen of a democracy.
Basis for In a democracy there must be harmonious
Co-operatwn frien(mness to insure a unity of knowledge in
the affairs of state. Does not the same neces-
sity dictate that within a trade community
there should be harmonious friendliness—
"good-fellowship" — amongst its members, in
order that there should exist a community
knowledge of all trade matters?
Competition upon the present basis of
aloofness, selfishness and secrecy is a process
of attrition as may be noted by the constant
elimination of old business houses. Results
from such "dog-eat-dog" methods as are illus-
trated by competition are obtained only when
the other fellow happens to be the "under dog."
As intelligent beings, business men must realize
that if the plane of competition can be ele-
vated to meet the requirements of moral law,
the standard of business conduct will likewise
be higher, producing unquestionably greater
results.
Intelligent co-operation means a high stand-
ard of business, with efficiency as its watch-
word. A low standard of business such as
competition induces implies ignorance, with
chance as its only hope. A high standard of
TRADE CO-OPERATION
both morals and efficiency creates a condition
which ignorance cannot attain.
THE FIRST PRINCIPLE
GOOD-FELLOWSHIP. By good-fellowship is Good~
implied a unity of friendliness, which is the
first indispensable condition to any co-oper-
ation.
In human nature the inclination to friendly
intercourse is inherent. Give this inclination
chance to develop and it quickly resolves into
good-fellowship. And if there be a common
sentiment directed toward any purposes, a
unity of spirit becomes immediately manifest.
Even between seemingly incompatible natures
there will grow a certain sympathy of feeling
when a necessity, or some common interest,
inspires a joint desire.
To make effective this unity of purpose
there must be confidence, and to insure con-
fidence, the absence of all mystery, secrecy
and ignorance of motive is imperative. And
with the elimination of these "unknown quan-
tities" will quickly follow fair dealing.
It is evident that to accomplish this neces-
sary condition, an interchange of information
forms the requisite solution.
It should be unnecessary to observe that
[77]
TRADE GO-OPERATION
it is only the competition of ignorance which
is to be feared. If a competitor is intelligent
his competition is "clean." It should follow,
then, that it is to the interest of all concerned
that all competitors should possess as nearly
as possible an equality of knowledge, or an
equal opportunity to acquire it.
Information which one competitor may
possess, which others do not, can be of but mo-
mentary advantage, for when others do dis-
cover it the reaction, which inevitably follows,
often results in the loss of what had been gained
by the advantage. A selfish advantage is
invariably followed by reprisals and reprisal
upon reprisal spells ultimate ruin.
The Open "Shirtsleeve diplomacy" through "the open
Door door" is equally a wise and up-to-date policy
for business. Throw open the doors, let in the
light upon all transactions, handle the truth
with shirtsleeve frankness, and mutual in-
terests will grow. A frank exchange of infor-
mation between competitors certainly must
increase the knowledge of both, while an inter-
change between and amongst all competitors
unquestionably will result in the growth of
the trade community, in knowledge, in op-
portunity, in economy, in efficiency and in
scope.
[78]
TRADE CO-OPERATION
What more could be wished? Is this not
what business is looking for?
The interchange of information should in-
clude everything of common interest. No
secrets in trade, would mean both competence
and efficiency, a condition which would ex-
clude opportunity for "pirates" to undermine
the trade stability by preying upon its un-
defended units.
A trade placed upon such a basis would be
invulnerable because it would be wholly
efficient.
The Federal Trade Commission has gath- Present
ered data in shape of direct information per- In*fficieTWy
taining to manufacturing industries which
reveals an astonishingly deplorable condition
of "hit or miss" ignorance in the simple ele-
ments which go to make, not only efficiency
and stability, but solvency. It serves as con-
clusive proof that it is simply the lack of
uniform knowledge which is responsible for
the condition.
If such be true of manufacturing industries,
it is sufficient indication to prove also that the
conditions in the miscellaneous classes of busi-
ness engaged in the distributing function must
be infinitely worse.
The interchange of information is that
[79]
TRADE GO-OPERATION
interchange process of education which in time leads to the
information Po^nt wnere trade units recognize that their
troubles are similar and their interests iden-
tical.
Most all problems in business are com-
munity problems and it is evident that they
can only be solved by community effort.
Therefore, just so long as the units of a com-
munity waste their energy, their capital and
their wits in the scramble of competitive at-
trition, the problems cannot be solved and
inefficiency must continue to ruin those whose
stock of these attributes is insufficient to stand
the strain.
It is the interchange of information which
reciprocally educates, and establishes that in-
telligent understanding which is necessary
to cope with the constantly increasing prob-
lems presented to the trade community by
the unremitting economic law.
THE SECOND PRINCIPLE
Comprehen- COMPREHENSION. Comprehension herein is
construed to mean intelligent understanding,
the absorption of definite knowledge.
It is only when facts and conditions are
intelligently understood that the problems
[80]
TRADE GO-OPERATION
confronting the 20th century can be solved, and
this equally is as true of business as of political
problems. The solution is up to the trade com-
munity upon a business issue, as it is up to
the people upon a political question.
Not to impugn the mental ability of busi- Lack of
ness men, it is no injustice to assert that it is Knowkd^e
their lack of proper comprehension of economic
fundamentals, natural laws, which occasions
the present absurdity of competitive strife,
just as the people's lack of comprehension
causes them to indulge in false political theories.
The untrained minds of business men cause
them to differ until there is formed a state of
chronic incongruity. They do not understand
the exact conditions in business, nor each
other's motives, consequently there is the
absence of a seeming possibility for unity even
while their interests and objects are identical.
Hence, in the absence of the common basis of
a uniform understanding, it is perfectly natural
that they should resort to competitive contest
in accord with their primal instincts.
Really, it is to the lack of that comprehen-
sion (which is possible for every man to ac-
quire) that almost every human difficulty,
disagreement and failure may be attributed.
Children are sent to school to learn the rudi-
[81]
TRADE CO-OPERATION
ments, the groundwork of knowledge, yet
their elders, owing to their disregard of these
very rudiments in business, indulge in what,
to the children, could they understand, would
seem ridiculous. Cause and effect are ignored
and motives attributed, which have no place
in reality whatsoever, being simply the result
of ignorance or of a suspicious imagination.
Men's While men's characters and dispositions
Characters may differ widely? all j^ influenced by the
same righteous principles, known as ethics,
which are established by moral law. But
these principles they cannot apply because
their minds differ too in ability to reason, in
clarity of purpose and in understanding.
Therefore, they do not comprehend how to
identify their community interest.
When, however, good-fellowship, mutual
confidence and unity of purpose, characterize
a body of business men — when they exchange
with each other the information which will
upbuild their common understanding of the
common interest — the result is bound to create
this necessary comprehension.
Essentials Without the ground work of comprehension ,
it would be idle to expect results from co-oper-
ation; but with its acquirement, the mental
process of every mind is revealed, the false
[82]
TRADE GO-OPERATION
impressions dispelled, the doors of business
are opened to the light of intelligence and
righteous ethics applied.
It is here, too, where patience is an essential
part of the education of the brighter minds,
while diligence is building up the intelligence
of the duller; and here again is "bear and for-
bear" essential to equalize the adjustment of
men's characters, mental abilities and ex-
pressed opinions.
A clear comprehension, therefore, of the
principles underlying co-operation must lead
unerringly to the goal desired by all — progress
and success.
THE THIRD PRINCIPLE
UNIFORMITY. The outcome from the com- Uniformity
prehension of the foregoing principles of co-
operation will result in uniformity — the con-
dition for proper teamwork.
Uniformity is specific in its application,
adapting standards to common use in the
trade. It is the utilization of methods and
materials, such as have been determined as
best adapted to produce the results desired.
It applies the education gained from trade
intercourse, to active practice in matters of
[83]
TRADE CO-OPERATION
Uniformity trade technic, efficiency and economy. It
establishes the scientific basis for business.
The secret of any progress in American busi-
ness lies in its universal adoption of uniform
standards.
The question as to why such uniformity
should not be equally as efficient if applied
to business morals, principles and policies, is
strictly in order, and the answer, to be consist-
ent, must be in the affirmative. And, when
there is the same uniform teamwork in the
mental and moral processes of business, as
there may be in its practical forms, then indeed
will the purposes of co-operation be fulfilled.
The determination of this uniformity, as
can be readily surmised, is the part of trade
opinion. After good-fellowship becomes the
rule and information becomes a common fund,
then is it possible to obtain a definite trade
opinion because the community interest has
been made the working hypothesis, based upon
facts as revealed by comprehension.
Argument should not be required to sustain
the desirability of uniformity or standardiza-
tion, the value of which is self-evident. It is
a principle too well founded and demonstrated
to inspire a doubt. The only question is as to
its possible effective application to the mental
[84]
TRADE CO-OPERATION
and moral process, and this may be answered Uniformity
by the statement made in the preceding
chapter regarding the necessity for the
groundwork of fundamentals to the acquire-
ment of comprehension. Uniformity in
business must follow community compre-
hension as the one possible result.
Unfortunately, uniformity of opinion is
today the great lack in business, and the only
possibility for progress and for defense lies in
the force of which it alone is capable. It has
been said that "public opinion is the only
enduring force in the world"; likewise is the
uniformity of trade opinion the only enduring
force in trade as it constitutes the only
authority to which the units of trade owe
allegiance.
Until this uniformity of purpose manifests
itself in trade opinion, the practical uniformity,
such as accounting, cost determination, stand-
ardization of usages, classification of competing
articles and other essentials to the conduct of
efficient business, cannot be forthcoming.
THE FOURTH PRINCIPLE
HARMONY. Harmony is that ideal condi- Harmony
tion to which nature and man are both work-
[85]
TRADE CO-OPERATION
Harmony ing — nature in the direction of perfection and
beauty, man in the direction of happiness and
truth. This may be hard to reconcile with the
incessant work, worry and circumstance of
man's existence, but the fact is clearly shown
by comparison with the past conditions of
mankind. It is very evident also from the
history of nature that harmony is the ulti-
mate purpose of her process.
Competition is the antithesis of harmony,
because it produces friction, and while rivalry
to excel is in itself an element in the happiness
of man, the vicious function of strife is no part
of it.
The result from co-operative work is har-
monious action, general in its ejFect. It pro-
ceeds from the crystallization of trade opin-
ion— the determination of the community
interest. It means the co-ordination of parts,
the movement of the whole. It cannot exist
except under moral influence, as it is applied
ethics which determines righteous action. It
necessitates, too, mental control which deter-
mines correct action; and it implies obedience
to natural law — economics.
Harmony is therefore not a condition pos-
sible to create, except through progressive
steps, for it is the condition of that "working
[86]
TRADE CO-OPERATION
order" which requires that the team be in
perfect action, the gearing in perfect align-
ment, and co-operative principles in operation.
It is not a working tool, as with the former
principles, but the finished product of their
action.
THE FIFTH PRINCIPLE
VOLITION. Much could be written of this Volition
subject as it covers the entire scope of man's
actions — his reasons, his emotions, his aspir-
ations, inspirations, instincts — as they work
upon his will. It is, however, not within the
scope of this work to undertake to dissect
mentality or character but only to distinctly
and emphatically place the responsibility upon
their master's use of them. He has the au-
thority over himself — his responsibility. As
he controls himself, denies his instincts, follows
his reason by sacrifice perhaps, certainly by
service, so will he obtain results. His con-
duct must determine his self-control, the
direction of his will — his volition.
The volition of the individual is the motive
power of co-operative principles. Without it,
they would be empty, inactive, impossible.
Volition, together with good-fellowship,
with which it joins hands to complete the
[87]
TRADE CO-OPERATION
Volition circle of principles, supplies the personality,
the humanizing spirit, in co-operation.
Volition is the active principle to team-
work, and as teamwork depends upon the
co-ordination of individuals actuated by voli-
tion, it is the vital principle in co-operation.
[88]
PART V
COMMENTARY
Meditating upon these matters, it is hard
to resist the persuasion that unless capital, i. e.,
business, can, in the immediate future, generate
an intellectual energy, beyond the sphere of its
specialized calling, very much in excess of any
intellectual energy of which it has hitherto
given promise, and unless it can besides rise to
an appreciation of diverse social conditions,
as well as to a level of political sagacity, far
higher than it has attained within recent years, its
relative power in the community must decline.
BROOKS ADAMS: "The Theory of Social Revolution."
/ tell you the tendency toward co-operation
is so much stronger in this twentieth century
than the tendency toward competition, that co-
operation will exist everywhere. * * * * We
have an irresistible tendency for co-operation
in business in every line from the crossroads
to the great metropolis.
Professor VAN HISE, University of Wisconsin.
We must recognize the probable effect of
present-day political tendencies upon busi-
ness, upon property and upon property rights
and upon the course of industrial and commer-
cial development. I believe that currents are
developing today that may quickly become irre-
sistible forces, and that, too, forces of adversity
and ill-fortune, if their dangers are not compre-
hended, their direction corrected, and their
sources controlled. F. A. VANDERLIP.
Preparation to meet this (international)
competition must be a complex operation, but
it must be effected upon the basis of certain
general principles, and conspicuous and essen-
tial among these must be reckoned that of do-
mestic reciprocity and co-operation between
government policy and private initiative and
endeavor. COL. HARVEY in N. A. Review.
THE COMMENTARY
Trade Co-operation means nothing more Practical
than the application of common sense to a Application
business proposition, and the five principles
outlined in this work define the logical lines
of endeavor by which to make possible its
practical application.
It is perfectly evident that co-operation
necessitates system, which is impossible under
open competitive methods. The main dif-
ficulties lie not in the adoption of a system in
accordance with co-operative principles, but
in the breaking down of the accustomed habits
under competition, in thought as well as in
methods.
To correct the thought there must be dis-
pelled that misapprehension which, in the
ignorance of facts and where interests seem-
ingly conflict, is prone to dwell in individual
minds. It is obvious that to dispel this mis-
apprehension will require enlightenment in a
common knowledge of conditions.
The chief obstacle confronting the correc- Chief
tion of competitive methods is inherent self- Obstacle
ishness, which is the chief support of compet-
TRADE CO-OPERATION
Chief itive strife. A course of rational reasoning
Obstacle ghoiJd reveai that wherever selfishness exists
there is an impossibility either of an equitable
opportunity or of an equitable enjoyment of
results.
No matter how bounteous the quantity
of an object may be, a beast in his nature snarls
to keep others away from it, and in the fight
which results, much of the object is destroyed
and lost. Among men, especially in civiliza-
tion, the enjoyment of anything in which there
is a recognized community of interest is par-
taken of in harmony and good-fellowship, for
then each is assured of an equitable portion.
Likewise should it be with trade, for there is
ample business for all, and if the community
interest is observed the equity in its division
is certain. Without the observance of this
community interest the selfish scramble re-
sulting means an inequitable division of
portions with the waste of a substantial part.
Why civilized man should not recognize
the error of competition, as it now exists, and
apply the obvious correction of co-operation,
as he has done in every other phase of his
political and social life, is due principally to
this inherent selfishness which lingers in his
nature.
TRADE CO-OPERATION
As has been indicated, co-operation cannot
eliminate competition entirely, but in with-
drawing the selfish thoughtlessness and mis-
apprehension from it, its unbridled tendency
to destroy is curbed and a basis is created for
clean rivalry in efficiency.
If the signs of the times are read correctly,
proper consideration for a fellow-man and the
acknowledgment of his community rights are
principles which hereafter will govern hu-
manity, and business must undergo the change
to conform to these principles.
During my twenty years of service in the The
councils of trade, I have seen an old generation
pass out and a new one take its place. I
have observed during this period a gradual
transition from acute individualism to a
semi-co-operative condition, induced by
increasing necessity. In some instances the
individuals plainly entered in the community
organization with an illy -concealed protest
and certainly with no co-operative spirit.
Such an organization cannot be called co-
operative for it lacks the zeal, the basic knowl-
edge, the harmony and uniformity which are
the cardinal necessities of true co-operation.
The necessities in recent years have been
growing more and more evident and plainly
[93]
TRADE CO-OPERATION
call for closer contact between members of a
trade, as they demand amity, unity and the
determination of community interest. These
necessities are created by economic, political
or social and legal conditions.
Community interest has become insistent
upon being recognized and in a short time must
become preponderant in the consideration of
trade, taking precedence before all individual
interests.
The business man's hesitancy today in
accepting the inevitable, in answer to the call
of necessity, to perfect his trade organization,
is due partly to his conservatism, owing to his
past success, partly to adherence to the habits
of competition, partly to skepticism, but prin-
cipally to his ignorance of the fundamental
principles of co-operation, a proper knowledge
of which would overcome his reluctance.
The Business Taking the business man as he is, he is a
sort of a "rough diamond" as far as higher
business culture goes. To use F. A. Vanderlip's
phrase, he is an "economic illiterate," but
as he has not heretofore been compelled to
polish up his economic knowledge, nor his
ethical attainments, he perhaps must be for-
given for following his competitive breeding.
It is not our privilege to accord to the
[94]
TRADE CO-OPERATION
business man the distinction of ' 'superman"- The Business
he is but plain human, even as his ancestors
were, and when called upon to perform a
necessary duty, which in view of past expe-
rience may appear to him as superhuman, he
is helplessly puzzled.
The business man is not a scientist and if
he be a philosopher he reasons along the lines
of human frailties rather than about the moral
possibilities of his fellow - being. He calls
science "theory" — and logic he dubs "aca-
demic stuff." He considers the rule-of-thumb
as "practical" knowledge and he is tainted with
the old, old habits, formed by his forbears
generations back, which he has inherited to
his present discomfiture. He is a victim of
conservatism, a slave of habit and a follower
of circumstance. He progresses by dogged
persistency and by experiment, rather than
by applied ability; by impulse and by expe-
diency, rather than by judgment, and oft-
times by luck rather than by design.
The business man carries with him all the
youthful characteristics of hopeful develop-
ment even though, at times, he lapses into
boyish thoughtlessness or mischief. Like any
other human being he is more readily suscep-
tible to the will power of a dominating mind
[95]
TRADE GO-OPERATION
The Business than to cold argument ; he will follow a leader
Man sometimes without discrimination. He is
readily swayed by eloquence and sometimes
by bombast. In brief, he is human and there-
fore uncertain. Throw into the balance with
these attributes, competition with all that
it implies, and mental incompatibility, and
some realization may be had of the necessity
for careful education as preliminary to real
association work.
Fortunately, he is amenable to the resur-
recting influence of reason, that is, if it does
not too abruptly attack his interests, and if it
is given to him in doses not over vigorous.
Once, therefore, get him into the habit of
"right" thought (even though he backslides
at times to "meet competition") then does his
real progress begin.
Here, then, is the material for that team-
work which the age demands.
If seemingly not promising, we must con-
sider that we have two great influences on the
proper side of the balance, common sense and
necessity, and if we can engraft them suffi-
ciently into the minds of our business men, to
convince them, we may be assured that their
education will be rapid, for they are, after all,
the keenest of all human classes.
[96]
TRADE GO-OPERATION
If once the business man becomes con-
vinced of the great advantage that harmonious
teamwork has over competitive conflict to
produce results, and when he absorbs the truth
that community welfare means his individual
progress, the foundation to successful co-oper-
ation is laid.
Now let us take a glance at the economic The
conditions — the stormy sea of troubles over
which the ship of trade is sailing, and we shall
see the practical necessity for co-operation.
Up to twenty or twenty-five years ago,
individual merchants had ample room to seek
new fields of opportunity, but with the devel-
opment of steam and electricity, the world
gradually contracted into a smaller sphere,
and the scope of opportunity likewise became
narrower.
Means of communication and transporta-
tion increased, facilities for manufacturing
multiplied, the appetites of the people for lux-
uries and conveniences developed with their
increasing wealth, and greater service was
demanded.
At the same time individual shops grew
into factories, factories into corporations, cor-
porations into combinations.
[97]
TRADE CO-OPERATION
The Goods became standardized, supply an-
ticipated demand so that speculative oppor-
tunity in many commodities lessened. Labor
organized and demanded a larger share of the
profits. Extensive advertising, intensive sales-
manship and extravagant service stimulated
the demand to the extreme. The wants of the
people continued to increase until they re-
belled at the cost of their own high living and
then sought out the business man as respon-
sible. Politicians caught the cue and howled
at the robbing business man and laws were
enacted to restrain him.
To do business and make money under
these conditions made business a wasteful
warfare. Is there any wonder that business
is floundering about in its endeavor to find
a firm footing, some stable condition upon
which it may hold its own, even intruding upon
its neighbor's rights in the wild scramble for
survival? Is it not evident that the individual
must be lost in this sea of troubles unless he
save himself by seeking assistance through
mutual helpfulness in co-operation?
There is no doubt that the old time " trust"
was created as a means to overcome the dis-
asters of internecine competition. The idea of
a combination or a "community of interest,"
[98]
TRADE CO-OPERATION
so called, with force behind it, was a shorter The
cut to the object than of voluntary co-opera-
tion with its attendant necessary education.
Such combinations were iniquitous but
no more so than the concentration of capital
and purchasing power, which, with govern-
ment assistance in shape of the parcel post,
are destructive of legitimate trade functions,
particularly in distribution. Their ability to
exist and succeed is due to their efficiency,
with which their competing lines in individual
competition cannot possibly cope.
And just at this moment the world war, the
war of democracy and co-operation against
autocracy and combination, is raging. What-
ever the outcome, there will be a new world,
with new conditions, new fields of opportuni-
ties and a new moral code. Business can never
be the same as before the war. It, too, must
be revised. International competition in busi-
ness is inevitable and its effect will change
the competitive conditions within the Nation.
Many governments will assist their com-
mercial interests, making their co-operation
mandatory, while in America co-operation
must be voluntary. It is up to the American
business man, with his power of initiative, to
show that he can so co-operate, for competi-
[99]
TRADE CO-OPERATION
tion will exist hereafter between co-operating
bodies. The community interest, the trade
interest, must be defined, comprehended and
held inviolate if the American business man
is to hold his own in the coming test for com-
mercial supremacy.
Political In the coming order of things we are cer-
Conditions ^am ^o ke confronted by the growing popular
clamor for paternal government — socialism.
As the gap widens between the efficient classes
and the inefficient, discontent will increase the
demand for government control. There will
be a revolution of sentiment, seeking to change
the very foundations of our government. The
indication can be had by analyzing the tend-
ency of labor unionism today, a constantly
growing power, which takes no cognizance of
competence or of efficiency, but its cry is:
the fewest hours, at the greatest wage, for the
least amount of labor. Equality is forced,
ability has no preference, and this legally
recognized combination of labor compels obe-
dience to its decrees. The opportunity for
business to expand and develop is restricted,
for the laws prevent trade combinations. As
the way narrows between the economic neces-
sity on the one hand and legal rights on the
[100]
TRADE CO-OPERATIO^
other, government control seems the only Political
possible relief.
State legislatures will unquestionably fol-
low the tendency, so it appears that gradually
all public utilities eventually will be doomed
to government control.
And what possible defense will the mem-
bers of a trade, dealing in a staple commodity,
have except in community efficiency? If
divided in opinion and interest and subject
to competitive conditions they will be deprived
more and more of their freedom of action —
action which perhaps economic necessity will
demand. We have already tasted of this legis-
lative medicine and all that can save many
industries in staple commodities in the future,
from a still more bitter and perhaps deadly dose,
will be the force of their unified opinion in their
trade interest and their community efficiency.
Seemingly the force of circumstance impels
business men to co-operate in their own pro-
tection, as it impelled their forbears, the cave
men, into clans for mutual protection, and
they of today are a much higher order of
beings. So, when analysis points to greater
protection as well as greater results, through
co-operative work, surely rational men should
hesitate no longer.
[101 1
TR A DE GO-OPERATION
Legal As we have observed elsewhere, there is
Conditions ft wj(je gap between the constructive economic
development and the conservatism of the law.
There is an urgent necessity for a bridge which
will bring these two great elements in national
life together.
Unfortunately, the gap is maintained by
the false theories which an uninformed public
creates in its wild clamor for a correction of its
social difficulties. These theories can only be
offset by the truth, by the education of our
lawmakers in economic law, and by the en-
lightenment of both lawmakers and adminis-
trators to the fact that it is a natural impos-
sibility to either alter or obstruct an economic
law by statute, without creating a condition
of demoralization which aggravates rather
than corrects the situation.
Business today is law-burdened. A super-
fluity of regulations embarrass its natural
course. But very few of these laws are truly
beneficial, amongst which the Pure Food law
stands pre-eminent. The Sherman Anti-trust
Act was passed — a righteous law, perhaps, but
unnecessary because the common law ade-
quately protects against the very iniquities
which this law was aimed to prevent. We see
a mass of decisions and interpretations which
[101]
TRADE GO-OPERATION
apply without discrimination, harassing the Legal
very business man whom the law was intended Condltlons
to protect. When his embarrassment became
too painfully evident through the decisions
under the Sherman Act, we find other laws
passed to assuage their violence — the Clayton
law, the Federal Commission law, and the
Webb Export law for instance — when what
is really needed is a repeal of all restrictive
laws with a court of commercial equity to
decide whether or not an act of business is
detrimental to public welfare.
We observe further that but few of the
technical questions get to the Supreme Court
for final determination, but are left in the air
in the district and circuit courts. We observe
that even conflicting opinions will license in
one part of the Union that which is prohibited
in another. We observe that the "Rule of
Reason" is given to the courts as a criterion
for their decisions, but unfortunately the rule of
reason seems to differ in the mind of different
courts. We observe that the Department of
Justice, upon its own initiative and without
court decisions, brings suits and obtains "con-
sent decrees" from the poor business man
to force its own opinions. We have observed
that our greatest industry, the railroads, was
TRADE CO-OPERATION
Legal taken over by the Government under the stress
Conditions of war? because the Interstate Commerce Com-
mission decided that either the railroads must
be relieved of the stringent laws, fail under the
handicap, or that the Government (against
which the laws do not prevail) must control
them.
Most all onerous and restrictive laws are
based upon the false premise of the necessity
for the ' 'freedom of competition," which is a
fetish with the public and politicians. As has
been shown, this freedom, the unbridled ten-
dency of competition, leads directly to destruc-
tion and it must be modified, not by laws but
by economic requirements. The law in equity
alone should interfere where some such modi-
fication may be proven injurious to public
welfare.
An eminent authority, former Justice
Hughes, in January, 1917, in an address given
before the New York bar, said:
"I hope that the days devoted to the appli-
cation of the uncertainties of such statutes as
the Sherman Act are numbered. What an ab-
surdity it is to find that the very co-operation
which the Nation finds necessary for its own
economic salvation under the strain of war is
denounced as a crime in times of peace!"
TRADE CO-OPERATION
How is the correction of these legal incon-
gruities to come about unless the unified
opinion of business can be used in protest, and
how is it possible to obtain such opinion
except through co-operation ?
It is not that these laws directly affect true
co-operation which does not violate them in
fact or tendency, as the act of any individual
is of his own volition, but they do cast a shadow
over the liberty of business by following it with
harassing threats of penalty or imprisonment
if it fail to keep within certain confines as deter-
mined by the opinions and interpretations
under the law.
Such laws are irritating and undemocratic,
so, as former Justice Hughes further said in
the address above referred to, "Let our legis-
lators free our statute books of cant."
In this brief commentary upon the condi- Conclusion
tions influencing business, I have been careful
not to overdraw the situation. In fact, perhaps
I have rather minimized the dangers, problems
and necessities confronting trade, but knowing
that but few business men have seriously con-
sidered the effect of the tendencies upon their
business prospects, I have thought best simply
to place before them a conservative statement,
TRADE GO-OPERATION
Conclusion content to know that if they do investigate the
facts their efforts will readily confirm my views
and they will not accuse me of overdrawing
the situation.
And now in conclusion — you have been
introduced to the subject of co-operation as it
should be understood by all business men.
The result, if my hope is fulfilled, is that you
will consider earnestly this new phase in your
business career; — that you will now be willing
to yield a portion of your individual sovereign
rights in order to constitute the community
interest — that your individual business will be
looked upon by you as a department — one unit
of the community whole — with you as its man-
ager, responsible for your part in the com-
munity welfare; — that you will hereafter reg-
ulate your actions to accord with community
opinion, the highest authority in co-operative
unity ; — that you and your fellow members will
look upon each other, no longer as competitors
in the old sense of the word, but as co-oper-
ators;— that your co-operator is not one to
down, but to uplift, to aid, and from whom to
receive aid; — that your competition hereafter
will strictly be a good natured rivalry to obtain
the result of efficiency or of economy with price
balanced with service ; — that you will meet the
[106]
TRADE CO-OPERATION
heads of other departments of the trade com- Conclusion
munity frequently, exchange with them views,
experiences and facts; — that you will yield to
a preponderant opinion against you, remem-
bering that the progress of the whole will yield
better results for you than anything you may
obtain by independent action, and finally; —
that you will follow the essential principles of
co-operation, particularly in exercising con-
trol over yourself and your action, so as to
perform properly your part in the teamwork.
If you do this, I am confidently certain that
the results of your organization, of your edu-
cation, of your co-operation will produce for
you and for your community the success, prog-
ress and prosperity which such loyalty and
teamwork must merit, and which it is unques-
tionably certain to achieve.
PRESS OF H. S. CROCKER Co. ,SAN FRANCISCO
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