SeptemBer 10. 1922 



HARDWOOD RECORD 



19 



Clarifying the Lumber Statistics Question 



On Deeember 19, 1921, it will be recalled the Supreme Court of 

 the United States sustained the lower Federal court in the grant 

 of permanent injunction against the so-called "open competition" 

 activities of the American Hardwood Manufacturers' Association. 

 This decision was rendered in such language as to cause much con- 

 fusion among trade associations as to whether the decision went 

 against all exchanges of trade statistics through trade associations. 



The court was divided six to three. From the majority opinion 

 it was not apparen' whether the court had ruled on the one ques- 

 tion of essential interest to trade associations at large, namely, 

 the legality of the compilation and distribution by associations of 

 current trade information, especially statistics of stocks, ship- 

 ments, orders, production and sales prices. The dissenting opin- 

 ions were almost equally confusing. The opinions of competent 

 attorneys were conflicting. Official and unofficial expressions from 

 governmental sources were not in agreement. Some associations, 

 because of a sense of insecurity and indecision, suspended or aban- 

 doned their statistical activities. 



The Department of Justice was besieged by trade associations 

 and their officers and legal advisors for a definite statement of the 

 Attorney General 's interpretation upon the Supreme Court 's deci- 

 sion in the Hardwood Case. The help of the Secretary of Commerce 

 was likewise solicited by trade organization officials in an effort 

 to learn the Government 's understanding of the law as applied by 

 the Supreme Court, and its policy with respect to enforcement. 



The Attorney General in public statement and in semi-private 

 conversations repeatedly stated that "legitimate business need 

 have no fear of Government prosecution or other action as a result 

 of national investigation into prices and trade practices"; and 

 "that the view of the Department of Justice was that it is not un- 

 lawful per se for open-price associations or similar organizations 

 to gather statistics or other data"; that "it is only unlawful to 

 collect and compile essential trade and industrial information, when 

 it is used for unlawful purposes." At about the same time the 

 Attorney General further "elucidated" the situation by stating 

 that which trade associations and for that matter all weU informed 

 citizens had known for years, that associations, under the law, 

 "cannot fix prices; cannot apportion territory for sales purposes; 

 cannot limit production; cannot control competition." 

 Would Not Weaken Haxdwood Buling 



With respect to the effort of the Department of Commerce to 

 secure what at that time was frequently referred to in anticipation 

 as a "charter for trade associations," the Attorney General, 

 within a month after the hardwood decision, stated that "naturally 

 it is the desire of the Department of Commerce to give to the busi- 

 ness public the most accurate information regarding these trade 

 associations that is possible"; * • » "We want," he stated, 

 "to encourage and perpetuate the organization of these associations 

 that are doing a legitimate service for business, but we cannot be 

 accommodating in making concessions to organizations when such 

 concessions weaken or abandon the rule laid down in the recent 

 beneficial opinion" (referring to the Supreme Court decision in 

 the Hardwood Case). 



Meanwhile, the Secretary of Commerce was in virtually constant 

 communication with the Attorney General with view to the issuance 

 of a public statement that might sufficiently clarify the law, as 

 interpreted and as proposed to be applied, by the Government, to 

 enable trade associations to resume or continue such activities in 

 current trade statistics as might be helpful to the trade and at 

 least not injurious to the public — and this without embarrassment 

 or fear of unwarranted attack. 



*iiecretary-Manager 

 Washm-gto-n, D. C. 



National Llimher Manujavturcn 



*By Dr. Wilson Compton 



Many association officials and attorneys were of opinion that the 

 Department of Justice could, if it were willing, outline the limits 

 of lawful association activities in definite language which could 

 be universally understood and applied. Such statement, however, 

 had never been issued; and it must, it would seem, be apparent to 

 those familiar with the law and legal procedure, that no such def- 

 inite or specific charter or outline of lawful association activities 

 could safely or wisely be published by the Attorney General. Some 

 acts on the part of associations are, of course, illegal in and of 

 themselves. But these are not the activities which were in con- 

 troversy. The activities in question and concerning which trade 

 associations desired light were those which in and of themselves 

 had not previously been considered unlawful and which have been 

 held unlawful only if abused or used for some unlawful purpose. 



It must be obvious, therefore, that the Attorney General could 

 not reasonably have been expected to issue a statement that would 

 enumerate specific activities which in and of themselves are not un- 

 lawful. Upon the test in the courts such a position could not have 

 been successfully maintained and the advice of the Attorney 

 General to just that extent would have been misleading. 



No General Guide Possible 



In this understanding the National Lumber Manufacturers' Asso- 

 ciation in January advised the associations in the lumber industry 

 that, although the Secretary of Commerce and the Attorney General 

 had been seeking a basis for an announcement of governmental 

 policy and that, although they were in disagreement on some points, 

 a public announcement was to be soon expected; but that such 

 announcement whenever issued could not be expected or relied upon 

 to furnish a general guide to the lawful conduct of trade associa- 

 tions. 



This was the conclusion finally reached in the negotiations be- 

 tween the Department of Commerce and the Department of Justice, 

 although the Attorney General is not competent under the law to 

 advise trade associations, he is under Federal statute, the official 

 legal advisor of the Cabinet officers. The Secretary of Commerce, 

 therefore, requested the advice of the Attorney General with 

 respect to the legality of trade association activities with which 

 the Department of Commerce itself desired to effect some arrange- 

 ment for co-operation. 



This resulted in the publication on February 16 of the so-called 

 ' ' Hoover-Daugherty correspondence. ' ' In this the Attorney Gen- 

 eral stated among other things, in response to specific inquiry from 

 the Secretary of Commerce, that in his understanding, the collec- 

 tion by trade associations of trade information including produc- 

 tion, wages, consumption, distribution, stocks and prices; or for 

 trade associations to compile and summarize such trade informa- 

 tion; or after collection and compilation to submit it to the Secre- 

 tary of Commerce to be by him distributed to the members of the 

 Association and to the public, was not unlawful. 



On the basis of this understanding, a conference between trade 

 association representatives and the Secretary of Commerce was 

 held in Washington on April 12. Several hundred trade associa- 

 tions were represented, including many lumber associations. There 

 and thereafter it became apparent that trade associations gen- 

 erally were not disposed to place the distribution of current trade 

 statistics entirely in the hands of the Department of Commerce. 

 Especially so, in view of the fact that by so doing they would not 

 acquire any immunity from attack by the Department of Justice 

 acting in its lawful discretion. Furthermore, such an arrangement 

 for the distribution of trade statistics would have involved such 

 delays as to make the information of little if any value when re- 

 ceived. 



A nsooiation , 



