THE AMERICAN TRADE AND BUSINESS ASSOCIATION:
A STUDY OF ITS GROWTH, STRUCTURE. AND
FUNCTIONS IN THE EMERGENT AMERICAN SOCIETY
Thesis few the Degree of D. B. A.
MICHIGAN STATE UNIVERSITY
Desmond D. Martin
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thesis entitled
THE AMERICAN TRADE AND BUSINESS ASSOCIATION:
A STUDY OF ITS GROWTH, STRUCTURE, AND FUNCTIONS
IN THE EMERGENT AMERICAN SOCIETY
presented by
Desmond D. Mart in
has been accepted towards fulfillment
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M degree in Wt
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Major professor
Date November 16, 196a
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ABSTRACT
THE AMERICAN TRADE AND BUSINESS ASSOCIATION
A STUDY OF ITS GROWTH, STRUCTURE, AND FUNCTIONS
IN THE EMERGENT AMERICAN SDCIETY
by Desmond D. Martin
This study was specifically designed to answer key questions
about the increasing significance of large—scale national trade and
business associations in the American society. Particularly, the
central purpose was to examine these associations and their in-
creasing importance as vehicles used by economic organizations in
dealing with environmental forces that present obstacles to the
achievement of their respective goals. Since the sc0pe of the study
was quite broad, a general framework was provided to view these
associations in a most meaningful manner. Trade and business asso—
ciations were examined as they exhibit changes and consistencies in
four major environments as follows: First, an historical environ—
ment of growth and develOpment. Second, the immediate environment
of these associations. Third, the environment provided by the
total society. Fourth, the environment provided by the business
world.
In order to control the boundaries of the analysis two coor-
dinate hypotheses were tested° First, the hypothesis was set forth
that trade and business associations come into being, grow and
flourish to the extent that members perceive them meeting their needs,
in particular, promotion and protection of mutual interest. Secondly,
Desmond Do Martin
it was hypothesized that these associations vis-a-vis society originate,
grow, and flourish to the extent that their objectives are congruent
with the psychological, sociological, and economic forces of the
emergent society. A corollary to this latter hypothesis suggests
that survival of a given association depends upon its ability to
adjust to these emergent forces in the greater society.
Three methodological approaches were used to test these
hypotheses: the historical, empirical, and case method. Questionnaires,
published histories, and supplementary association pamphlets were the
primary sources of data used. The questionnaire was sent to a
selected sample of 442 large—scale national trade and business asso-
Ciations. For purposes of analysis, it was necessary to stratify the
sample into meaningful categories. The categories selected conform
to the Standard Industrial Classification Cede and included the
following activity types: agriculture; manufacturing; transportatlon,
communications, and utilities; wholesale and retail trade; finance,
insurance, and real estate; and services. A final non—SIC category
(national business associations) was added to account for special
types of business associations. The criterion used in assigning in-
dividual associations to a specific category was the primary activity
of the association. The hypotheses were tested in the context of
both the major environments and the specific activity types of
associations.
The major findings of the research confirmed the validity of
the hypotheses within the limits of the research designo In fact,
each of the three methods yielded remarkably similar results with
Desmond D. Martin
respect to the hypotheses tested. Historically, trade and business
associations have originated, grown, and flourished to the extent
that they have been able to fulfill this need-oriented mission in-
herited from the guild system and modified by more recent history.
Empirically, these associations have exhibited unique patterns of
both internal and external relationships designed to sustain them-
selves in the greater society. Case studies of individual asso-
ciations provided additional support to the basic hypotheses. For
example, membership need-oriented functions were apparent throughout
each association's history. Also, emergent forces threatened the
survival of each association studied, and steps were constantly taken
to remain congruent with these forces and survive. The research
clearly showed that the modern trade and business association is
the product of an emergent American society.
THE AMERICAN TRADE AND BUSINESS ASHDCIATION:
A STUDY OF ITS GROWTH, STRUCTURE, AND FUNCTIONS
IN THE EMERGENT AMERICAN EDCIETY
By
‘ v
Desmond D9’Martin
A'WEflS
Submitted to
Michigan State University
in partial fulfillment of the requirements
for the degree of
DOCTOR OF BUSINESS ADMINISTRATION
Department of Management
1964
TABLE OF CONTENTS
CHAPTER PAGE
I INTRowCTION.OOOOOOOOIOOOOOOO0.00000QOOCOOUODOOU0 l
Purpose, Scope and Significance................ 1
Publications EBaling with Formal
ASSOCiationSOOOOOOOOOOOOOOOOOOOOOOOOCODOOOO. 4
II RESEARCH DESIGN AND METHODOLOGY.................. 27
IntrOdUCtionOOOOOOOOOO.IOOOOOOOOOOOOOOOOOOOOOOO 27
Definition of Trade and Business
Associations................................ 29
Trade and Business Associations: A Pop-
Ulation and a sampleOOOOOOOOOOOOOOQOCOOOOOCD 30
Major Research Tools........................... 41
III THE HISBDRICAL EVOLUTION OF TRADE AND
BUSINESS ASQCIATIONSOOOOOOOOOOOOOOOOOOOUOOOOOO 49
Introduction................................... 49
Trade and Business Associations: An
Historical Perspective...................... 50
IV THE ACTIVITIES AND FUNCTIONS OF TRADE AND
BUSINESS ASSOCIATIONS AS THEY RELATE TO
TH HEIR OWN IWIEDIATE ENVIRONMEIIT AND THE
BUSINESS VDRLDOOOOO (‘ottQOOOOOOUCDC-OOCL‘UCCC‘I‘ mt uC " 8’3
IntrOdUC‘tionec-Ioonoo oooooo oooocooc \«‘I>IIH 83‘
Environmental Faci;ors Affecting Trade and
Business Association Location . . f... . B4
Organizational Membership and S art C arac»
terist ics of Large- Scale National Trade
and Business Associations...... ......,.i. 93
The Financial Characteristics of Trade
and Business Associations .......-,-...,. ll;
Internal Educational Activities of Trade
and Business Associations...cu...as......... 123
Summary............ ...... ........t,.._.to...... 125
ii
CHAPTER
V THE ACTIVITIES AND FUNCTIONSIDF TRADE
AND BUSINESS ASSOCIATIONS AS THEY
RELATE TO THE GREATER SOCIETY WITH
PARTICULAR EMPHASIS ON THE GOVERN-
MENTAL SPHERE...... ......... .o.... ..... ...o.
The Established Position of Large-
Scale National Trade and Business
Associations in the Greater Society....
The Governmental Sphere: The Vital
Role of the Activities of Trade
Associations in Political Affairs.....o
The Public Sphere: The Significance
of Trade and Business Association
Activities in Broad Areas of Ameri-
can Public Life........................
Summary..................................
VI THREE CASE HISRDRIES THAT CHARACTERIZE THE
GROWTH, ACTIVITIES, AND RESULTING FUNC-
TIONS OF LARGE—SCALE NATIONAL TRADE
ASSOCIATIONS................................
Introduction: The Use of the Case Study
Method in this Study... ............... ...
A History of the American Bottlers of
Carbonated Beverages...............- .....
A History of the Investment Bankers
Association of America.............o.....
A History of the National Assoc1ation
of Electrical Distributors.......,.
Summary.. ..... .. ........... ..n....l..........
VII SUMMARY AND CONCLUSIONS ....... .. ...... u.....t....
BIBLIOGRAPHY..... ......... ............................
APPENDIX A - PRE~TEST QUESTIONNAIRE.......... .........
APPENDIX B - FINAL QUESTIONNAIRE ........ . .............
iii
PAGE
ISO
130
132
146
157
163
163
164
175
190
201
20.3
213
4'16
426
TABLE
10
11
12
13
14
LI ST OF TABLES
Number of Trade and Business Associations in
sample by ACtiVity TypeOOOOOOVOOOOOOOOO0.0.0.000.
Association Questionnaire Responses by Acti—
vity Type of Trade and Business Associations....
Activity Type by Age of Association...............
Trade and Business Association Membership
GrOWth by ACtiVity TypeOOOOOOOOOOOOO ...... 0000..
Trade and Business Association Processes of
Merging and Dividing by Activity Type.o .........
Major Impact of Emergent Forces on Trade and
Business Associations Development by Year.......
Present Location of Headquarters by Activity
TypeOOOOIOOOOOOOO... ........ O 0000000 000.00.00.00
Number of Affiliates by Activity Type.............
Extent of Departmentalization by Activity Type....
Type of Membership by Activity Type...............
Comparison of Number of Organization Members
and Extent of Departmentalization of Large-
Scale National Trade and Business AssOC1ations..
Activity Type by Occupational Category.i..........
Number of Paid Staff by Activity Type.........
Comparison of Number of Paid Staff and Extent
of Departmentalization Among LargeoScale
National Trade and Business Associations. ... ..
iv
PAGE
39
48
68
72
76
79w8O
86
95
98
100
103
105
109
111
TABLE PAGE
15 Size of Annual Income by Activity Type......... 116
16 Associations Receiving Membership Income
only by ACtiVity Type.....OOOOOOOO0.000...... 118
17 Primary Sources of Income (Public or Private
Criteria) By Activity Type................... 121
18 Presence or Absence of Internal Education
Program by Activity Type............ ......... 124
19 Activity Type by Contact with Federal,
State, and Local Governments...... ..... ...... 133
20 Presence or Absence of Formal Agreement with
Federal Agencies by Activity Type............ 139
21 Presence or Absence of Informal COOperation
with Federal Government Agencies by
ACtiVity Type....OOOOOOOOOOOOOOOO 00000 O 000000 142
22 Trade and Business Associations that Take a
Stand on Public Issues by Activity Type...... 146
23 Issues Which Associations Take a Stand on
by ACtiVity Type....OOIOOOOO. OOOOOOOOOOOOOOOO 1.53
24 Presence or Absence of External Education
Programs by Activity Type.. ...... . ...... ..... 157
25 Relative Extent of Trade and Business Asso—
ciation Interaction in the Governmental
and Public Spheres by Activity Type.......... 160
PREFACE
This study of trade and business associations was made pos-
sible by use of research tools and data drawn from a broader study of
American associations under the direction of Professor W. Lloyd Warner
of Michigan State University and financially sponsored by the Car-
negie Corporation. This broad study of large-scale national associa-
tions in American life has been a collaborative effort by a research
team. The most important individual effort in the success of the
overall association research was supplied by Professor Warner. Under
his expert direction the total association research has been guided
toward a meaningful end, and without it this particular study of trade
and business associations would not have become a reality.
In addition to the leadership provided by Professor Warner,
earlier foundations for both the broader association research and this
research were laid by a number of members of the research team. Pro-
fessors Warner, Orvis Collins, and John Trimm, and Mr. James Shrier
all contributed significantly to an early research design for the
broader study of American associations. These individuals provided
source materials through library research and personal contacts that
were used throughout both the broader study and this study. The En-
cyclopedia of American Associations, a comprehensive list of existing
associations published by the Gale Research Company, emerged as a key
tool used in both analyses. Once preliminary data were collected and
vi
analyzed, Professor Warner selected a representative sample of large-
scale national American associations. This sample was cross-checked
with samples selected by other members of the research team.
In the early stages of the broader research, Professor Frank
Nall and Mr. John Jackson were added to the research team. These
two men played important roles both in final questionnaire develop-
ment and in the creation of the operative research design for the
American associations study. Since the present study uses data ob-
tained from responses to that questionnaire, whatever merits it may
contain can be directly traced to the high quality of the association
questionnaire that emerged from team effort.
Generally speaking, the broader study of American associations
is concerned with all types of large—scale national voluntary associa-
tions. It emphasizes particular differences among these associations.
For purposes of analysis, American associations are placed in activity
types that include eight major categories. They are:
1. Production, ownership, management, and exchange
2. Agriculture
3. Civilian and military government and public administration
4. School and education
5. Religious and church
6. Physical and social welfare
7. Physical, biological, other sciences and arts
8. Recreation and sociability
vii
A total sample of 1,093 associations composes these eight
activity types. This selective sample accurately reflects the
true representation of large-scale national associations in each of
these activity types. The questionnaire was mailed to these 1,093
associations and 793 or 72.5 percent were completed and returned. Of
this 72.5 percent, approximately 60 percent were returned on the first
mailing and an additional 12.5 percent on the second mailing. Res-
ponses to this questionnaire yielded significant information about
governmental relationships, organizational characteristics, and gen-
eral purposes of the associations. These responses have been analyzed
and integrated in a meaningful study of American associations.
Trade and business associations that compose the production,
ownership, management, and exchange activity type of the broader study
are the major focal points of this analysis. This activity type is a
basic part of the entire economic segment of the society, and this
specific study analyzes in depth the associations it contains. A
special interest in trade and business associations nourished by the
author's participation as a member of the broader research team is re-
sponsible for this endeavor. Since it uses data collected by the total
research team, this study is an individualized product of the total
research. Trade and business associations are treated as individual
entities within a social type; this study can now be regarded as a
separate study of trade and business associations apart from the
broader study of all large-scale American associations. Thus, given
viii
its relationship to the broader association research, the ensuing
analysis emphasizes methodology, analysis, and conclusions as
applied to trade and business associations. Professors W. Lloyd
Warner, W. J. E. Crissy, and Dalton E. McFarland of Michigan State
University made substantial contributions that improved the
methodology and content of the individual thesis research as a
separate study. I am verngrateful to all of them for their
valuable and generous assistance.
ix
CHAPTER I
INTRODUCTION
Purpose, Scope and Significance
The central purpose of this study is to examine trade and
business associations and their increasing importance as vehicles used
by economic organizations in dealing with environmental forces that
present obstacles to the achievement of their respective goals. The
ensuing analysis will show that these associations have exhibited a
dynamic growth pattern in terms of membership sizes, scope of opera-
tions, and total influence in American life.
Thus this study is specifically designed to answer key questions
about the increasing significance of trade and business associations.
It is particularly important to determine why this growth has occurred.
Is it concentrated in any one type or kind of trade association?
Have trade and business associations experienced marked influences
from evolutionary forces? What are the internal and external relation-
ships of these associations, and how do they relate to their role and
importance?
Two coordinate hypotheses will be tested that will help to
provide answers to these key questions as follows:
Hypothesis I:
Trade and business associations come into being, grow and
flourish to the extent that members perceive them as meeting
their needs, in particular, protection and promotion of
mutual interest.
Hypothesis II:
Trade and business associations vis—a-vis society come into
being, grow and flourish to the extent that their objectives
are congruent with the psychological, sociological, and
economic forces of the emergent American society.
A corollary of hypothesis II:
Survival of a given association depends upon its ability
to adjust to the emergent forces in the surrounding society.
Three methodological approaches are used to test these hypotheses.
First, the historical method is utilized in determining association
growth patterns and how growth and functional types of associations
are related. Secondly, empirical analysis is employed in discerning
key relationships from a wide range of data. Finally, the case method
is used as a vehicle for analyzing particular associations in light of
the two fundamental hypotheses suggested in the study.
While the boundaries of this analysis are primarily controlled
by the nature of the hypotheses to be tested, a general framework is
provided within which these associations may be studied. They will be
examined as they exhibit changes and consistencies in four major
environments as follows:
1) An historical perspective of trade and business associations:
changes that take place as associations are older or younger.
3
2) Their own immediate environment: within the trade and
business association complex.
3) The total society environment: government, the larger
business world, and the greater society.
4) The business world environment: corporations, marketing
institutions, or financial organizations.
An inter-relationship exists among environments 2, 3, and 4.
For example, given that a trade or business association is primarily
concerned with the three worlds of 2, 3, and 4, it is postulated that
these three worlds are undergoing very rapid change and that these
associations adjust to that change in each of these areas. A trade
association may undergo an alteration in its structure to adapt to a
change in its own immediate environment, or to a change in the total
society. Furthermore, it may mean some type of alteration in purpose,
function, or in membership composition of the association as these
three worlds exhibit their changing faces as part of an emergent society.
One need only look at the developments in transportation, com-
munication, production, and distribution in the past thirty years to
realize that our society has become more urban, more mobile, and more
complex. Today no part of this society is remote and communications
between corporations and trade and business associations are very
easily accomplished even though they may be located in different parts
of the country. Also, the growth of urban areas has presented market—
ing problems that did not exist forty or fifty years ago. Many cor-
porations find themselves in a highly competitive situation in which
4
success or failure of productive enterprise in the market place may
hinge on what little is known about consumer motivation. While it is
true that more is being done today to learn about consumers and about
mass marketing enterprise, it is also true that the changing nature
of our society has made such study more difficult. This analysis is
concerned with how these developments have shaped the face of modern
trade and business associations. Particular emphasis will be placed
on an examination of membership, structural characteristics, and
activities of such groups to determine their place and influence in
American economic life.
Publications Dealing with Formal Associations
In view of the general purposes of this study as set forth in
the early part of this chapter, it is essential that a brief review
be made of the existing association literature in order to determine
how much is already known about voluntary association relationships
in their basic environments. While some research contributions have
been made to a greater understanding of associations, the current
state of theoretical knowledge in this area is quite undeveloped.
Further, the body of knowledge about association functions, growth,
and societal relationships (the primary interests of this study) is
concerned with voluntary associations in general rather than with
trade and business associations. The paucity of studies of this
type is particularly apparent when a penetrating analysis is made
of the classic works in the field. Many attempts were made to
5
uncover both the sources and content of the available literature
dealing with voluntary organizations. A valuable aid in this effort
was provided by Professor Buford H. Junker's exhaustive bibliography
of voluntary organization literature which he compiled at the Univer-
sity of Pittsburgh.1 His coverage includes the literature of the
relevant disciplines - political science, business administration,
sociology, and psychology.
The present study is an attempt to fill in some gaps of
knowledge that are revealed in the review of classic publications
about voluntary associations. Specifically, these gaps of knowledge
occur mainly in the areas of functional purpose and environmental
adjustment of these associations as set forth in hypotheses I and II.
Some early writers, such as Kropotkin (1914), made specific
reference to the problem of human association as distinguished from
other evolutionary processes. Kropotkin argued that the major pur—
pose of human association was one of mutual aid;2 There is little
question that we group together as human beings for mutual protection
and advancement, but the most important aspect of this grouping takes
on a special characteristic that can best be described by the term
formalization. The findings in this study suggest that it is mutual
lBuford H. Junker, "Voluntary Organizations in American Com—
munities," Unpublished bibliography, Department of Sociology, Univer—
sity of Pittsburgh, 1958 (mimeographed).
2Kropotkin, Mutual Aid: A Factor in Evolution (New York:
Alfred Knopf, Inc., 1925), Chapter 1.
6
aid (the support through banding together) that lays the foundation
for voluntary associations such as trade and business associations as
well as other types of human association that have arisen since the
beginning of mankind. As stated in hypothesis I, protection and
promotion of mutual interest will emerge as the goals of people
seeking mutual aid through trade and business association membership.
M. F. Robinson's Spirit of Association, published in 1913,
was an early attempt to analyze specific types of associations. After
studying the multiplicity of associations in Great Britain, Robinson
came up with what he calls four great forms of association.3 These
are:
l) Guilds (religious, social, trade, and craft)
2) Friendly societies (movements for mutual aid and social
advancement of one's life through group relationships).
3) COOperative movement (the social reform movement which
was an expression of a desire for social betterment, and resulted
in the socialistic community of Robert Owen as one example) .
4) Trade unionism (mutual aid in the form of the accumulation
of benefit funds with which to enhance the power of the worker in
his effort to restrain the forces of unrestricted competition as it
effects him).
3M. F. Robinson, Spirit of Association (London: John Murray,
1913), Chapters I, VIII, X, and XVII.
7
Robinson offers an early attempt to distinguish between dif-
ferent types of associations, and although he is not specific in
categorizing associations into activity types, he does use activity
as a determining factor in deriving his four classes of associations.
Trade associations, as will be developed in Chapter III, are an out-
growth of what Robinson calls guilds because the trade and craft
guild was an early form of trade association. The friendly societies
and cooperative movements Robinson defines differed from the guild
primarily in the extent of their social activity. These organizations
worked for public betterment and social reform and are counterparts
of modern social welfare associations. Finally, the labor union,
Robinson's fourth class, was concerned with improving conditions
of work within the framework of the existing industrial system.
Trade unions then operated for the benefit of the working man and
were more directly concerned with his workplace as Opposed to the
widespread social concerns of friendly societies and c00perative
movements. Trade guilds Operated in a broader industrial setting
than did trade unions, and were particularly concerned with problems
in the higher echelons of economic life. Interestingly enough,
Robinson perceived this difference and separated the two on the
basis of their activities. These differences will be further
analyzed in subsequent chapters.
Kropotkin and Robinson make two basic contributions to an
initial understanding of the association process. First, Kropotkin
8
recognizes common human needs resulting in universal characteristics
that reach into all kinds of voluntary associations; and, secondly,
Robinson provides a starting point for further analysis by dis~
tinguishing between different types of associations. The four
great association classes of Robinson are important because they
indicate how vital "associative effort" is with respect to national
progress. Guilds, unions, friendly societies, and cooperative
movements pave the way for social reform. In reality, legislative
and legal activities do not necessarily pioneer social reform, but
rather are supported by "associative effort" from which these
activities receive democratic sanction. Thus, in the present inves-
tigation it is recognized that associations, by their very nature,
have important social and economic influences on the processes of
organization in a given society, i.e. government, business, and
education.
Robert Lowie's Primitive Society, published in 1920, contains
a more sophisticated approach to the association problem. Lowie
uses Schurtz's theory of associations published in Germany in 1902
as the basis for his analysis. Schurtz theorizes that a profound
difference in the psychology of the sexes underlies the differen—
tiation between kinship and associational groups.4 For example,
women are eminently unsociable and any associational activity in
which they engage is considered to be of little consequence. Men,
4Robert H. Lowie, Primitive Society, (New York: Boni and
Liverwight, 1920), p. 297.
9
on the other hand, are eminently sociable, and this masculine
gregariousness fosters significant association activity.
In addition to the sex differentiation, Schurtz's theory
recognizes age differentials as playing a key role in association
development. Schurtz regards the antagonism between the older
and the younger generation that separates parent and child as
the basis for the oldest type of associated grouping. A basic
axiom of this theory is that grouping by psychological age and
matrimonial status preceded all others.5 In primitive societies
sex and age are the primary socializing agencies. There is little
doubt that these agencies, as they operate in such societies
have the effect of both identifying and protecting the social
patterns of behavior associated with age and sex differences. How-
ever, in more advanced stages of societal development, sex and age
do not remain as the only socializing agencies.6 The more advanced
society is characterized by a differentiation according to rank
and wealth. Clubs tend to arise supplanting the earlier age
classes and entrance fees and other qualifications emerge that
destroy the pure age stratification system of the society. Such
clubs can become highly secular or they may take the form of purely
social organizations.
51bid., p. 298.
61bid., p. 350.
10
Finally, Schurtz refers to secret societies as the other type
of association formed by masculine gregariousness. A prominent
trait of secret societies is the attempt to keep women and slaves
in subjection. This latter feature is certainly identified with
the basic nature of associations as conceived by Schurtz.
This early theorizing by Schurtz was crude and left many
questions unanswered. Probably the most devastating attack on his
theory can be centered on the fact that the nature of age and sex
groupings is culture bound. In fact, Lowie in his ensuing dis-
cussion of Schurtz raises this fundamental objection. Although
such limitations of the theory reduce its value, they do not nullify
its usefulness completely. The protection and promotional functions
of hypothesis I are present in Lowie's analysis of Schurtz. Schurtz
perceives a protective function being performed by associations.
It doesn't matter whether groupings are on the basis of age, sex,
wealth, or social class because the association can play the same
type of role in each case. Schurtz clearly points this out in his
discussion of secret societies.
Camilla H. Wedgewoods's study of secret societies among the
peoples of the South Pacific is a logical extension of Schurtz's
approach.7 Wedgewood considers the problem of why secret associa-
tions develop in certain societies and, perhaps even more important,
7Camilla H. Wedgewood, "The Nature and Functions of Secret
Societies," Oceania, I (July, 1930), pp. 129-45.
11
the nature of the functions that they perform. Her functional
analysis of secret societies has particular meaning to this
study of associations, and the ensuing discussion of Wedgewood's
findings points out some important analogies between the charac-
teristics of secret societies and trade and business associations.
In the context of this study the overall conclusions of the
Wedgewood study are particularly significant. Wedgewood states
that no association continues in existence unless it has a definite
function to fulfill. A distinction is made between two specific
types of function which a secret society may fulfill, first, the
"ostensible" or "manifest" function, and second, the "latent" or
"underlying" function. According to Wedgewood, it is this latent
function that must be present in every association, but the outside
world and even its own membership may be oblivious to it. She
defines the "ostensible" function as the object for which the
society was designed or the function which it is recognized by its
members as performing. Since many secret societies do not rigidly
adhere to their original purposes, many of these societies have
no "ostensible" function.
A secret association or secret society, in its broadest
sense, is a voluntary association whose members, by virtue of their
membership, are possessed of some knowledge of which non-members
are ignorant.8 The nature of this knowledge will vary from one such
81bid., p. 132.
l2
association to another: it may comprise magical or religious
rituals or spells; some sacred objects; the identity of the mem-
bers; the "ostensible" function of the association; or the very
existence of the association itself. But regardless of the
nature of the secret, the important point is that a secret society
is an organized, self—conscious association whose members are
possessed of some kind of a secret. Wedgewood qualifies her state-
ment that these associations are voluntary by pointing out that
there are certain circumstances in which an individual is forced
to join a secret society. In many of the societies that she
studied one's social prestige was dependent upon certain society
memberships, and in other instances, social obligations forced
such membership. Although the modern trade and business associa-
tions analyzed in the present study are also considered to be
voluntary in nature, their respective memberships also experience
compulsory influences similar to those of the secret society meme
berships of Wedgewood's study. For instance, in order to achieve
industry prestige or competitive effectiveness as a company, a
requirement may be company membership in the appropriate industry
trade association.
Wedgewood's functional analysis of secret societies contains
another interesting conclusion about their latent functions that has
particular significance in this present analysis. She suggests
that fundamentally all secret associations may have one latent
function in common. In every individual there are two conflicting
l3
impulses, one of which is to resemble his fellows and the other to
be different from them.9 While everyone wishes to remain within
the community, most individuals desire to be important in the
community.10 Hypothesis I suggests that trade and business
associations serve a similar purpose for the corporate or indi-
vidual memberships. Specifically, membership within the trade
association can easily constitute a sense of belonging to the
larger group of members, e.g. a recognized part of the industry.
Also, the services rendered by the trade association in serving
its membership such as providing technical knowledge or specialized
data about market trends tend to set members apart from non-members,
and therefore provide them with advantages and need fulfillment.
If hypothesis I is tenable, the common latent function of Wedgewood's
secret societies is at work in modern trade and business associa-
tions. In fact it is crucially important to their very existence.
With particular reference to political organization,
Wedgewood declares that autocracy and democracy are both fertile
environments in which secret societies flourish. Secret societies
supply men with the opportunity to acquire prestige and self-
expression without endangering themselves or running counter to
the established order of things in both of these political environ-
ments. The pressures of an unpopular autocracy can give a secret
91bid., p. 139.
101bid., p. 140.
l4
society the ostensible function of overthrowing the system. Ee-
mocracy, characterized by a free environment and attendant com-
petitive problems, suggests a need for formal association to
help c0pe with these problems and attain a preferred position
within the society. For example, some of the findings in the
present study suggest that the American political and economic
environment, although of a democratic nature, exhibits certain
pressures and restrictions on the industrial sphere. These
pressures are directly related to trade and business association
growth and sustenance. Particularly, they interact in such a
way that membership in the voluntary association satisfies the
needs of both the individual and the company for greater power
and prestige. This precisely coincides with Wedgewood's important
functions of secret societies in a democratic community. In the
context of hypothesis II, actual representative membership of a
corporation in a modern trade association provides an avenue for
adjusting to both political and economic environmental forces that
may result in an exceptional position of superiority for the
members. In fact, this hypothesis suggests that these associa~
tions grow and flourish to the extent that they are congruent
with these environmental forces. In Wedgewood’s analysis the
desire for superiority and differentiation leads to the establish-
ment of new associations as old associations become larger with
broader membership bases. She bases this conclusion on the fact
that the amount of prestige gained from belonging to a larger
15
group is diminished by the simple effects of size. Selectivity,
then, is a basic factor in determining the force exerted by a
particular association. In the trade association setting, the
new interests that continually arise in the business world
support the formation of new associations to promote these in—
terests in a select fashion. But, special interests may per-
meate a common membership base, and the growth of this base may
actually result in greater power and prestige of the membership
than ever before. Thus membership in large powerful trade or
business associations may be highly valued by members and non-
members alike. This fact is really a product of large-scale
growth in an emergent society. Nevertheless, in the Wedgewood
sense, membership in a small, select group may also be highly
valued in a complex society.
Another finding in the Wedgewood study is that secret
societies serve as a unifying force and means whereby men are
brought into social relations with others outside their normal
sphere of contact.11
Members may be drawn from several social
groups, geographic areas, etc. This fact is also of basic impor—
tance to this study of trade and business associations, because
this type of organization provides a direct means of bringing men
representing common interests together and regulating their
mutual behavior.
llIbid., p. 142.
16
These early writings about associations emphasize the uni—
versalistic aspect of the process of association that transcends
every society. Since the present study is primarily concerned
with the American society, the remarks of Alexis de Tocqueville in
his classic Democracy in America are pertinent. This perspicacious
foreign observer of American society pointed out that association
is a distinctive characteristic of every aspect of American life.
For example, de Tocqueville says:
I met with several kinds of associations in America, of
which I confess I had no previous notion; and I have often
admired the extreme skill with which the inhabitants of
the United States succeed in proposing a common object to
the exertions of a great many men, and in getting them
voluntarily to pursue it.12
He further states:
Thus, the most democratic country on the face of the earth
is that in which men have in our time carried to the
highest perfection the art of pursuing in common the object
of their common desires, and have applied this new science
to the greatest number of purposes. Is this a result of
accident or is there in reality any connection between the
principles of association and that of equality?13
Surely associations could not have grown as they have nor
flourished as they have in this country unless its laws and basic
social norms recognized the rights upon wnich the existence of such
groups depends. The observations of Wedgewood concerning democratic
processes and association develOpment are pertinent to de Tocqueville's
12Alexis de Tocqueville, Democracy in America (New York:
D. Appleton and Company, 1904), p. 594.
131b1d.
l7
speculations, and the environmental forces of an emergent democratic
society referred to in hypothesis II are also applicable to de
Tocqueville's thoughts.
It seems reasonable to conclude that associations tend to de-
rive from and grow out of the basic institutions of American culture.
They appear as ways and means by which the cultural membership is more
or less formally organized for the purpose of giving support to and
upholding existing institutions, i.e. they help to preserve and main-
tain the cultural institutions within our society. At the same time
they allow for a modification of existing institutions through the
combined expression of their respective memberships. This is a slow
process at best because some oppositions and conflict within member-
ships and between memberships of various associations always exist to
some extent; however, some general expression must emerge to substan-
tially influence a modification of existing institutions. Associations,
therefore, seem conducive to cultural change but without upsetting the
continuity and stability of at least the more basic institutions of
our society.
The associations that emerge from the basic institutions of
American society may then be grouped into complexes of associations
that represent significant and strongly the institutions from which
they emerged and now represent. From this analysis the concept of
trade and business associations emerges as a separate entity apart
from other complexes. For instance, we can categorize some of these
basic complexes of associations as trade, governmental, educational,
18
social welfare, and religious. This research study is concerned with
only one of these complexes, namely, trade and business associations
or in the more specific definition, those associations that help to
arrange order and support production, ownership, management, and
exchange. These studies of associations mentioned up to this point
were all conducted prior to 1935, hence the resulting contributions
to knowledge cannot be considered recent. While certain gaps in
knowledge of trade and business associations were filled by these
early studies, they have the common characteristic of answering only
broad questions about associations in such areas as function, purpose,
and effects of the political environment. The Wedgewood study was
particularly important in setting forth a basic understanding of volun-
tary association functions, and is pertinent to the hypotheses inves-
tigated in this study.
An examination of more recent studies of association does not'
add much to this earlier body of knowledge. In fact, more recent
conclusions by American sociologists about classification of associa-
tions are very similar to what Robinson found in Great Britain. Panunzio,
an American sociologist, has divided associations into three classes or
parts as follows: contractual, familistic, and compulsory.l4 Unlike
Robinson, Panunzio distinguishes between these three types of associa-
tions on the basis of their more general characteristics as opposed to
activities. Familistic associations are characterized by much face—to
14Constantine Panunzio, Major Social Institutions, (New York:
The Macmillan Company, 1939), p. 14.
l9
face contact among members, much mutual dependence, and rights and
duties are implied rather than clearly defined. Contractual associa-
tions are bound by legal or other specific bonds and ordinarily they
involve only one sector of life or interest such as economic, religious,
or political. According to Panunzio, the characteristics of contractual
associations are specific objectives, rights, and duties clearly de-
fined, and less face-to-face contact among members. Panunzio would
fit trade and business associations into this second class. His third
class, compulsory associations, are characterized by a dominant member
who seldom is concerned with the welfare of the members. In the extreme
case, he may force the association upon others.
Panunzio has contributed the broadest possible classification
for a theory of associations. His classification includes voluntary
and involuntary associations as well as a tight-knit small group versus
large informal groups. Of primary importance to this study is his
recognition that little face-to-face contact among members may exist
in his contractual associations which include trade and business asso-
ciations. In the absence of face-to-face contact, Panunzio hypothesizes
that there is a primary bond that holds together every association,
and that any association ordinarily disintegrates whenever the primary
bond ceases to exist. For trade and business associations, this bond
will normally take the form of an economic interest centered in some
aspect of the business or professional world. The economic world
provides the interest, and the ability to promote this interest through
formal association creates the bond.
20
R. M. Maclver states this concept mOst clearly as follows:
Associations develop as means or modes of attaining interests. "An
association is likely to be formed whenever people recognize a like,
complementary, or common interest sufficiently enduring and distinct
to be capable of more effective promotion through collective action."15
Thus, the existing economic environment generates the primary
interests that involve the protection and promotional functions of
hypothesis I and trade and business associations originate to fulfill
mutual interests.
Robert Angell in his The Integration of American Society and
W. Lloyd Warner's The Social Life of a Modern Community, Volume I
of the classic Yankee City Series, both make vital contributions to
the general pattern of analysis of this particular study of trade
associations. The results of Angell's research on associations lead
him to conclude that the forces that have produced and maintained the
capitalistic system, namely, struggle groups and benevolence, are in
16 With in-
large measure responsible for the rise of associations.
creasing urbanization the old—fashioned community contacts declined
as a form of interaction, and correspondingly, urbanization paralleled
by an increasing division of labor gave impetus t specialized
interests. The natural outgrowth of these two developments was the
15R. M. MacIver and C. N. Page, Socieiv - An Introductory Analym
sis, (New York: Rinehart and Co., 1949), p. 439.
16Robert Angell, The Integration of American Society, (New York:
McGraw Hill Book Company, Inc., 1941), p. 180.
21
rise of interest groups or associations. He places emphasis on the
"voluntary" aspect of the association movement. In his view,
associations voluntarily evolved to meet the needs of an emerging
society and they are not necessarily an outgrowth of conflict. In
Angell's terms, a basic difference between a labor union and a trade
association is that a labor union is a struggle group and strictly
an outgrowth of conflict, while a trade association is an outgrowth
of needs created by a changing economic environment characterized by
a voluntary participating membership not necessarily in conflict with
external forces. The need orientation concept as stated in hypothesis I
is, of course, vital to this present study of trade and business
associations. In analyzing the associations of Yankee City, Warner
and Lunt perceived the existence of a hierarchical structure among
these organizations.17
For example, there were both superordinate
and secondary or satellite types of associations in Yankee City. The
superordinate association acted as a coordinator by linking other
secondary associations such as schools and businesses together. In
fact, an "interconnectedness" was found to exist primarily through
association that permeated the entire political, social, and economic
structure of the community. The Warner study emphasizes the knitting
or cohesive role of associations with respect to the separate entities
of American life and hence gives impetus to further research directed at
17W. L. Warner and Paul Lunt, The Social Life of a Modern
Community, (New Haven: Yale University Press, 1941), p. 314.
22
understanding more about this role. In keeping with the premise that
associations tend to interconnect the institutions from which they
derive is the supposition that they would also tend to support each
other, i.e. tend to influence each other and integrate their actions
in a kind of supreme effort. Therefore, trade and business associa—
tions in one activity type will influence associations in another
activity type and the broader range of trade associations arising
from the great economic institution of one culture will influence
other great institutions, such as political, educational, or govern-
mental organizations. This study takes account of these broader re—
lations and pays particular attention to the differences between coor-
dinate and satellite types of associations and how their respective
characteristics shape into the concept of interconnectedness Warner
found in Yankee City. '
The Warner and Lunt study is a first real attempt to look at the
multiplicity of associations in American life in analytical fashion.
For example, what roles do individual associations play in the greater
society, and how does the performance of these roles influence the
individual association, other associations and the total environment?
In testing hypotheses I and II of this present study, a knowledge of
these interacting performance factors of individual associations and
environmental influences is particularly important.
Moving further away from general functional and societal views
of voluntary associations, Dr. Herbert Goldhammer's study of partici-
pation in voluntary associations completed in the early 1940's answers
23
questions about the relationship between variations in age, education,
and certain personality characteristics to variations in the degree
to which persons participate in voluntary associations.18 His ques-
tionnaire responses from 4,000 Chicago residents provided some in-
teresting answers to these questions. Participation in voluntary
associations was found to vary directly with education for educational
levels above primary school.19 Education also varied directly with
number of officerships, amount of dues paid, and type of association
preferred.2O
Generally speaking, educational attainment broadens
one's interests, develops a sense of social importance and responsi-
bility, and generates certain aspirations around one's status position
in the community. It can be expected that these same findings would
also hold true for trade and business associations, because the same
forces are at work. Since these associations are normally composed of
business and professional people, both formal education and professional
problems tend to support an interest in participation.
Goldhammer's study also reveals important findings about age
and participation in voluntary associations. Primarily, age and asso—
ciation participation are inversely related in early years and directly
21
related in later years. Participation declines in the oldest age
18Herbert Goldhammer, "Some Factors Affecting Participation
in Voluntary Associations," (Unpublished Ph.D. dissertation, Uni-
versity of Chicago, 1943).
191bid., p. 88.
20Ibid., p. 89-90.
211b1d., p. 87.
24
group and the attendance frequency of young men exceeds that of old
men. To the extent that one's zeal and zest for activity is greater
in early and middle years as opposed to later years, this would pro—
bably also apply to trade and business associations. In the context
of hypothesis I the problems facing these trade and business asso-
ciations may call for participation for protective rather than social
purposes, and this type of influence will motivate membership par-
ticipation more on the basis of need rather than age.
According to Goldhammer, the number of officerships held in
voluntary associations is directly related to length of membership
and frequency of attendance. No doubt this finding is explained by
the fact that one's participative effort tends to influence his
political position in the association. It is reasonable to assume
that this fact would also hold true for trade and business associa-
tions, however, the politics of these association memberships is
relatively complex. For example, officerships are often held by
people that represent firms with substantial economic power even
though their participation effort is minimal.
General studies of trade associations in the American society
are limited in both number and scope. C. E. Bonnett's History of
Employers Associations in the United States gives a good account of
the rise of trade associations in the 19th century. Bonnett emphasizes
the decline of the guild system and the emergence of industrialization
as the key factors in the growth of employers associations. During
the 1920's and early 1930's numerous publications appeared dealing with
25
the history of trade associations and the services they render to in-
dustry. In 1930 Joseph Foth's book, Trade Associations, Their Services
to Industry, presented some of the broader aspects of the trade asso-
ciation function in the industrial setting. Foth primarily emphasized
the service aspect of trade promotion, and exchange of information
accomplished through trade association activity. Glover, Cornell, and
Madden's The Development of American Industries, published in 1932,
gives a good account of some of the broader aspects of trade asso-
ciation development until 1920. And, in 1934 Simon Whitney's Trade
Associations and Industrial Control looked closely at the performance
of these associations with respect to the NIRA. DUring this same
period the government was particularly concerned with open price trade
associations and issued some publications concerning their activities.
The United States Chamber of Commerce has sponsored some studies of
trade associations in recent years, but the emphasis has been largely
on surveys of current association structures and activities with
little emphasis on broader societal relationships.
Probably the most comprehensive study with respect to overall
influence was undertaken by the Political and Economic Planning Commit-
tee of Great Britain concerning industrial trade associations in that
country until 1950. This study focussed on broader societal influences
on trade association growth, activities, and functions such as in—
creasing industrialization and economic crisis.
In summary, while available publications are useful in explaining
the history and activities of trade and business associations they do
26
not provide very deep insight regarding the relationship of these
associations to their immediate environment, the business world, and
the total society. There is still a dirth of studies on this latter
point. The present investigation hopes to fill in some of the
apparent gaps in knowledge about trade and business associations.
It is proposed to study trade and business associations in relation
to the major environments with which they interact. In testing the
hypotheses I and II, it will be necessary to place underlying func-
tions, structures, activities, and growth patterns in historical
perspective (Chapter III). Also, these organizations must be ana-
lyzed on the basis of a rational classification system. The
specific criteria for distinguishing among types is integrated with
discussion of the research design (Chapter II).
CHAPTER II
RESEARCH DESIGN AND METHOEDLOGY
Introduction
The research design adopted provides for testing the hypotheses
both in light of historical evolution of trade and business associations
as well as in terms of data collected in the larger study (see
Preface). The historical method is used throughout Chapter III to
test these basic hypotheses. With respect to hypothesis 1, an'
historical perspective of trade and business associations provides
insight into their growth and prosperity in our emergent society.
Through the use of research data obtained from questionnaires, pub-
lished histories, and supplementary association pamphlets, a detailed
historical typology of trade and business association growth by
functional type is constructed. Fundamental conclusions are next
drawn about need fulfillment and how membership perception of need
fulfillment affects association growth and prosperity. This process
particularly involves protection and promotion of mutual interest.
The historical perspective is also useful in testing hypothesis II.
Any meaningful examination of the psychological, sociological, and
economic forces set forth in this hypothesis must be given historical
depth. Chapter III provides this depth by emphasizing three basic
28
periods that have decidedly affected trade and business development
as follows:
1) World War I and before
2) The great depression of the 1930's
3) World War II and after
The rural influences that occurred before 1900 are also con-
sidered. This study will show that these periods produced changes
in trade and business associations, and that these changes result
from trade and business association interaction with an emergent
American society.
The corrollary to hypothesis II is also sharpened by an exami-
nation of the historical evolution of such associations. Particularly,
in showing which ones have survived and flourished.
Empirical data set forth in Chapters IV and V test the basic
hypotheses of Chapter I. These two subsequent chapters deal indi-
vidually with the other three major environments set forth in Chap-
ter I. Their purpose is to examine each environment in the context
of the fundamental hypotheses of this study; the end result supports
the tenability of these hypotheses, and answers basic questions about
the relationship of trade and business associations to American life.
Most of the data used in these two chapters were obtained from the
responses to the questionnaire previously mentioned in the preface.
These responses are cross-tabulated by functional type of association
to determine patterns of growth, activity, function, and structure in
American trade and business associations.
1 E ' —‘—__fi‘_
29
Finally, Chapter VI utilizes the case study method to support
the findings of the previous chapters. The data used in this chapter
are provided by supplementary materials made available by the particular
associations studied, published historical facts about these associations,
and pertinent questionnaire responses. This chapter clarifies the
role of emergent forces in effecting membership need fulfillment and
subsequent growth patterns of selected associations. Thus, this
latter chapter contains an intensive analysis of specific cases in the
association population.
Definition of Trade and Business Associations
For purposes of analysis a trade or business association is
defined as a voluntary cooperative organization of business competitors
designed to assist its members and its industry in dealing with mutual
business problems. Operationally, both organizations and individuals
are viewed as constituting business competitors. Thus, a trade or
business association can be composed of individuals as well as organi-
zations (businesses). The term competitor can include intra-as well
as inter-industry competition among individuals, corporations, and
other cohesive enterprises. Within this context, a trade or business
association may be composed of professional service people, e.g.,
accountants, office managers, purchasing agents, et al., who are not
necessarily in competition with each other. These associations are
formed to establish standards, to formulate codes of ethics, or to
systematize knowledge that will further their respective industries,
30
the larger business world, or the greater society. Therefore, this
broader definition of trade and business associations will not limit
this study to associations composed of business firms dealing with
mutual business problems. The expanded concept of trade and business
associations can also include service groups and other individuals
directly concerned with some aspect of the commercial world. In this
all inclusive senSe, trade and business associations are those asso-
ciations that help to arrange, order, or support production, owner-
ship, management, and exchange in the American society. This defi-
nition includes the broadest aspects discussed above, such as indi-
vidual services and trade practices as well as the more traditional
competitive business environment. In addition to the narrower term
"trade," the definition requires that the broader term "business" be
applied to the sample of associations. This accounts for certain
associations in the sample that satisfy the formal definitional
requirements set forth above, but that are not trade associations by
the strictest definition. Both trade and business associations are
the concern of this study.
Trade and Business Associations: A Population
and a Sample
What constitutes the population for the purpose of this study?
Ideally, this population consists of all trade and business associations
that conform to the above definition. However, since there is no
single all-inclusive list of trade and business associations, there is
no positive way of determining the exact number of these associations
31
in American life. United States Department of Commerce figures indicate
that there are about 2,000 national trade associatiOns currently in
l Of course, there are many more state
existence in the United States.
and local associations that are not national in scope. This figure
provided a general guideline to the population of trade and business
associations from which a sample could be drawn. The primary source
used in compiling this pOpulation was Volume I of a series entitled
National Organizations of the United States, published in 1961 by the
Gale Research Company. Volume I is an Encyclopedia of American
Associations, and is a comprehensive listing of all types of national
associations in the American society. The Gale Research Company has
been compiling this directory for several years and their efforts
have resulted in the most comprehensive listing of associations in
total number and variety recorded in one volume. Another valuable
source referred to is the Directory of National Associations of Busi-
nessmen published by the U. S. Department of Cbmmerce, Washington, D. C.
The listings in these two publications provide the population from
which the sample was selected.
Out of this population a sample of specific associations was
drawn to correspond to basic criteria that had been established. Two
basic criteria served as fundamental guides throughout the selection
1Jay Judkins, Directory of National Associations of Businessmen,
U. S. Department of Commerce (Washington, D.(3.:IJ.S. Government
Printing Office, 1961), p. 2.
32
process: the first was a sample of trade and business associations
that were large-scale organizations, and the second was to select
associations that were national in character. In distinguishing those
characteristics required under these two criteria six sub—criteria
were used:
1) Large-scale in number of members.
2) Large by coordinating or federating other structures of
large scale.
3) Large within the trade association universe.
4) Size of staff in both absolute number and type.
5) Geographical representation in terms of regions and states.
6) Sc0pe of activity in terms of spatial reach.
It can be noted from the above that the first four sub-criteria
serve as an index to the extent of large—scaleness among trade asso—
ciations, and the last two determine whether or not the particular
association is of national character. In order to indicate more about
the nature of large-scaleness as viewed through the selection process,
each of the six sub-criteria will be developed further.
The four sub—criteria used to determine large-scaleness were not
viewed individually but as a totality in relation to each association.
An organization with a relatively small membership might still have
been chosen if it was particularly significant in coordinating other
structures of large scale, or had a large staff.
The essential characteristics looked for under the six sub—
criteria were as follows:
33
l) Large-scale in number of members. This determination in-
volved a comparison of membership sizes among all trade associations.
From this comparison both large and small membership sizes were dis-
tinguished, thereby making it possible to isolate those trade asso-
ciations with both large individual and organizational memberships.
In making the final selection full recognition was given to the idea
that organizational memberships should be given different weights
than individual memberships. In order to account for this difference,
a second selection factor was introduced into the analysis.
2) Large by coordinating or federating other structures of
large scale. These other structures might be other associations or
business firms. For example, an association with five organization
members could be of particular significance in terms of large—scale-
ness if these organizations were business corporations such as Ford,
General Motors, Shell, or even lesser corporations in terms of eco-
nomic power. Since many trade and business associations are composed
of other organizations, particular emphasis was placed on type of
organization and role of the association in the coordinating process
in determining large scale.
3) Large within the trade and business association population.
This determination was essentially a comparison of all the criteria
with respect to trade and business associations. Those that appeared
to be larger than average with respect to all trade associations were
given special consideration.
4) Size of staff in both absolute number and type. If a trade
34
or business association possesses a relatively larger staff in com-
parison with other associations it was given special consideration.
Staff size is an indication of an amount of effort exerted to perform
some task or to do something that supposedly falls in line with the
purposes and objectives of the association. In fact, the effort
exerted by an association as a result of a large staff operation tends
to be distributed broadly with the impact being felt throughout the
society. Type of staff is also important. If a particular association
has a small number of organization members, but a relatively large
staff it may well be of larger scale than a similar organization with
numerous individual members but a small staff. Thus, staff size is a
key variable used to determine large-scaleness.
5) Geographical representation in terms of regions or states
was an important criterion used in determining whether or not an
association was national in scope. An association was considered to
be national in scope if it fits the following general description: Its
membership consists of individuals who are widely distributed geographi-
cally or its membership consists of other organizations whose combined
and individual memberships are widely distributed geographically. An
association with few individual members or few organization members
widely dispersed geographically was believed to be as important nationally
as one with great numbers. If the few members represent important firms,
social classes, or occupational groups spread geographically, it was
thought their influence could be integrated On a national basis.
35
6) Scope of activity in terms of spatial reach was a final
consideration used to determine national sc0pe. It was felt that an
association could be composed of memberships that were primarily
localized geographically if the sCOpe of its activity was widely
dispersed geographically. For example, this criterion would apply
to regional lumber or livestock associations whose activities were
felt throughout the entire national economy.
Since the Encyclopedia of American Associations gives mem-
bership characteristics, staff size, headquarters location, and a
brief comment about the association's activities, it was possible
to apply the above criteria to the Gale listing of trade and busi-
ness associations. Where supplementary sources were used, an attempt
was made to obtain comparable information about the particular asso-
ciation. The criteria then were applied to each association on the
basis of this fundamental information which included membership
characteristics, size, staff size, and scope of activity.
Essentially, the sample as drawn was an attempt to bring
together the group of trade and business associations from the popu-
lation of all these associations that are of the largest scale and
are national in sc0pe. The sample used in this analysis can be re-
garded as a selective sample of large-scale national trade and busi-
ness associations.
Once these criteria were carefully applied, a total of 442
associations emerge that are representative of the truly large-scale
trade and business associations in America.
36
Since this study uses the trade association concept in the
broadest sense, it was necessary to stratify the sample of trade and
business associations in some meaningful way to make a useful analysis
of the total research effort. The categories of trade and business
associations selected conform to the Standard Industrial Classification
under the sponsorship and supervision of the Office of Statistical
Standards of the Bureau of the Budget. The classifications use the
revised SIC codes contained in the 1957 Standard Industrial Classi-
fication manuals. The categories are as follows: agriCulture;
manufacturing; transportation, communications, and utilities; whole-
sale and retail trade; finance, insurance, and real eState; and
services. For purposes of analysis the contract construction and
mining categories listed separately in the SIC are combined with the
manufacturing category. This combination is necessary because of the
limited number of associations the sample included in the mining and
contract construction fields. A final non-SIC category (national
business associations) is added to account for special types of busi-
ness associations. The analysis is based on seven categories of trade
associations, six of which are as set forth in the SIG.
The next step was to classify each association drawn in accor-
dance with the seven-fold plan. The key criterion used in this
classification was the primary activity of the particular association
as set forth in the directory. This use of primary activity was neces-
sary because any one association might carry on a variety of activities.
In making the selections the definition of activity used in W. Lloyd
Warner's The Living and the Dead was followed closely. In reference
37
to associations, Warner defines activity as "a recognized, open and
explicit level of social behavior occurring in a situation which
involves the relations of members alone or the members of the associa-
tion in relation to the rest of the community."2 Accepting this
definition, situations are emphasized that involve the relations of
the members of the association with the rest of the community, i. e.,
the total society. This classification then is based upon those
activities that serve to relate associations to their external social
environment. In this sense, the activity serves as a point of articu-
lation between an association as a system and those systems external
to it. Returning to the broad definition of trade and business
associations as helping to arrange, order, and support production,
ownership, management, and exchange; this concept or process of pro-
duction, ownership, management, and exchange constitutes an external
system and the seven sub—categories as parts of this system. Then, by
using the concept of activity as the point of articulation, each trade
and business association is placed in its prOper relationship to the
broader system.
To give a clearer picture of how this placement of specific
associations operates, Association A serves as an excellent example.
This association cites its primary activity in terms of a primary aim
or objective, namely, "to improve the standards of design, production,
2W. L. Warner, The Living and the Dead (New Haven: Yale
University Press, 1959), p. 35.
38
and quality of gray iron castings." From the above description, we
would conclude that this association helps to order and support those
who are professionally involved in the production of gray iron castings.
Its primary activity would suggest it helps to arrange, order, and
support production so it naturally fits our broader definition and
the resulting general category of trade and business associations.
Moreover, since its primary activity centers in production as opposed
to ownership, exchange, agriculture, etc., it is placed in the manu-
facturing category. Although numerous other examples could be given,
this one illUStrates the process used in classifying each association.
Since it is now clear that activity was the main criterion for asso-
ciation classification in the seven sub-categories, these seven
categories will be continually referred to as "activity types" in
the ensuing discussion and analysis.
National business associations meet on a localized basis, but
are concerned with business problems that are national in scope. Pri-
mary examples are such service clubs as Kiwanis and Lions. Although
national and state chambers of commerce are often concentrated in
regional localities, these organizations are included in this cate-
gory because their functional business activity is national in scope.
Since many trade and business associations are service organi-
zations in the broadest sense, problems arise in distinguishing what
should be included in the services activity type. In order to deal
with this problem, the criterion of the primary activity itself is
augmented with a consideration of the end result of this activity.
39
If the service aspect appears to be the goal or end result of the pri-
mary activity of a particular association, it was classified in the
services activity type. On the other hand, if the end result of the
service is to promote some type of manufacturing process or some
aspect of retail trade, it was placed in the corresponding activity
type which it serves. For example, an association of accountants or
personnel managers whose primary activity centers in the advancement
of their respective profession would be placed in the services activity
type; but an association of marketing executives whose primary activity
served the distribution process of a particular product would be
placed in the wholesale retail trade activity type. When heavy re-
liance was given to the concept of primary activity, few other
difficulties were experienced in this general problem area.
The sample of 442 large-scale national trade and business
associations classified by activity type is shown in Table l.
\
TABLE 1. Number of Trade and Business Associations in Sample by
Activity Type
Agriculture 45
Manufacturing 124
Transportation, Communications, and
Utilities 37
Wholesale and Retail Trade 66
Finance Insurance and Real Estate 35
Services 86
National business associations 49
Total 442
40
It can easily be seen from Table 1 that no attempt is made to
keep an equal distribution of trade and business associations among
the seven activity types. In fact, there is a wide variation in the
number of associations included in each of the seven categories from
a maximum number of 124 in the manufacturing activity type to a mini-
mum number of 35 in the finance, insurance, and real estate activity
type. Since this sample of large-scale national associations was
drawn from the total trade and business association population, the
disparity of representation among the seven activity types is an index
of the extent of large-scaleness found in each activity type in the
total population of such associations.
As can be seen from Table 1, manufacturing ranks highest among
all activity types in large scale representation with 124 associations
in the sample. If the 442 asSociations were evenly distributed among
the seven activity types, approximately sixty-three would fall in
each category. Thus, in addition to manufacturing, the services and
wholesale retail trade activity types rank above average with eighty-
six and sixty-six associations, respectively. Conversely, the
finance, insurance, and real estate; transportation, communications,
and utilities; and agricultural activity types rank considerably
below average with thirty-five, thirty-seven, and forty—five associa-
tions, respectively. The remaining activity type, national business
associations, is also below average with forty-nine associations
represented.
The nature of the manufacturing process, for example, division
41
of labor, technological progress, and specialization of productive
effort, may account for its greater representation of large-scale
national associations. The same trends in the economic segment of
our society precipitate the need for services which help to explain
the second place ranking of the services activity type. The narrower
interests of the finance, insurance, and real estate and trans-
portation, communications, and utilities activity types subject them
to these same influences on a more limited basis.
In summary, this sample is one of large-scale national trade
and business associations designed to be representative of the total
population of trade and business associations.
Major Research Tools
The basic tool used in this study was a questionnaire mailed
to the sample of 442 associations. This same questionnaire was mailed
to all large-scale national associations in the bigger association
research and the generally useful nature of the questions asked
placed few restraints on this specific study.
Initially, in preparing a valid questionnaire, hypotheses were
crystalized about large-scale national associations and these were
formulated into questions designed to discover important information
about these associations. Such things as income, membership size and
growth, organization structure, occupational groups represented in
the membership, number of paid staff, and purposes of the association
were regarded to be of primary importance to a successful study. The
second step was to conduct a series of interviews with executive
42
secretaries of large-scale national associations directed at determining
what types of information could be obtained, particularly how many of
the essential basic questions could be answered. Responses to these
interviews suggested that large national associations rarely keep de-
tailed records of historical facts. Also, due to a variety of both
membership classes and terms assigned to particular aspects of the
associationS' activities and structure, the necessity of clarity and
preciseness in the questionnaire was recognized. The third step in-
volved correlating the facts obtained from the interviews with infor-
mation actually desired. This correlation produced a questionnaire
suitable for mailing to large-scale national associations.
This questionnaire was mailed to 157 associations in a pretest
sample; approximately fifteen of these associations were trade and
business associations. Since 82 (over 50 per cent) of these question-
naires were completed and returned, the pre-test was highly successful.
This pre—test sample was composed of national associations that did
not fully meet the criteria of large-scaleness as outlined earlier in
this chapter. The coding and analysis of the pre-test questionnaire
led to some minor changes in the final draft of the questionnaire,
particularly the classification of questions on membership. The pre—
test questionnaire requested the association to identify the number,
types, and classes of membership. Since responses to this question
made coding difficult, it was modified to ask specifically for the
number of full time and/or part time members. The question on member-
ship growth was clarified for easier response, as the time span of
43
years dealing with membership sizes was revised. The number of members
representative of each occupational group in a particular association's
membership was also sought. The responses indicated that this type
of information would not be provided so the revised version asked only
for occupational groups represented. Since the pre-test questionnaire
further substantiated the belief that it would be difficult to obtain
historical materials in questionnaire form, it was decided to ask
specifically for historical supplementary materials in the cover letter
that accompanied the final draft of the questionnaire. This change
was designed to provide a significant sampling of the historical aspect
of the association movement in the United States. The pre-test ques-
tionnaire is set forth as Appendix A.
When this type of revision was completed, a final version of
the questionnaire was prepared based on the results of the pre-test.
A copy of this final questionnaire is included as Appendix B.
The responses selected for tabular presentation are from those
questions directly related to testing the major hypotheses of
Chapter 1; these also provide a greater understanding of the four
environments represented in the general approach to this study. Some
of the specific questions that were used to accomplish the basic
objectives of the study are discussed in the following paragraphs.
Section A of the questionnaire investigates present and past
locations of headquarters and date of founding. Responses to this
questionwdetermine the locational patterns of trade and business
associations with respect to their activities and functions in the
44
business world. Conclusions can be reached about particular patterns
of location by activity type, and whether there is a functional ex-
planation of headquarters locations of particular associations.
The date an association was founded in a particular city was
correlated with the original founding date, to determine any patterns
of movement of headquarters. Age of association is asked in Part I,
question 7, and a comparison of age among the activity types of
associations helps to reveal the effect of industry age on association
formation and resulting growth patterns by activity type.
Section B of the questionnaire examines the governing body of
the association. Question 8 is of particular importance as it asks
if the responsibility of the association's principal voluntary or
paid officers require them to be in regular contact with federal, state,
or local government officials. This question is used to determine
the relative amount and strength of contact among the activity types
of these associations with federal, state, and local governments.
These responses help to determine the relationship of large-scale
national trade and business associations to the total society.
Section C of the questionnaire explores employees rules, and
organization structure. The present study is primarily concerned with
Questions C1, C5, and C5a. Question C1 determines how many full time
paid employees work at the association's headquarters. Responses to
this question give an indication of the relative staff sizes of trade
and business associations and lead to conclusions about the extent of
administrative efforts on behalf of the activities that they represent.
45
In a relative sense, these comparisons reveal patterns of staff size
among different industrial classifications.
Question C5 and C5a determine the number of administrative
departments in the association's structure. This question acts as a
guideline to the extent of departmentalization among large-scale
national associations, and can be correlated with many other variables
to determine its functional significance in trade and business asso-
ciation activity.
Section F examines organizational finances and the questions
on size and sources of income are used in both an absolute and rela-
tive sense among the seven activity types. Correlations with other
variables throughout the analysis result in the true relationship
between financial structure and association activities, function, and
position in American life.
Section G contains questions involving external and internal
communication and questions 2 and 2a in this section involve educa-
tional programs directed at the internal membership of the association.
Responses to these questions give a better understanding of the internal
functions of these associations with respect to their individual mem-
berships and their own immediate environment. Question 4 studies the
external educational programs directed at the general public, and
question 6 examines the position of the association in regard to
public issues. Responses to these questions contribute to an under»
standing of the position of trade and business associations in the
total society environment. ReSponses to question 6a reveal the types
46
of issues that are of primary concern to large-scale national trade
and business associations.
Section H explores relationships with other associations and
federal agencies. Question H asks if the association is affiliated
with or a member of any other associations. These responses aid the
understanding of the immediate environment of the association and
whether or not its activities are widely dispersed among other
associations or confined to its own respective memberships. Question
H4 asks if the association has a formal written working agreement
with any agencies of the federal government, and quaiion 4a asks if
the association carries on any cooperative activities with federal
agencies. These two questions are used to determine the relationship
of trade associations to the federal government, particularly in terms
of the strength of these relationships both by activity type and for
the population as a whole. These responses further our knowledge of
the trade and business association position relative to the total
society, viz., the government representing the total society. Question
H5 asks if the association has ever merged with, absorbed, or branched
off from another association, and determines historical growth patterns,
by activity type. Particularly, whether or not the merger and division
process is vital to the growth and development of large—scale national
trade and business associations.
Section I relates to the membership of the association, and
questions are asked about numbers of individuals and organizations that
are members of the respective association. These responses are exten-
sively used in the analysis to determine differences in membership size
47
and composition. Question 8 was added to reveal membership size and
growth since the date of founding. This question is extensively used
to determine the amount of growth of the respective activity types and
among large-scale trade and business associations in American life.
Section K queries the occupational composition of the association's
membership, and this study concerns itself with Question Kl which asks
for the occupational representation by business, government, farming,
etc. These responses reveal characteristics of individuals by occu-
pation found in both the American trade and business association popu-
lation and in particular industrial types of associations.
The basic questionnaire that included the above questions was
mailed to the 442 large-scale national trade and business associations
in the sample. ’Table 2 is a breakdown by activity type of those
questionnaires sent and returned. This table shows that 334 or 75.6
percent of the 442 associations returned completed questionnaires. The
agriculture and finance, insurance, and real estate activity types
rank particularly high with over 88 percent of the associations in
each of these two activity types returning completed questionnaires.
The national business association activity type ranked lowest with 69.4
percent returning usable, completed questionnaires. Although no attempt
was made to match the distribution of large-scale national trade asso—
ciations against the seven activity types, Table 2 indicates a suffi»
cient number of questionnaires was returned in each category to provide
meaningful analysis and comparisons. The number of questionnaires
varied from a minimum of thirty-one in finance, insurance, and real
estate to a maximum of eight—four in the manufacturing activity type.
48
The relative variation in questionnaire number among the seven acti-
vity types reflects the true representation of large-scale national
associations in each activity type. This study is purposely de—
signed to be representative of large-scale national trade and
business associations but there is still a significant number of
associations falling within each activity type to make valid com-
parisons to prove the tenability of the hypotheses set forth in
TABLE 2. Association Questionnaire Responses by Activity Type of
Trade and Business Associations
Sent Returned Percent
Agriculture 45 40 88.9
Finance, Insurance and Real Estate 35 . 31 88.6
Transportation, Communications,
and Utilities 37 28 75.7
Manufacturing 124 92 74.2
Services 86 62 72.1
Wholesale and Retail Trade 66 47 71.2
National Business Groups 49 34 69.4
Totals 442 334 75.6
this study, and to gain a greater understanding of the role of trade
and business associations by examining individually the four major
environments in which they interact. Chapter III that follows begins
this analysis by providing an historical perspective of these
associations.
CHAPTER III
THE HISDDRICAL EVOLUTION
OF TRADE AND BUSINESS ASSOCIATIONS
Introduction
In the previous two chapters a foundation was laid for
analyzing large-scale national American trade and business ass0w
ciations, and this chapter is primarily concerned with testing the
hypotheses set forth in Chapter I. Hypothesis I of Chapter I
suggests that trade and business associations come into being,
grow, and flourish to the extent that they meet certain needs of
members such as promotion and protection of mutual interest. The
ensuing analysis demonstrates that influential time periods, charac-
terized by the development of special economic interests, provided
great impetus to trade and business association formation and growth.
Furthermore, hypothesis II of Chapter I suggests that these trade
and business associations come into being, grow and flourish to the
extent that their objectives are congruent with the dynamic forces
of an emergent society. The historical perspective contained in this
chapter does the following three things with respect to this latter
hypothesis: First, it points out the nature and extent of these
dynamic forces; secondly, it indicates the importance of the objectives
of trade and business associations being congruent with these forces;
and third, it supports the corollary to hypothesis II that the
49
on .. _
.-
50
survival of trade and business associations depends upon their ability
to adjust to emergent forces in the surrounding society.
Trade and Business Associations: An Historical Perspective
This analysis begins by answering certain basic questions about
the origin and development of trade and business associations. The
first question asked is what are the primary factors that gave impetus
to the formation of the early trade and business associations; and
secondly, how did these same associations multiply into the complex
system found today?
Most of the evidence available in the literature indicates
that craft guilds appeared as early as 1297 when they began to regu-
1 The early craft guilds in America
late apprenticeships in Europe.
appeared around the mid 17th century. These earliest guilds were
voluntary associations formed for the mutual aid and protection of
their members. Consequently, there was a distinct relationship be-
tween the functions of these guilds and the functions of many of the
modern associations. But, with the rise of industries many of the
early guilds assumed the function of controlling specific trades within
these industries. The regulation of the industry became the chief
Objective of the craft guild, and in many instances it supervised the
processes of manufacture in a particular branch of industry. Records
show that there were attempts by guilds to control specific trades
1C. E. Bonnett, History of Employers Associations in the
Uriited States, (New York: Vantage Press, 1956), p. 25.
51
within New York City as early as 1690, associations or guilds attemp-
ting to fix wages of skilled workers were found as early as 1633 in
Massachusetts, and in 1646 a company of shoemakers of Boston peti-
tioned for and were granted a charter to form a guild.2 The American
craft guild was an employers association from its origin, dominated
by employers' interests, and primarily dealing with labor matters.
Trade unions are not exact counterparts of employers' associations
because the employer associations dealt with conflicts of interests
not only among workers within the enterprise, but also interest con-
flicts between different enterprises. Since the craft guild or em-
ployers' association was the first indication that employers might
organize to relieve certain conflicts of economic interest, these
simple associations were characterized by the same elementary func-
tions of modern trade associations.
This simply organized guild of the 17th and 18th century was
the product of the simple industrial society that existed during
that period. The advent of the factory system threatened the exis—
tence of the guild in its original form. The new economic forces
generated by the introduction of new industries organized on a more
modern basis caused companies to gradually lose control over the
regulation of the industry. The early guilds were so concerned with
monopolistic control of their respective trades that their purposes
became incompatible with the new ideas of individual liberty and free
comPetition that were generated by the greater separation of capital
Ibid., p. 35.
52
and industry, and employers and workmen. The tendency of these early
organizations to promote their own interests without regard to the
welfare of the community was outdated, and changes became necessary
if they were to survive. This historical fact lends specific support
to the corollary to hypothesis II which states that "survival of a
given association depends upon its ability to adjust to the emergent
forces in the surrounding society." Guilds declined because their
existing form was not suitable to deal with these emergent forces
effectively. In their fight for survival the entire nature of these
associations was changed. Their activities were expanded to provide
the opportunity to pool the interests and knowledge of individuals
or enterprises in order to assist each other in dealing with mutual
business problems; problems such as relations with the industry's
employees, competing enterprises, and the general public.
The charter of the Master Plasterers Company of Philadelphia
organized in 1804 indicates this pooling of interests and knowledge
3
among individuals and enterprises. The constitution of this early
organization included among its purposes a section providing for
improving the knowledge of those within the industry and assisting
those in need. Their constitution particularly stressed the con-
tinued advancement of the science of architecture, and helping the
underpriviledged members of the organization. The promotion of the
general welfare of the industry is a clearly defined purpose of this
organization. A look ahead a few years to the 1860's indicates that
3J. G. Glover, W. B. Cornell, and J. T. Madden, The Develop-
ment of American Industries, (New York: Prentice-Hall, Inc., 1932),
p. 871.
53
these same characteristics were found in the first national trade
associations. The oldest national trade associations in America were
formed from 1861 to 1865, and were characterized by this same pooling
of knowledge and promotion of the general welfare of their respective
industries.4 Among the earliest trade associations that exemplify
this fact were the Writing Paper Manufacturers Association organized
in 1861, the United States Brewers Association organized in 1862, the
American Iron and Steel Association and the National Association of
Wool Manufacturers organized in 1864. While there were many local
associations found in the late 18th and early 19th centuries, these
four associations organized before 1865 are generally credited as
being among the oldest trade associations on the American scene. In
fact, the Writing Paper Manufacturers Association claims to have
supporting evidence that it is the oldest national trade association
in the United States. However, it must be emphasized that while
these earliest national associations most closely followed the pat—
tern of such organizations as the Master Plasterers, there was also
a large group of employers' associations in the early 19th century
that exhibited entirely different characteristics. These associations
held as their primary objective the handling of those needs and
interests of their employees that did not necessarily mesh with those
of the enterprise as a whole. Such things as regulation of hours of
work, wages for different types of skilled jobs, and length of employm
ment were basic decisions that had to be made within the framework of
41bid., pp. 871. 872.
54
mutual consideration for both employee and employer. Thus, some of
the organizations such as the Master Plasterers were operating under
a similar framework of objectives as found in many of our trade and
business associations today while many others were assuming the
function of a company union. The nature of these latter organizations
changed as the society developed from the early simple industrial
state to one of an increasingly larger production and distribution
complex, with the relatively limited number of mutual problems
multiplied.
As this organizational state of the American economy pro-
gressed, there was also a multiplication of the number of methods
that were employed to reduce conflicts arising between individuals,
groups, and organizations. Although these methods developed
rapidly, there was a paralleling develOpment of a wider range of
conflicts resulting from demographic, economic, and social forces.
In short, the emerging demographic, social, and economic changes of
an emerging society affected the business environment by favoring or-
ganizational development to deal with these new and challenging eco-
nomic conditions. It is important both to trace the development of
these forces and to identify the nature and extent of their existence.
Initially, it was the latter part of the 19th century when
big business began to flourish; mergers were numerous, and industrial
capacity was greatly increased. Correspondingly, large markets and
market centers arose to handle the greater amount of goods that
tended to flow from the productive facilities of the growing industries“
In consequence, this growth of the smaller industries into a larger
55
industrial and distribution complex gave the greatest impetus to trade
and business association formation.
Adam Smith and other nineteenth century economists envisioned
an economy in which a large number of firms would compete in each
field. The presence of intense competition would guide the economy
toward optimum efficiency in production and distribution. The control
of their respective industries by individual firms would be negligible;
and since the firms would be at the mercy of the market place, each
firm would not need to concern itself with market share, public
policy, or other external problems. Instead, these problems would
be satisfactorily settled through the interplay of competitive forces.
The most interesting fact facing the growing economy was that in
actual practice the market did not follow competitive patterns in in—
dustry growth. Competitive forces did not prevail to solve all indus-
trial and market problems for both the interest of the respective
industries and the welfare of society. In fact, the small firms of
the seventeenth and early eighteenth century began to be replaced by
larger firms dominating certain fields of production. A very large
part of the steel, petroleum, aluminum, and automobile markets fell
under the control of a few firms in each industry. The problems that
faced industry and society extended into many areas as the public be—
came concerned about preserving the merits of the competitive frame-
work pointed out by.Smith and the classical economists. They made their
feelings known not only in individual and group action but also through
such governmental legislation as the Sherman Anti-Trust Act of 1890.
Conversely, industries, and more particularly specific firms within these
56
industries, wanted to assure their own competitive niches in the.
changing face of the industrial segment of the society. The smaller
firms were in a fight for survival while the position of the larger
firms was constantly being challenged in society by an enlightened
public opinion as reflected in the passage of the Sherman Anti-Trust
Act.
As a result of these developments, the small employers' asso—
ciation was no longer capable of dealing with the multiplicity of
problems that arose. Many of the modern trade associations find
their roots in attempts to deal with this new range of problems.
Probably the most important single factor leading to association of
firms and individuals concerned with trade was the changing competi-
tive environment in the late 1800's and early 1900's. The existing
economic power of large-scale enterprise of this period created
threatening self—interests through enterprise attempts to gain greater
shares of the market or greater control of the market place. Also as
large corporate structures developed, goods tended to be distributed
in wider geographical areas; and in contrast to the early smaller
enterprises, these large-scale business organizations were dealing
with mass markets about which relatively little was known.‘ Many of
the early trade associations were designed to fill the resulting need
of facilitating information about the channels of distribution and
the nature of the market place in the expanding trade regions and
this need involves the promotion and protection functions of hypothesis
I of this study.
Early trade and business associations were formed where people
57
recognized a like, complementary, or common interest sufficiently en-
during and distinct to be capable of more effective promotion through
collective action. The initial forces that generated these interests
were centered in the competitive aspects as discussed above. Im—
provements in transportation were also widening markets, extending
areas of competition, and making large-scale production worthwhile.
Large-scale production was made possible by advances in metallurgy
and engineering, and the necessary concentrations of capital that
were readily affected through joint stock organization, limited
liability, the growth of a capital market, and an efficient banking
system. While in the beginning these interests were primarily local
and confined to small geographical areas and the relative number of
associations formed was quite small, the expansion of the economic
aspect of the society offered greater opportunity for the creation
of organized groups than did the previous simple industrial society.
As the scale of enterprise grew, production tended to become not
only more specialized -— a fact which encourages association between
firms using the same machinery and processes -- but also concentrated
in relatively large firms. Firms whose high fixed costs made them
susceptible to trade depression and between whom competition was
becoming a cost struggle among equals rather than a simple elimi-
nation of the inefficient, clearly saw the necessity for such agree-
ments as could be provided through formal association.
Many writers have referred to the period 1890 to 1911 as the
formative stage of trade associations, and the factors summarized above
58
suggest that this conclusion is quite accurate.5 This analysis has
suggested that it was the attendant problems of the emerging economy
that produced this formative stage. The big industries and widening
markets that have been mentioned presented new and challenging prob-
lems to American business. Businessmen were desirous of adjusting
their activities more intelligently and accurately on the basis of
the best technical practice and actual market conditions. Under these
circumstances the so-called "open price" trade associations were in-
augurated. These associations distributed and exchanged price infor-
mation among their competitors. There was also a large group of
closely related trade associations that distributed a wide range of
trade statistics but excluded prices. Modern trade associations are
an outgrowth of attempts to satisfy the crucial need for knowledge
about competitors and the market place that was apparent at the turn
of the twentieth century. The tendency toward bigness was a key
factor in trade and business association formation. Essentially, it
was the attendant complexities of bigness that generated a common
interest that was sufficiently enduring to sustain collective action.
Particularly, this common interest arose from the prevailing compe—
titive situation, and competitive influences really shaped the trade
and business association function. Protection and promotion of mutual
interest referred to in hypothesis 1 centers in improvement and pro-
tection of competitive position.
Since the competitive situation was influenced by the
5Ibid., p. 872.
59
governmental environment, and conversely, the attendant problems
created by firms attempting to gain greater market control affected
the government environment; many of the earliest trade and business
associations were immediately concerned with legislation affecting
their respective industries. While the Sherman Act of 1890 and the
Clayton Act of 1914 were major control devices, numerous acts
affecting specific industries were either proposed or passed in
this early period. In line with hypothesis 1, this legislative
situation stimulated association among firms in a given industry in
order to protect their interests with government.
Therefore, much of the groundwork that provided incentive for
association within industry had been laid in this early period. The
economic base of the American economy was expanding and the basic
problems were present that could best be handled through collective
industry action.
The war years introduced new and greater challenges to American
industry, and provided one of the most fertile periods for trade and
business association formation. According to the U. S. Department of
Commerce, the number of trade associations increased rapidly between
1914 and 1919 from about 800 to 2,000 associations.6 This increase
can partially be accounted for by wartime production problems and the
establishment of the War Industries Board, which desired to deal with
industries in organized groups. Mobilization of production toward the
war effort, including unification of industry production and more
61bid., p. 872.
60
efficient distribution, was a basic factor that stimulated both trade
association growth and formation. World War I influences tended to
temporarily shift association emphasis away from competitive problems
within the industry to the production problems created by the pressing
dogma of the worldwide struggle.
Many new techniques for coping with previous problems emerged
during this period. There was a rise in the use and practical appli—
cation of statistical information. The need to coordinate production
quotas coupled with the urgent need to allocate resources in the most
efficient way from a defense point of view opened the door to the
essential role of statistics. It will be shown later that much of the
modern widespread use of statistical information among trade associa-
tions grew out of the needs of the war years.
Wartime shortages and production problems and controls brought
many associations into close contact with government officials for
the first time. This contact was encouraged by such formal agencies
as the War Industries Board, and was a natural result of closer con-
tact between government and business that was a necessary by-product
of producing goods for purposes of national defense. In fact, many
of the existing associations today found their basic impetus for or-
ganization in the challenge to their industry that World War I pro-
vided. Needless to say, from that time on, government's role has
become increasingly important both in its interest in trade and busi—
ness associations and in these associations interest in government.
It is true that these associations had an earlier interest in govern-
ment as exemplified in early trade legislation, but the closer contact
61
with government due to the war effort strengthened the bonds and
ties of this relationship.‘
One can say that at the close of World War I trade and busi-
ness associations had assumed many of the characteristics that,
as will be shown later, are found to be typical of them today. The
competitive aspects began to blossom from the late 1800's on, the
statistical aspect became prominent during the war years, and
governmental relationships were strengthened during wartime condi-
tions. While many of the large-scale national trade associations
were formed after 1920, the basic stimulus to their formation had
emerged in the society by 1920. The foundation had certainly been
laid in the society for continued growth of a trade and business
association segment.
During the 1920's with both their formative stage and the
wartime problems a thing of the past, trade associations extended
a program of widespread cooperative advertising for promotional pur-
poses. Mass communication was emerging as a definite asset that
could be used by these associations to promote their respective
causes. glover reports that a survey of thirty-seven national pub~
lications revealed that the amount spent on advertising by these
associations increased from less than $400,000 in 1919 to over
$6,000,000 in 1929.7 In addition, several times this amount
($6,000,000) was expended by trade and business associations in
trade promotional work other than cooperative advertising in these
71bid., p. 873.
62
same publications. The prosperous years of the twenties provided
the economic environment that stimulated large—scale promotional
activities. It was during this period that trade associations took
on the true national character that is found in the large-scale
national associations represented in the sample.
The depression years of the early thirties and the corres-
ponding problems that faced American industry provided another de-
cisive influence on the character of American trade and business
associations. Although these associations had experienced a forma-
tive stage and continued their development through the problems of a
world war, they had not yet experienced a basic threat to our eco-
nomic system until this great depression. Industry saw the need to
restrict competition and to erect safeguards against price cutting.
Moreover, there was a universal concern among businessmen about general‘
market conditions that overshadowed prior emphasis on intra-industry
competition. There was an urgent need to learn more about the
market place, in order to deve10p ways to increase sales and survive.
Trade associations were faced with a distinct challenge if they were
to really serve their respective industries.“ The mass promotional
campaigns of the twenties were re—examined with a new emphasis on
market research. A preliminary report made by the trade association
department of the U. 8. Chamber of Commerce indicated that over 200
trade associations stepped up cooperative advertising in the 1930's
at a cost of several million dollars, and that 143 associations
adopted specific programs of market research.8 Trade and business
8Ibid., p. 879.
63
associations had been forced to realize the urgent need to gain a
greater understanding of all of the factors entering into the market
environment.
The severity of the depression dealt a serious blow to the
effectiveness of many of these associations. In fact, while their
stepped up programs of market research were to become a permanent
characteristic of these associations, the immediate effectiveness of
these programs was slight. The short-lived National Industrial Re-
covery Act of 1933 was a primary influence that galvanized renewed
life into the trade and business association function. The American
trade association occupied a key position under this act because it
thrust many of them into a position of central authority for their
industries. The act provided for these associations to draw up a
code of fair competition for their respective industries, and then
to take an active part in developing and enforcing it in practice.
The N. I. R. A. therefore established the trade association as an
instrument of industrial control, and although its effectiveness in
this area can be questioned, the act certainly helped to secure an
established position for trade associations in the modern industrial
setting. There was an apparent trend toward closer internal regula-
tion in industry, and trade associations continued an active role in
this area throughout the 1930's. While their effectiveness during the
depression has been seriously challenged, the N. I. R. A. restrengthened
their position and possibly avoided a substantial decline in their
growth.
The outbreak of World War II interrupted the move toward
64
closer internal regulation of industry, but greatly stimulated asso—
ciation activities by bringing them once again into close and con-
tinuous touch with government. They participated, with varying
degrees of responsibility, in the allocation of materials to manu—
facturers and played a critical role in providing statistical infor-
mation about their industries for national defense purposes. The
statistical aspect of association activity increased to an even
larger extent during World War 11. As mentioned previously, the
exchange of statistical information among association members and
government grew out of problems created by the first world war,
but the second world war expanded this role. Trade and business
associations also played an increasingly important role in facili-
tating relationships between government and industry for purposes
of national defense. Partially as a result of these wartime in-
fluences, these associations emerged from the second world war as
a vibrant and influential force in our economy.
The current state of the trade and business association seg-
ment will be dealt with in more detail in subsequent chapters; how-
ever, some of the basic trends of the post World War II years will
be summarized briefly here. Since these associations occupied an
enhanced position following World War II, many of them experienced
their greatest gains in membership growth during this period. There
was a continuation of the information function facilitated by the
statistical activities of the war. The tremendous strides in mass
production and automation stimulated through wartime production car-
ried over into peacetime industry following the war.
The increases in productivity put the informational function
65
in a permanent status position among large-scale national trade and
business associations. The governmental relationship particularly
involving potential legislation that would affect specific industries
was given renewed emphasis. Many trade and business associations
increased their lobbying activities and there was a tendency to
maintain legal counsel or offices in Washington, D. C. The c00pera-
tive promotional activities characteristic of the twenties were
given renewed status and many associations originated advertising
and promotional departments. Concurrently, market research was used
as a tool by trade and business associations to determine the extent
and effectiveness of their promotional appeal.
These associations were undergoing a period of reappraisal
and expansion. The foregoing activities were extensions and re-
finements of similar activities that had proved useful prior to the
interruption caused by World War II. The emerging complexity of the
economy called for this continued expansion and refinement. A new
major influence occurred following the war that added an additional
function to trade and business association activity. The emergence
of large-scale production and attendant service industries directed
attention to the need for establishing and maintaining good public
relations. In response to this need, many of these large-scale asso-
ciations established public relations departments. These departments
were, for the most part, designed to stimulate national opinion in
behalf of the major activities that were represented.
During the course of assOciational development the growth of
66
particular industries has paralleled the growth of the trade seg-
ment by activity type. The following tables derived from data
received from questionnaires answer many of the questions about
the formation and development of large-scale national trade and
business associations in American life. The trends in development
emphasized throughout this chapter receive additional support from
the ahalysis of questionnaire responses.
Table 3 indicates the trends in activity types by age of
association in the sample. Of particular note is the predominance
of the formation of manufacturing associations in the early years.
While 53.4 percent of all the manufacturing industries trade asso—
ciations in the sample were formed prior to 1920, only 3.3 percent
were formed after 1950. This fact suggests that the majority of
large-soale national manufacturing trade associations existing today
find their roots in industries that were established before 1920.
In fact, while only 3.3 percent of these associations were formed
after 1950, 86.7 percent were formed before 1941. Although few of
the total sample of associations were formed after 1950, manufac—
turing still ranks next to the bottom in "start-ups." Table 3 also
reveals that the larger percentage of the associations in the sample
were formed before 1920 with associations in the transportation,
communication, and utilities fields being the only exceptions.
Secondly, 77 percent of this latter group was founded between l92l
and 1950. This fact can be accounted for by the historical develop-
ment of these industries, because the modern developments in transW
portation, communications, and utilities did not originate until after
1920.
67
Another interesting indication from the table is the fact
that more agriculture associations were founded after 1950 than were
any of the other activity types. One might infer that the recent
trends in overproduction and specialization in agriculture is a
major cause for this trend. The basic needs of protection of com-
petitive position and promotion of industry welfare are being con-
tinually brought to the foreground in the agricultural setting. But
further analysis of the agriculture activity type yields significant
information about its relative importance in early years. In spite
of the fact that more new agricultural associations have been formed
since 1951, Table 3 also shows that this same activity type leads all
others in the formation of national associations during the period
of 1900 and earlier. When an examination is made of the individual
agricultural associations founded prior to 1900, an interesting pat~
tefln prevails. The greater percentage of the large-scale national
agricultural associations formed in this period were associations
dealing with particular kinds of livestock. For example, associations
concerned with hereford, jersey, angus, shorthorn, holstein, and
shropshire cattle were all organized before 1900. In addition, a
national cattleman's association dealing with the many aspects of
livestock production was founded in 1898. The other agriculture
associations formed before 1900 were concerned with the older fiber
producers such as wool and cotton, and with the lumber industry. The
National Wool Growers Association, founded in 1865, is one of the
oldest in the sample. The emergent process is particularly apparent
in this activity type because the early cattle and crop associations
68
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69
of this late 1800 period were generally concerned with particular
breeds of cattle or specific kinds of crops, but those associations
in agriculture formed after 1950 are more generally organizations
bringing the different kinds of cattle and cr0p producers together
in single organizations. Examples of this finding are the National
Swine Growers Council founded in 1954 and the National Wheat
Growers Association founded in 1950.
The finance, insurance, and real estate, and wholesale
retail trade activity types also rank above average in the formation
of new associations during the 1900 and earlier period with over
one-fourth of the former and one-fifth of the latter activity type
being formed during this period. One can certainly include the
monetary and credit problems of the 1880's and the resulting mone-
tary and banking reforms of this period as factors affecting fi-
nancial interests and generating collective patterns among particular
segments of the financial world. The growth of corporate entities
and limited liabilities no doubt influenced the insurance field in
terms of protecting personal and pr0perty interests. These latter
develOpments gave rise to more widely dispersed market centers
which probably encouraged the expansion of wholesale retail trade
associations.
National business associations; finance, insurance, and real
estate; and transportation, communications and utilities have re—
mained fairly static at between six and eight percent since 1951,
while wholesale and retail trade was the least active in terms of
trade association formation during this period. Service organizations
70
were surprisingly dominant in formation during the 1941-50 period.
The wealth of statistical problems during World War II and the
reconversion problems following the war certainly were a predisposing
influence on establishment of the service activity type.
The most important single contribution yielded by this table
is the fact that approximately 45 percent of all large-scale national
trade and business associations in the sample were formed prior to
1921, and that there has been a steady decline during the three
periods that followed to a small 5.3 percent after 1951. Two pri—
mary conclusions can be drawn from this finding. First, a great
percentage of the large-scale national associations found today are
not young relative to the sample as a whole. This fact partially
results from two forces of probably equal strength. One force
suggests the hypothesis that large-scale national trade and busi-
ness associations take a number of years to grow, because many of
the big ones are older; and the other suggests that a large propor—
tion of the modern industries represented by these associations
emerged from smaller industries founded prior to 1921. Further evi»
dence for this conclusion is found in the fact that few new large«
scale national trade and business associations have developed since
1951. Second, and probably more important, the hypothesis is sug-
gested that the basic needs of industries are met early in their
development because the large-scale associations emerge with the
early growth of the industry. This conclusion is clearly indicated
in manufacturing; finance, insurance, and real estate; wholesale retail
trade; transportation, communications, and utilities; and services.
71
Added recognition must be given to the 1921-40 period as being signi-
ficant in transportation, communications, and utilities industries as'-
well as those in finance, insurance, and real estate. Also, as men-
tioned previously, the trends in services resulting from the influences
of the World War 11 years and the reconversion period of the late
1940's had a pronounced effect on service associations. New needs
were created between 1921 and 1945 in each of these industries, and
as suggested in hypothesis 1, the satisfaction of these needs can be
considered basic to the growth of the respective associations. Agri-
cultural associations experienced early growth then declined during
the 1921 to 1950 period but resurged again after 1951. Recent changes
resulting from research and mechanization in agriculture help to ex-
plain this trend. The pattern of deve10pment set forth earlier in
this chapter is confirmed by the findings of this table. These data
clearly support the fact that the basic motives for trade and business
associations formation were prevalent in the economy by 1920. More~
over, the additional conclusion that the growth of younger industries
and the deve10pment of statistical and service functions of trade
associations had pronounced effects on trade and business association
development after 1920 is also supported.
While a large percentage of trade and business associations
were formed prior to 1921, average membership size for those associaw
tions reporting was quite small in these earlier years. As can be
seen from Table 4, the average membership per association in the
trade segment was only 1,642 individual members for the twelve asso—
ciations reporting in 1910. This figure increased steadily to 21,079
72
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77
slightly larger percentage in wholesale retail trade‘have undergone
this type of structural change. Those in the remaining activity
types fall in a middle range with between one-fourth and one-fifth
reporting mergers. One must conclude that mergers do play a signi-
ficant role in the growth process of trade and business associations,
and that the problems facing manufacturing and the transportation,
communications, and utilities industries are predisposing influences
toward merger. Particularly, the competitive conditions that face
these industries are constantly changing. For example, in manufac-
turing when a firm or firms emerge as industry leader(s), it is
likely that existing trade association structure will be altered
to the extent that smaller firms in the industry find it necessary
to merge their associations to compete with industry giants. Con-
versely, the emergence of industry giants may dictate a change in
existing association structure that is more adaptable to new firm
problems. This new structure may call for an emphasis on govern-
mental relations to avoid trust law violation, or for a vehicle that
can be used to keep smaller firms in line.
In the area of transportation, communications, and utilities
the concept of controlled monopoly makes the trade association perm
form a vital function with regard to governmental relations. While
government often serves as a watchdog for the public interest in many
of the industries represented in this activity type, the trade asso-
ciation promotes and protects the interests of its industry. Changing
public views, new discoveries, and urban growth pose threats to the
stability of many industries in transportation, communications, and
78
utilities and often invite merger of existing associations to meet
new needs. Thus the promotion and protection needs of members re-
ferred to in hypothesis I are altered as industry conditions change
and merger or division of existing trade and business associations
may result.
Summary
Table 6 puts the major findings of this chapter in summary
form; it demonstrates the important relationship between the dynamic
forces set forth in hypotheses II and the nature of trade and busi-
ness associations. The growth and deve10pment of these associations
have been distinctly influenced by basic forces in our society.
Trade and business associations were an outgrowth of the early guild
system, and exhibited certain new characteristics necessitated by a
changing society. The objectives of the early guilds were not con—
gruent with the dynamic forces of the society because their functions
and ideals were too narrow to fit into a more complex society. Simi-
larly, in the context of hypothesis 1, guilds did not grow and
flourish because they no longer met the needs of their membership.
Dynamic forces were producing a complex urbanized society that was
becoming increasingly competitive. A new organization with a broader
membership base and more sophisticated economic knowledge was needed
to protect competitive position and promote membership welfare. The
modern trade and business association emerged with these fundamental
characteristics and objectives.
Table 6 clearly indicates that the trade and business associa—
tion that was a product of the economic environment at the turn of the
79
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87
concentrated in New York with a few of the insurance control asso-
ciations, such as the National Association of Insurance Agents, lo-
cated in Washington, D. C. The real estate associations most fre-
quently identify Chicago as the site of their national headquarters.
Associations with headquarters in other cities tend to locate in
major cities that are identified with their industries as indicated
by the number of national insurance associations located in Hartford
and Philadelphia. These findings suggest that the financial and
insurance associations account for New York's high percentage of
national headquarters in this activity type, and the real estate
associations help account for Chicago's second place position. Some
financial associations are also found in Chicago. The insurance
associations are the most likely of the three groups to be found
in Washington, but they also contribute greatly to the 25,8 percent
that locate headquarters outside the three major sites.
[The manufacturing activity type contains a unique pattern of
headquarters location by type of individual association. The 31.6
percent of this activity type located in New York are largely asso—
ciations representing a variety of industries, or the more general
aspects of a particular industry. Primary examples are both the
National Association of Manufacturers which is a general organization
in terms of widespread industry representation, and the United States
Brewers Association promoting the brewing industry, both located in
New York. While Chicago attracts some of the more general repre-
sentative organizations, it tends to have many of the narrow interest
associations such as those representing farm equipment and mobile
88
homes. Washington attracts both broad and narrow interest associa-
tions in manufacturing but to a lesser extent. A useful finding is
the fact that those associations locating outside these three cities
primarily consist of particular national manufacturing associations
locating near the centers of their respective industries. For
example, many of the national iron and steel associations are in
Pittsburgh and Cleveland, automobile assoCiations in DetrOit, pe-
troleum in Texas and Oklahoma, and lumber associations in the north-
western United States.
The services activity type, which ranks high in its per-
centage of New York City headquarters, contains service associations
in a variety of fields. Those associations primarily concerned with
industry services such as management and advertising tend to locate
in New York. Those dealing with credit management and accounting
services are evenly distributed in New York, Washington, and Chicago.
The 29.1 percent of this activity type with headquarters located
elsewhere are, for the most part, associations offering more special
services such as motor hotels, photographers, etc. In consequence,
the industrial influence of the New York area tends to show up in
services as well as manufacturing associations.
Finally, the wholesale retail trade activity type, which is
fairly evenly distributed in terms of national headquarters in the
three major cities, contains similar locational patterns to the
above three activity types. New York again attracts a great majority
of wholesale retail trade associations directly concerned with in-
dustrial products; noteworthy examples are associations concerned
89
with trademarks, standards, and particular industries such as the shoe
industry. Chicago attracts a great majority of national trade asso-
ciations in the food distribution field such as the National Asso-
ciation of Retail Grocers, which claims to be the largest trade asso—
ciation in the United States. Washington, D. C. is identified with
a variety of wholesale retail trade associations, and it is difficult
to determine any definite trend other than some basic interest in the
legislative aspects of the distribution process among these associations.
Totals in Table 7 for the three major cities yield a sur-
prising result. In spite of the fact that New York is the most
frequent location for the aforementioned four activity types, Washing-
ton, D. C. is the most frequent location of headquarters of all trade
and business associations with 24.9 percent compared with 24.3 per-
cent for New York. A distinct relationship between the governmental
sphere of our society and trade and business association activity is
suggested. Although this relationship will be dealt with exten-
sively in a later chapter, of particular note here is the fact that
over 70 percent of the transportation, communications, and utilities
associations in our sample are located in Washington. The relation—
ship between these industries and the federal government is obvious;
the large percentage specifically suggests facilitating activities
among these associations and the federal government. Agriculture
and national business associations also show up with considerably
higher percentages in Washington than in New York. The close real-
tionship between agricultural problems and federal legislation, and
the functioning of national business associations in the governmental
9O
sphere account for this finding.
Chicago has a goodly representation of headquarters from each
of the activity types, but regardless of its midwestern location,
it only attracts 10 percent of the agricultural associations, which
is considerably less than its representation of the other activity
types. Both the national business associations and agricultural
associations in our sample predominantly locate their headquarters
outside these three major centers.
Closer examination of the particular associations included
in these categories explains this finding. Although national busi-
ness associations lead all activity types with twenty-two associa-
tions (64.7 percent) locating headquarters outside New York, Washing—
ton, and Chicago, twenty of these associations are state chambers of
commerce, and consequently, their headquarters are located in their
respective states. Only two associations other than these chambers
of commerce located their headquarters outside the three major sites.
The large national chambers of commerce such as the United States
Chamber of Commerce and the Council of State Chambers of Commerce
are located in Washington, and the international chamber is located
in New York. The governmental complex in Washington and the interest
of the national chamber in governmental affairs account for the
Washington location. The remainder of the national business asso-
ciation category is primarily made up of the national service clubs
such as Lions, Kiwanis, and Circle K; they tend to locate their
national headquarters in Chicago. Since the activities of these
service clubs are widely dispersed geographically, it is not surprising
91
that they would choose ChicagO‘s central geographic location for their
headquarters. Although national business associations have the highest
percentage of associations with headquarters outside New York, Washing-
ton, and Chicago it is now clear that aside from the state chambers
of commerce virtually all of the other associations in this activity
type are located in these cities, and the unique nature of state cham-
bers of commerce preclude their location in these three cities.
The agriculture activity type, which ranks a close second to
national business associations in locating headquarters outside the
three major cities presents a somewhat different picture. An analysis
of the individual associations in this category indicates that the
greater percentage of agricultural associations that locate head-
quarters elsewhere are crop or cattle associations that locate near
the particular areas where these commodities are primarily raised.
Most of the national cattle and national wheat associations are lo-
cated in the midlands and western states where these food products
are raised. National cattle and wheat associations headquarters are
concentrated in Texas, Nebraska, Kansas, Missouri, and Iowa. National
tobacco, fruit, and vegatable associations also locate near their
growing areas in such states as North Carolina for tobacco and Cali-
fornia and Florida for citrus fruits. The other agricultural asso-
ciations that are concerned with a wider variety of products or wide
geographic areas of production tend to follow the general trends and
locate in Washington and Chicago. Prime examples are the American
Farm Bureau Federation that has located its headquarters in Chicago,
and many of the national agricultural associations most directly
92
concerned with governmental legislation that are located in Washington.
Forestry and wildlife management organizations with widely dispersed
geographic interests are included in this latter group.
The transportation, communications, and utilities activity
type which reports no associations outside the three major sites, is,
of course, heavily concentrated in Washington, D. C. Close examination
of the individual associations in this activity type indicates that
most of the public power and transportation control associations are
located in Washington, but a few of the more technical associations
are located in Chicago and New York. Examples of these are the Ameri—
can Railway Engineering Association in Chicago and the Edison Electric
Institute in New York. The general indication therefore is the fact
of government or industry control that accounts for the Washington
location, and those associations located in the other two cities are
less likely to be characterized by a control function and more likely
to have narrower technical interests.
Generally speaking, it can be concluded from the above analy-
sis and the data in Table 4 that large-scale national trade and busi-
ness associations as well as large—scale organizations of other types
such as corporations, government agencies, and banks tend to locate
in the major metropolises of New York, Washington, D. C., and Chicago.
In reference to hypothesis I of this study, membership need fulfill-
ment tends to influence a given association's choice of a headquarters
site. Furthermore, performance of the protection and promotional
functions of hypothesis I that are continually developed in this
93
analysis involves the opportunity for governmental contacts and the
proximity to industrial and market centers provided by these locations.
Organizational Membership and Staff Characteristics of Large-Scale
National Trade and Business Associations
An important aspect of the functional nature of trade and busi-
ness associations is their proliferation of activity through affiliation
with other associations. Affiliation is one element of the dynamic
pattern of organizational and structural characteristics of trade and
business associations that helps explain their individual effectiveness
in meeting membership needs referred to in hypothesis I. Affiliation
is a tool used by associations to make their influences felt in their
total environment of industry and society. Affiliation represents a
bond of interest and activity that naturally increases the sc0pe of
influence, the activity range, or scope of the association. This
bond of interest can take numerous forms ranging all the way from
written working agreements and representation on the boards of di-
rectors of other associations to informal working agreements and
pooling of knowledge and information between associations. Those
associations with larger numbers of affiliates can be regarded as
using this tool of influence to a relatively greater extent. Another
significant aspect of affiliation is that it gives an indication of
the degree of cohesiveness found among the seven activity types.
Table 8 indicates percentage and rank order of the large-
scale national trade and business associations by number of affilia-
tions only, and no attempt is made to isolate affiliates from the
94
parent association. Extreme care was taken, however, to uncover any
unusual patterns of affiliation such as activity types with few
affiliates in numbers, but where affiliation channels ran directly
to one dominant parent association. If this occurs the result is a
very tight knit association complex. The most prominent case of
this type is the National Association of Manufacturers which solidi—
fies the manufacturing activity type as a whole through its ties
with a large number of affiliated associations.
Table 8 reveals that over 50 percent of all the associations
have at least one affiliate. Agriculture, with 46.2 percent reporting
no affiliations, and wholesale retail trade, with only 15.6 percent
reporting no affiliations, are the two extremes. While wholesale
retail trade associations report that 84.4 percent have affiliations
with other associations, none reported more than five affiliates.
Correspondingly, national business associations report a significant
65.6 percent with affiliation but, again, only 3.1 percent of the
associations in this activity type have more than five.affiliates.
Large-scale national manufacturing trade associations report over
21.4 percent having over fiJe affiliates. The functional nature of
the manufacturing activity type seems to call for a larger number of
affiliates. This finding can be partially explained by common prob-
lems that face many industries such as labor relations, governmental
legislation, and the cooperative promotional activities pointed out
in Chapter III. It can be concluded that the manufacturing activity
type is most cohesive in terms of the extent that affiliation is used
by its associations. The fact that wholesale retail trade associations
95
TABLE 8. Number of Affiliates by Activity Type
Number of Affiliates
Activity Type 1:5 Rk. Over 5 Rk. Rk. Total
# % Ord. # % Ord. # % Ord. # %
Wholesale Retail Trade 38 84.4 (1) 0 0.0 (7) 7 15.6 (7) 45 100
National Business Assoc. 20 62.5 (2) 1 3.1 (6) 11 34.4 (6) 32 100
Services 35 58.3 (3) 6 10.0 (5) 19 31.7 (5) 60 100
Manufacturing 46 54.8 (4) 18 21.4 (1) 20 23.8 (4) 84 100
Trans., Comm., 8 Util. 13 48.1 (5) 5 18.5 (2) 9 33.4 (3) 27 100.
Fin., Ins., & R. Estate 13 41.9 (6) 5 16.1 (4) 13 41.9 (2) 31 100
Agriculture 14 35.9 (7) 7 17.9 (3) 18 46.2 (1) 39 100
Totals 179 56.3 (1) 42 13.2 (3) 97 30.5 (2) 318 100
are particularly prone to affiliation but only in terms of a few affil—
ates per association suggests that this activity type is not nearly as
cohesive as manufacturing, although certain problems faced and func-
tions performed by these organizations do call for between one and
five affiliates for m0st associations. The problems faced by marketing
organizations, are different from those of manufacturing. While it
is true that their interests are strong in areas of legislation, labor
relations, and promotion, the findings suggest that there is less
unity needed in performing their functions successfully. An example
of this difference is found in the promotional interests of the two
activity types. Manufacturers are often concerned With gaining a
general type of acceptance for their industry‘s product, but whole-
sale retail trade is likely to be more interested in the competitive
side which requires distinguishing brand names or types within the
industry.
96
The functions of national business associations are also re-
vealed in their affiliation pattern. Since by their very nature many
of these associations are state and locally oriented, it is not sur-
prising to find that they rank next to the bottom with only 3.1 per-
cent reporting over five affiliations. Their localized interests
tend to limit the scope of their influence and this fact suggests
that cohesiveness of this activity type is not high. The American
Farm Bureau Federation plays a crucial role in bringing together the
divergent locations, backgrounds, and interests of American farm
families, and the cohesiveness of the agricultural activity type is
certainly strengthened by this dominant parent organization.
It is apparent that promotion and protection of members' mu-
tual interest referred to in hypothesis I affects affiliation pat-
terms. Manufacturing associations find it necessary to affiliate
with a large number of other associations to be most effective. Whole-
sale retail trade and national business associations also affiliate
but with a fewer affiliates per association than manufacturing. All
remaining activity types affiliate with other associations in a more
balanced fashion between large and small numbers of affiliates. Cer-
tainly, affiliation is a key factor in effective performance of func-
tions that meet the needs of individual association memberships.
While affiliation involves an external modification by asso-
ciations to strengthen their effectiveness, departmentalization within
the association is an internal modification that is used by associations
to increase their ability to perform protection and promotional func-
tions. A knowledge of internal departmentalization among trade and
97
business associations indicates the extent of formalization of struc-
ture required if an association is to successfully meet the needs of
its membership. Where Table 8 shows that some activity types are
more prone to affiliation than others, Table 9 indicates a similar
finding about internal departmentalization. For purposes of analysis,
a high degree of departmentalization is defined as those associations
with four or more distinct administrative departments. Agricultural
associations which rank low in affiliation report the least degree of
departmentalization with only 27.5 percent of these associations ex-
hibiting four or more distinct administrative departments. This com—
parative pattern does not exist among all activity types in the two
tables because financial, insurance, and real estate associations
have very few affiliations and yet they exhibit a relatively high
degree of departmentalization. This fact is also true for national
business associations but to a lesser extent.
The functional activities of both finance and manufacturing
associations attract departmental organization most frequently while
the functional activities of agricultural associations do not produce
the same effect.
Further support for the above findings is obtained from the
fact that an average of 47.3 percent of all associations in the sample
report a high degree of departmentalization, and it is the associations
in wholesale retail trade; transportation, communications, and utilities;
and agriculture that fall significantly below this average. The con-
clusion is that in fulfilling membership needs the activities of these
98
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99
latter three activity types are less likely to require a high degree
of departmentalization than do the others.
Additional questions about the trends in departmentalization
are answered in Table 10 which examines the membership characteristics
0f trade and business associations. The manufacturing and the finan-
cfia1,insurance, and real estate associations rank highest in organi-
zational memberships with approximately 75 percent of manufacturing
and 59 percent of financial, insurance, and real estate associations
reporting organizational members only. Since these same two activity
types report the highest degree of departmentalization, a relation-
ship is suggested between organization structure and type of member-
ship. Although transportation, communications, and utilities asso-
ciations report a lower than average extent of departmentalization,
they still have a greater than average number of organizational mem-
bers. This finding does not contradict a suggested relationship be—
tween the number of organizational members and extent of depart-
mentalization because the transportation, communications, and utili-
ties associations also have a much greater percentage of individual
memberships than either manufacturing or finance, insurance, and
real estate associations.
A substantial 46.7 percent of all the associations in the
sample have organizational members only. Excluding national busi-
ness associations and agriculture, this percentage rises above 50
percent. An important thing to note in Table 7 is that these same
two activity types (national business associations and agriculture)
had the fewest total headquarters locations by percentage in the three
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101
major centers of New York, Washington, and Chicago. This fact suggests
at least a partial relationship between headquarters location and
type of membership. Interestingly enough, the agricultural asso-
ciations in the sample report the largest percentage of individual
memberships, the lowest extent of departmentalization, and are second
only to national business associations in locating their head-
quarters outside of the major centers of New York, Washington, and
Chicago. This fact alone suggests more than a casual relationship
among these three variables.
National business associations rank high in the combined
membership category with 62.1 percent reporting this type of member—
ship. The nature of the organizations included in this activity type
suggest the reason for this finding. Manufacturing associations rank
at the bottom in combined memberships as well as individual member-
ships, thereby indicating that organizational memberships are more
characteristic of this activity type of trade association than any
of the others. Thus, manufacturing trade associations rank high in
organizational members, high in departmentalization, and low in the
tendency to locate their headquarters outside New York, Washington,
and Chicago.
Wholesale and retail trade associations fall near the average
in each of the three membership types with 27.5 percent reporting
individual members only, 47.5 percent reporting organizational members
only, and 25 percent reporting combined memberships. Services asso~
ciations rank substantially higher than average in individual member~
ships slightly above the average for combined memberships, and
102
substantially below average for organization memberships only. This
finding is explained by the fact that the functional aspects of ser-
vice organizations exhibit more individual membership patterns than
do manufacturing organizations.
Table 11 provides a better understanding of the relationship
between the number of organization members and the extent of depart-
mentalization. As a means of testing this suggested relationship
between these two variables, a chi square test was computed from the
data in Table 11. The results of this test, as indicated at the
bottom of the table, show a significant relationship between the
number of organization members and the extent of departmentalization
at the 5 percent level of significance among the large-scale trade
and business associations in the sample. The fact that only twenty-
nine of the associations reporting no organization members have four
or more distinct administrative departments (high departmentalization)
while 51 of these associations have less than four departments (low
departmentalization) is significant. Also, while forty-one of the
sixty-two associations with 1,001 or more organizational memberships
report high departmentalization, only twenty-one of these sixtywtwo
associations report low departmentalization. This finding indicates
the strength of the dependency between the two variables. The con—
cluding point to be made from this table is that although the de-
pendency between high departmentalization and a large number of
organization members is not universal among all trade associations
in the sample, it is still of considerable significance.
103
TABLE 11. Cbmparison of Number of Organization Members and Extent of
Departmentalization of Large-Scale National Trade and Business Assoc.
Extent of Departmentalization
Number of Organization Total
Members High Low
1 - 200 39 50.7 38 49.3 77 100
201 - 1,000 30 38.0 49 62.0 79 100
1,001 - 3,000 22 61.1 14 38.9 36 100
3,001 - 10,000 10 58.8 7 41.2 17 100
10,001 - 100,000 9 100.0 0 0.0 9 100
No organization members 29 36.3 51 63.7 80 100
Totals 139 46.6 159 53.4 298 100
5df x35 2 11.07 x2 = 25.27
Two basic conclusions are drawn from the above analysis of
types of membership. First, and most important, the functional nature
of these associations in the business world supports a predominance of
organizational and combined memberships as Opposed to individual meme
berships. Secondly, fundamental comparisons between type of member-
ship, headquarters location, and extent of departmentalization suggest
more than a casual relationship between these three variables. A
larger percentage of organizational members tends to indicate a greater
extent of departmentalization, and an increased tendency to locate
national headquarters in New York, Washington, or Chicago.
With the conclusion already established that a great per»
centage of these associations are made up of member organizations,
further understanding oftheir functional nature in the business world
104
can still be gained by examining occupations represented by the in-
dividual members. Table 12 is a percentage ranking of activity types
by the four major occupations reported in the sample. The dominance
of managerial personnel in the memberships is obvious from a first
glance at this table. In fact, over 70 percent of all members of
both the wholesale retail trade and manufacturing activity types in-
dicate that their memberships are composed of managerial personnel
exclusively, In all of the activity types except agriculture and
national business associations substantially over 50 percent of the
memberships are composed of managerial, professional, and white
collar personnel. Over 48 percent of the agriculture associations
reported their membership to be composed of farmers exclusively.
National business associations are widely distributed among various
occupational categories. It can be recalled from Table 7 that these
latter two activity types were the least likely of the activity types
to locate their headquarters in the three major cities mentioned.
Consequently, there is an apparent relationship between headquarters
location and type of membership by occupation of members. Those
activity types with a greater percentage of members from managerial
and professional ranks are more likely to locate their headquarters
in the three major centers (New York, Washington, and Chicago) and
the opposite is true for the activity types with lesser membership
representation from these managerial and professional occupational
ranks.
Another important finding revealed from Table 12 is the paucity
of blue collar occupations represented in trade and business association
105
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106
memberships. No more than one association in all activity types ex-
cept services reported a combination of both blue collar and white
collar personnel in their respective memberships. The services
activity type reported only three associations with this combination,
and that was the maximum number for any activity type. These findings
reveal that there are very few blue collar members of large-scale
national trade and business associations. A basic difference is there-
fore established between the function of the large-scale national trade
and business association, and the function of the trade union in the
business world. Chapter III pointed out the evolution of modern trade
associations from early employer associations, and how these associa-
tions became primarily concerned with promotion of industry welfare
and protection of competitive position. On the other hand, trade
unionism evolved as a protective device for the individual worker as
opposed to the company or industry as a whole. The paucity of blue
collar members of these associations supports the conclusion that a
basic difference in purpose and function has continued between the
labor association and the trade association. Furthermore, the func-
tional difference between the two is so great that few blue collar
workers join trade and business associations. This fact is particu-
larly noticeable among the manufacturing trade associations where
only 1.4 percent report a combination of blue collar and managerial
professional memberships, even though the large number of blue collar
workers engaged in manufacturing is self-evident.
Since agriculture and national business associations deviate
most from the prescribed pattern of managerial professional occupational
107
memberships, it can be recognized from most of the analysis in this
chapter that these two activity types are least characteristic of the
large-scale associations in the sample. They tend to contain fewer
organizational memberships, have fewer affiliates; also, agriculture
is particularly less departmentalized.
Now that an examination has been made of the organizational
and membership characteristics of large-scale national organizations,
it is important to look next at the size of staff used to carry out
the association‘s function. Staff size is an indicator of how the
association functions. Since this study is particularly concerned
with the need fulfillment aspect of association activity, major em-
phasis is placed on internal staff activity as an indicator of the
given association's functional effectiveness. Table 13 breaks down
staff size with percentage rankings for the seven major activity
types. It is significant that 48.6 percent of the sample report a
staff size of less than fifteen. Small staffs are particularly
characteristic of those associations in wholesale retail trade and
agriculture. Since these two activity types reported a relatixely
large number of individual members per association as was snown in
Table 4, this finding is highly significant.
The finance, insurance, and real estate; transportation,
communications, and utilities; and manufac’urlng activity types
reported the largest percentage of staff sizes greater than 100. As
can be seen from Table 10 earlier in this chapter, these same three
activity types report the largest percentages of organizational memJ
bers only. These findings suggest a distinct relationship between
108
type of membership and size of staff. Since those activity types re—
porting a relatively larger average number of individual members per
association (agriculture and wholesale retail trade) also report
smaller staffs, and those activity types with a relatively larger
number of organizational members (transportation, communications, and
utilities; and manufacturing) report relatively larger staffs, the
general conclusion can be drawn that the functional nature of asso—
ciations with greater percentages of organizational members support
larger staffs and the opposite is true for associations with greater
percentages of individual members. Nearly one—fourth of the finan-
cial, insurance, and real estate associations report staff sizes
greater than 100, while approximately 60 percent of this same acti—
vity type have organizational members only. The transportation,
communications, and utilities activity type also has both a greater
than average percent of organization members and a relatively larger
than average number of associations with staffs exceeding 100. These
conclusions are made with full knowledge of the fact that almost two-
thirds of all associations in the sample have less than thirty on
their staffs. Given this fact, the financial, insurance, and real
estate; transportation, communications, and utilities; and manu-
facturing activity types show up most frequently with the larger staff
sizes.! Thus, the above conclusions about the relationships between
type of membership and staff size have given both full recognition
to and are consistent with these more general findings.
Further, there is a significant relationship between size of
staff and extent of departmentalization. Table 13 shows that the three
109
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110
activity types with the greatest percentage of small staffs (whole-
sale, retail, trade; agriculture; and transportation, communication,
and utilities) also rank lowest in extent of departmentalization as
shown in Table 5. Therefore, as would be expected, smaller staffs
are related to less departmentalization. The manufacturing and
financial, insurance, and real estate activity types which rank
consistently higher in staff sizes over fifteen also rank highest in
extent of departmentalization.
Table 13 also shows that a few large-scale trade and busi-
ness associations have no paid staff. The national business 8550-
ciations activity type with 8.8 percent reporting no paid staff has
the most significant percentage of associations with this character—
istic. Since a total of only 2.1 percent of the sample report no
paid staff, it can be said that the general characteristic is to
have some paid staff. A plausible explanation for these associations
with no paid staff is the possible utilization of volunteer workers.
It is less likely that large-scale associations could function
effectively without some staff assistance.
Table 14 contains data concerning the strength of the re-
lationship between the number of paid staff and extent of depart-
mentalization among the associations that compose the sample. The
chi square value computed from these data was a large 106.35 with
only 9.49 needed for significance at the five percent level with
four degrees of freedom. Thus, the dependency of a large staff for
high departmentalization is clearly revealed. Although this finding
may be somewhat naive, it indicates that large association staffs
lll
tend to be associated with four or more distinct administrative de-
partments. While a total of 104 trade and business associations re-
ported paid staffs larger than thirty one, only nineteen of these
associations had low departmentalization. Over 75 percent of those
associations with staff sizes between thirty-one and 100 report high
departmentalization, and 94.1 percent of those associations with
staff sizes over 100 report high departmentalization. It is there-
fore apparent that departmentalization is likely to occur with even
relatively smaller staffs and it becomes progressively more fre-
quent as staff size increases. This conclusion is further supported
by the fact that over 64 percent of the associations with staffs
numbering more than fifteen report four or more administrative
departments. Table 14 indicates that a staff size of sixteen or
more is a cut-off point at which high departmentalization begins to
predominate.
TABLE 14. Comparison of Number of Paid Staff and Extent of Depart—
mentalization Among Large-Scale National Trade and BUsiness Assoc.
Extent of Departmentalization
Number of Paid Staff High Low Total
None 0 0.0 7 100.0 7 100
l - 15 34 21.1 127 78.9 161 100
16 - 30 38 64.4 21 35.6 59 100
31 - 100 53 75.7 17 24.3 70 100
101 and over 32 94.1 2 5.9 34 100
Totals 157 47.4 174 52.6 331 100
4df x85 2 9.49 X2 : 106.35
112
The analysis of organizational, membership, and staff charac-
teristics contained in this chapter provides one basis for under-
standing the trade and business association environment in the busi-
ness world. There appears to be a demonstrable interaction between
membership need fulfillment and the immediate environment of the
association, specifically, in such matters as extent of departmentali-
zation, type of membership, and size of staff. It is clear that there
are certain common characteristics present in the complex of large-
scale trade and business associations, found in the American society.
For instance, their staffs are usually quite small; they tend to
affiliate with other organizations to a greater or lesser extent;
and they are generally made up of organizational or combined member-
ships. Moreover, and perhaps most important, there exist consistent
differences among the activity types with respect to how closely
they follow these general characteristics. Those associations with
few or no organization members tend to be less departmentalized and
will tend to locate headquarters outside the more common sites. Those
associations with large staffs are usually more departmentalized, have
more organizational members, larger numbers of affiliates, and are
most likely to locate headquarters in the common sites. These
findings are directly related to successful pursuit of the need
fulfillment functions of these associations. For example, it is
apparent that the sustaining activities of manufacturing and financial
and real estate associations exhibit a fairly consistent pattern of
organizational memberships, larger staffs, and more departmentalization;
while agricultural associations and national business associations
113
present somewhat different trends. In fact, the sustaining activities
of each activity type of association presents some unique character-
istic pattern throughout most of the tables.
The Financial Characteristics of Trade
and Business Associations
Thus far the locational, organizational, and staff character—
istics of large-scale national trade associations have been analyzed
and certain generalizations and conclusions have been drawn. Next,
in order to determine more about the environmental relationships of
these associations, questions will be answered about how these asso-
ciations are financed. Those individuals or organizations that con-
tribute money to an organization generally receive either direct or
indirect benefit from its activities in the form of a personal or
group service from the organization's activities or in the form of
publications, enhancement of personal prestige, or promotion of'
general industry welfare. Specific findings about the sources of
income of trade and business associations is very important in sub-
stantiating the vital relationship between the meeting of membership
needs and the success of the particular associations as set forth in
hypothesis I of this study.
It is also helpful to know the relative size of income among
organizations. For example, activities and functions of associations
can be increased due to sizable capital resources or limited because
of financial constraints. In terms of the previous discussion of the
benefit or service aspect of association financing, it can be said
that those associations with the greater incomes are either selling
114
their services at higher prices or reaching broader bases with their
beneficial activities. With these generalizations in mind, their
financial characteristics will be examined.
Table 15 breaks down size of income by activity type of asso-
ciation into five different categories. At first glance one can see
that the greater percentage (52.1 percent) of the associations in the
sample have incomes between $76,000 and $500,000. The wholesale re-
tail trade and national business association activity types rank
particularly high in this category with over 60 percent of these
associations reporting incomes falling within this range.. Finan-~
cial, insurance,and real estate associations rank low with only 35.7
percent of these associations reporting incomes in this $76,000 -
$500,000 range. Only 12.1 percent of the sample report incomes be-
low $76,000, and the finance, insurance, and real estate associations
are considerably below this 12.1 percent average. Financial, in-
surance, and real estate associations have the largest relative in-
comes among all the activity types; a total of 46.5 percent of this
activity type have incomes over $1,000,000 and a significant 14.3
percent have incomes greater than $2,000,000.
Although transportation, communications, and utilities asso~
ciations have the highest per:entage of associations with incomes
over $2,000,000, over 26 percent of the manufacturing activity type
have incomes over $1,000,000 which ranks them second to finance,
insurance, and real estate in the larger income brackets.
While the finance, insurance, and real estate and manufac-
turing activity types rank highest in the larger income brackets
115
(over $1,000,000) agricultural associations report the larger per-
centage of associations with incomes under $76,000. National busi-
ness associations also rank high in the low income bracket with 23.3
percent of this activity type reporting incomes less than $76,000.
Both national business associations and services rank lowest in the
larger income brackets with only 10 percent of each of these activity
types.reporting incomes greater than $1,000,000.
Some basic conclusions about the financial nature of large-
scale national trade associations in American life are suggested.
Since only 12.1 percent of the sample have incomes less than $76,000,
it can be said that few associations are characterized by such a low
income. Secondly, since a majority of tne sample reports incomes
falling in the $76,000 to $500,000 bracket, this can be called a
median income range for large=scale national trade and business asso-
ciations. Furthermore, approximately 35 percent of the associations
in the sample report annual incomes greater than $500,000 but only
about one-fifth of the sample receive annual incomes greater than
$1,000,000. This latter group can be considered to be the high in-
come associations within the trade segment.
Further conclusions can be drawn by looking at specific acti~
vity types falling within these high, middle. and low income ranges.
The income analysis indicated that financial, insurance, and real
estate; and manufacturing associations ranked highest in the high
income bracket (over $1,000,000). Earlier in this chapter it was
pointed out that these same two activity types rank highest in percent
of organizational memberships and extent of departmentalization. An
116
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117
apparent relationship therefore exists between size of income, type
of membership, and extent of departmentalization of large-scale
national trade associations. A larger number of organization mem-
berships tends to support both a larger income and a greater extent
of departmentalization. As a corollary to these conclusions, larger
paid staffs are also employed in these associations; Table 13 indi-
cates a greater percentage of the larger staffs occurring in the
financial, insurance, and real estate; and manufacturing activity
types.
Additional support to the above conclusions is provided by
services, national business associations, and agriculture which have
relatively low incomes, rank low in number of organized memberships,
and are slightly below average in extent of departmentalization.
This low ranking is particularly true of agriculture and national
business associations which rank lowest in organizational member-
ships among all the activity types.
Earlier in this discussion of the financial aspects of trade
associations, the importance of sources of income among associations
was emphasized particularly in terms of providing a functional under~
standing of association activities. Table 16 shows the percentage
rankings of the seven activity types of trade associations receiving
membership income only.
It is significant that 73 percent of the associations in the
sample report that their income is derived from membership exclu-
sively. Since the larger percentage of these associations receive
their financial support from their own memberships exclusively, in
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119
line with hypothesis I, it logically follows that the membership re-
ceives, or thinks it receives, substantial direct or indirect benefit
from services rendered by the association. The economist's concept
of the rational behavior of economic man is that man will divide his
expenditures among alternatives in such a way that total utility is
maximized. If this axiom is applicable to this situation, then it
follows that utility received from association membership dues or
contributions compares favorably with utilities that would have been
received if this money had been spent on alternative products or
services.
All national business associations in the sample report their
income is derived exclusively from membership sources. It can be re—
called from Chapter II that this activity type is composed of chambers
of commerce, and national business organizations meeting at local and
regional levels. This evidence would indicate that these organizations
are particularly membership oriented. Transportation, communications,
and utilities; and manufacturing associations also rank considerably
higher than average in receiving their income exclusively from mem-
bership sources, indicating an especially strong service orientation
toward their respective memberships.
Both the agriculture and wholesale retail trade activity types
rank lowest in exclusive membership income support with approximately
55 percent of these associations reporting income from membership
only.
In order to learn more about these associations that receive
income from sources other than membership, Table 17 has been included.
120
This table divides income into public, private, and combined sources;
and therefore would indicate any sharp deviations from a private mem—'
bership orientation in association income. This table further supports
the membership orientation of trade and business associations referred
to in hypothesis I by demonstrating the almost exclusive relationship
of private income sources to trade and business association finance.
For example, over 98 percent of all the associations in the sample
receive their income from private sources only. Among the seven ac-
tivity types, only three report any income from public sources.
Transportation, communications, and utilities; agriculture; and
services are the only activity types reporting incomes from public
sources, and for these activity types the percentage is negligible.
Only one association in both the agriculture and services activity
types reports income from public sources only, and only three asso-
ciations report incomes from public and private sources combined.
The obvious general conclusion about trade and business associations
suggested by the data in Table I7 is their overwhelming reliance on
private sources for membership support. In Chapter III the point was
made that competitive influences shaped the trade association func—
tion, and such things as protection of competitive position and pro-
motion of industrial welfare were their primary functional charac—
teristics. These functions would suggest a predominance of private
financing among these associations, because competitive interests
are rather narrow industry and membership interests. In line with
the overall financial views presented early in this analysis, it is
clear that membership is paying for the benefits it receives through
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122
formal association. Since membership is essentially the sole bene-
factor from the association activities, it is usually the sole finan-
cial supporter of the association. Some basic differences also emerge
between trade and business associations and other types of associations,
such as social welfare or religious organizations, with respect to
sources of income, because the benefits of these latter organizations
accrue to non-members as well as to members of the association.
It is now possible to say some specific things about trade and
business associations, the business world, and membership need ful-
fillment. Throughout this analysis, numerous functions of these
associations have been uncovered, and in each case the functions were
primarily directed at serving the membership in some aspect of busi-
ness or industry. Such activities as providing statistical informa-
tion, cooperative advertising campaigns, conducting market research,
and such functions as promotion of industrial welfare and protection
of competitive position have emerged as attendant factors to the re—
lationship between large-scale national trade associations and the
business world. These characteristics suggest that the trade and
business association function is primarily a service function to its
members, Furthermore, since its members are in strategic parts of
the business world, its broader function is serving particular seg-
ments (industries, corporations, groups,) within the business world.
These conclusions are particularly supported by the fact that large-
scale trade association finances are almost exclusively derived from
private sources that are concentrated within the business world.
123
Internal Educational Activities of Trade
and Business Associations
The concept pf education is distinctly related to the need
fulfillment pattern that has emerged from this research. Successful
performance of the promotional and protective functions of these
associations is greatly aided by educational programs. Since these
functions are associated with members' needs, a look at internal
education programs conducted by these associations is important. The
data contained in Table 18 indicates that the greater percentage of
large-scale national trade and business associations conduct specific
internal educational programs among their memberships. Additional
support is added to the general evidence suggesting the validity of
hypothesis I of this study, and the predominance of the membership
service orientation of these associations with respect to their func-
tion in the business world is made even more clear.
As indicated by Table 18, 83.3 percent of the associations in
the sample report the presence of an internal educational program
among their memberships. The finance, insurance, and real estate;
wholesale and retail trade; national business associations; and ser-
vices activity types rank particularly high with over 90 percent re—
porting internal educational programs.
These findings are consistent with the nature of the activities
represented in each of these activity types. National business asso-
ciations, and services are both characterized by associations repre-
senting a proliferation of business activities that can be directly
benefited through educational information about business conditions,
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125
promotional appeals, or specific techniques of operation. This same
reasoning also applies to the finance, insurance, and real estate
activity type. The particularly high percentage (97.8 percent) of
wholesale and retail trade associations in this area can be accounted
for by the intensely competitive nature of the distribution process
which is confronted with changing markets and products. These con-
ditions naturally lend themselves to a continuous educational process
involving product, promotion, and price.
Although the agriculture; manufacturing; and transportation,
communications, and utilities associations conduct a great number of
internal educational programs, they rank below average for the seven
activity types. This fact tends to suggest that their industries are
least supportive of this type of educational activity when compared
with the rest of the trade segment. While transportation, communi—
cations, and utilities and manufacturing rank lowest, these industries
are more concerned with specific processes of production and the eco-
nomic problems, and seem to approach these problems through affilia-
tion and broader informational exchange. Table 8 earlier in this
chapter indicated that these two activity types are most likely to
have larger numbers of affiliates.
Finally, agricultural associations rank only slightly below
average in amount of internal educational activity, and their re-
latively larger number of individual members helps to explain this
trend.
Summary
The descriptive presentation of locational, organizational,
126
membership, and financial characteristics of large-scale national
trade and business associations contained in this chapter has focused
upon the similarities and differences that occur among the seven ac-
tivity types with respect to these variables. While throughout the
chapter heavy reliance was placed on data in tabular form, important
general findings emerged from the analysis. Essentially, the large—
scale national trade and business association was characterized as a
service-oriented institution benefiting most directly its immediate
membership and indirectly proliferating its activities throughout the
business world. Moreover, the findings confirm the fact that these
associations have sufficient funds, organization, and staff to Operate
effectively in both their immediate environment and the business
world. In performing their functions certain key geographical loca-
tions are likely to be selected as the base of operations.
Outside forces have shaped the nature of trade and business
association functions in the business world, and these forces have
interwoven their influences into a generalized pattern of organi—
zational and financial characteristics. These characteristics give
support to conclusions in Chapter III about the effects of the emer-
ging society on these large-scale associations. Modern trade and
business associations with organizational memberships and affiliations,
staff activity, and high incomes are in sharp contrast with the early
trade associations. There is no doubt that these associations are
playing a crucial role in the business world, and will continue to
grow in size and effectiveness.
Specifically, these conclusions are drawn from the significant
127
data presented in this chapter. An emergence of power centers is
apparent in many areas of the American society and trade and business
associations are attracted by their magnetic strength. The fact that
New York, Washington, and Chicago are chosen as the most frequent
location of association headquarters is certainly important, but more
significant is the unique way that the choice of a particular head-
quarters site tends to relate to the specific association's functional
interest such as public power, finance, or insurance. Our society
is characterized by increasing urbanization and concentration and this
has had more impact on trade and business association concentration
than any other factor included in this study. Large-scale enterprise
and the competitive struggle that accompanies urban growth are con-
tinuous influences on the nature of the function and purpose of these
associations in the society; and locating headquarters in close prox-
imity to government, industry, and market centers is an end result
of this combination of important forces.
The pattern of organizational, membership, and staff charac—
teristics of trade and business associations is also reflected in the
forces of a changing society. Externally, the great extent of affil-
iation undertaken by many associations is really an attempt on the
part of the association to better its position to deal with dynamic
problems (legislative, competitive, industrial) in an emerging so-
ciety. Internally, the extent of departmentalization varies in a
clear pattern among trade and business associations; the larger and
rhore powerful associations tend to be highly departmentalized. Large
size, specialization, and bureaucratization have paralleled urban
l28
growth in our society, and the result is a greater degree of depart-
mentalization among formal organizations. These same forces also
affect internal membership patterns among associations. A more com-
plex and specialized society tends to generate a polarization of
interests according to common group characteristics and resultant
needs, and the dominance of managerial personnel and the paucity
of blue collar occupations represented in trade and business asso-
ciations memberships are a direct result of this phenomenon. Large-
scale organization has resulted in a greater separation of management
and workers and a trend towards professionalization of managerial
personnel. These trends and interests are reflected in trade and
business association activities that have largely left out the blue
collar class.
The financial characteristics of trade and business asso-
ciations are also significant indicators of their environmental
position. Those associations that represent a consolidation of
powerful interests in their respective industries are characterized
by large incomes. For example, the polarization of interests pre-
viously mentioned can manifest iteself into very powerful groups
such as the National Association of Manufacturers and large amounts
of funds are provided by the membership to support their interests.
Staff size varies to handle the volume of work necessary to promote
these interests, namely, promotion and protection.
The data provided in this chapter play a major role in
supporting the first hypothesis. Certainly, trade and business asso-
ciations grow and flourish to the extent that members perceive them
129
as meeting needs. In meeting these needs, they exhibit a unique pat-
tern of internal and external characteristics that help to explain
their effectiveness in the society. Throughout this chapter the
strategic relationship between need fulfillment and association
characteristics has clearly emerged. The position of trade asso-
ciations in the total society is examined in the next chapter. Al-
though in the previous chapters it has been suggested that there is
important interaction between trade associations, the business
world, and the total society, in the next chapter an attempt will
be made to measure both the extent and effect of this interaction.
CHAPTER V
THE ACTIVITIES AND FUNCTIONSlOF TRADE AND BUSINESS ASSOCIATIONS
AS THEY RELATE PO THE GREATER SOCIETY WITH PARTICULAR
EMPHASIS ON THE GOVERNMENTAL SPHERE
The Established Position of Large-Scale National Trade
and Business Associations in the Greater Society
The deve10pment of both the activities and structural organi-
zation of large—scale trade and business associations as contained in
the previous chapters provides an understanding of the nature of these
organizations. These associations have continued to increase in prom-
inence and functional usefulness in the business and industrial seg—
ment of American economic life. The importance of the industrial
segment to the organization and progress of the total society is un-
questioned. One need only review the role played by American in-
dustry in winning two world wars or the tremendous influence of the
business and economic depression of the early thirties on the po-
litical and social environment in American life to realize how deep
the roots of industry and trade flow within the greater society.
America's position of world leadership and her internal expansion
is to a significant extent determined by how successfully her eco-
nomic segment is able to function.
Economic growth is directly related to the emergent process
and is, in fact, a part of that process. As organizations grow into
laarge-scale institutions, they grow economically as well as physically
130
131
and socially. The emergent process is as clearly at work in the
industrial segment as in any other segment, and the influence of the
process on the face exhibited by trade and business associations was
developed in both Chapters III and IV. It was shown that these
large-scale associations have experienced the same emergent process
that has permeated the greater society.
The key objective of this chapter is to examine these asso-
ciations and the emergent forces that have shaped their function.
Specifically, the analysis uses the empirical method to test the
tenability of hypothesis II and its corollary as set forth in Chapter
I. Hypothesis II suggests that trade and business associations vis-
a-vis society originate and prosper to the extent that their ob-
jectives are congruent with emergent forces in this society. The
corollary to hypothesis 11 suggests that survival of a given asso-
ciation depends upon its ability to adjust to these forces.
In studying societal relationships of formal organizations
such as associations, the nature and extent of their governmental
a<:tivities serve as the chief index to a given organization's position
if! society and throughout this chapter data concerning governmental
IWBlationships with trade and business associations will be analyzed.
Enuergent forces of the society are also reflected in this relationship
ttrrough association activities designed to sustain their position
VidS-a-vis society, for example, contact with government officials,
le“aislative activity, and formal and informal c00peration with govern-
‘nerlt bureaus. The ensuing analysis examines these activities in detail,
aruj also gives attention to trade and business associations activity
in 'the total public sphere.
132
The Governmental Sphere: The Vital Role of the Activities of
Trade and Business Associations in Political Affairs
As suggested above, the fundamental relationships of trade
and business associations to the greater society have occurred through
their governmental activities. Earlier discussion of association de-
velopment indicated the importance of this relationship. Legislative
problems were shown to influence the formation and function of early
trade associations, and the two world wars and the great depression
of the 1930's strengthened the bonds and ties of this relationship.
One means of analyzing the nature of this governmental tie among
these associations would be to ask associations about their contacts
with all echelons of government. It is of primary importance to know
how many trade and business associations have contacts with govern-
ment, and at what levels these contacts are most likely to occur.
This kind of information can provide answers to questions about the
sc0pe and importance of functions performed by these associations
within the greater society.
Table 19 contains a summary of the types of governmental con-
tact of the seven activity types of large-scale national associations.
Since only 46.6 percent of these associations report no contact, over
one-half (53.4 percent) of all large—scale national associations have
some type of contact with either federal, state, or local government.
This is a particularly significant percentage in view of the question
that was asked in the questionnaire: "Do the responsibilities of the
association's principal (voluntary or paid) officers require them to
k>e in more or less regular contact with federal, state, or local
133
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134
government officials?" There was no question asked about the various
types of indirect influence that may occur with government officials.
The histories received with the questionnaires indicated that the
informal influences directed at governmental legislation were great,
and a major point to remember is that this percentage (53.4) would
be significantly higher if indirect influences were also considered.
Over one-half of the majority of activity types experience formal
official contact. Agriculture reports the greatest amount of con-
tact as only 30 percent of these associations report no contact;
and conversely, the services activity type reports the least amount
of contact with a substantial 57.3 percent of these associations re-
porting no contact. The 70 percent of the large-scale agricultural
associations that have direct governmental contact is strong evidence
of the mutual interest between agriculture and government.
The services activity type is largely made up of associations
serving other organizations in a somewhat narrow or technical sense.
As a result, many of these associations are not directly active in
the governmental sphere, and this fact helps to account for the
paucity of their contact with government officials. Although the
57.3 percent of these associations that report no contact is the
largest among the activity types, it leaves 42.7 percent that do
have this formal contact--still a substantial figure.
Manufacturing trade associations compose the other activity
type that falls slightly below average in this type of formal govern-
mental contact. A plausible explanation for this finding is the
rnanufacturing process itself. Many of these associations are concerned
135
with coordinating and controlling particular aspects of production,
and consequently are not as active in governmental circles as other
activity types that serve broader interest groups. Approximately
one-half of the manufacturing associations do have formal contacts
with federal officials, and although this percentage is below average
among all activity types, it is still relatively high.
Table 19 also shows the great importance of the federal
government with respect to large-scale national trade and business
associations. While 53.4 percent of the sample report that their
principal officers have more or less regular contact with government
officials, 22.6 percent of these associations indicate that this con-
tact is at the federal level only. Wholesale and retail trade;
transportation, communications, and utilities, and agriculture rank
highest among all activity types with at least 30 percent of these
associations reporting this type of contact at the federal level
only. Table 7, Chapter IV, indicated that these same three activity
types ranked highest in locating their national headquarters in
Washington, D. C. The fact that the Washington location facilitates
federal government contact is the reasonable explanation for this
finding. The relatively high percentage of associations in more or
less regular contact with government officials is a determining
force for the high percentage of associations that locate their
national headquarters in the nationis capitol.
National business associations, services, and agriculture
rank highest in the percentage of associations whose officers are in
regular contact with federal, state, and local government officials.
136
Evidently, the activities of these three activity types attract a
greater dispersion of governmental relationships at all three govern-
ment levels. Furthermore, the functional activities of agricultural
associations that protect and promote mutual interests seem to call
for governmental contacts at all three levels in many cases. Since
the national business association activity type contains state and
national chambers of commerce, it is not surprising to find that it
is also above average in federal, state, and local contact because
these organizations operate at all governmental levels. The services
performed by large-scale national service associations tend to center
in these widely dispersed governmental contacts as Opposed to con-
centration at either the federal or state level. Since accountants,
managers, etc. are concerned with state and local regulations as well
as federal statutes, one would normally expect this pattern to prevail
among service associations. None of the trade and business associa—
tions in the sample reported these regular contacts with local
government officials only, and just two associations reported contacts
at the state level only. This finding is not surprising because a
basic criterion used in selecting the sample was that the associations
be national associations, and the governmental activitics of this type
of association is normally concentrated at the federal level.
Important conclusions drawn from the preceding analysis of
Table 19 are that over one-half of the associations in the sample
report direct contact with government officials, and this contact
primarily occurs at the federal level.
Although the agriculture activity type tends to use formal
137
governmental contacts to a greater extent than do others, the per-
centage difference between most of the activity types is not large
enough to draw many striking contrasts. The services activity type
reports a relatively lesser percentage of direct contact than others.
All are significantly high and this supports the general conclusion
that government has an important impact on trade and business asso—
ciations in an emergent American society.
In support of this general conclusion, it is essential to
emphasize that earlier chapters have supported the membership need
fulfillment orientation of these associations as set forth in hy-
pothesis I. The overall results of Table 19 suggest that in the
performance of their need fulfillment functions such as promotion
and protection of mutual interest, government relations evolve as an
aid. In order to explain the reason for these ties with government,
it is necessary to go beyond hypothesis I to hypothesis II and the
corollary to it. Governmental relationships provide avenues that
are used by trade and business associations to stay congruent with
the emergent society. Government is sensitive to the changing so—
cietal environment, and by maintaining close relationships with
government, these associations use that sensitivity to adapt them—
selves to the changing society. This adaptation is vital to success-
ful fulfillment of their neednoriented mission. In establishing the
fact that trade and business associations use governmental ties to
adapt themselves to the emergent society and thereby increase their
effectiveness, it is important to learn more about the way these ties
are integrated into a useful network of relations. One of the most
138
effective ways that this integration can be accomplished is through
formal (written) working agreements with federal government agencies.
In this context the following question was asked: "Does your asso-
ciation have any type of formal (written) working agreement with any
agencies of the federal government?" The "yes" responses to this
question are shown in Table 20. One can immediately see that the
number of these associations which have a formal agreement with
federal goverment agencies is considerably less than those whose
principal officers have formal contact. While 53.4 percent of the
associations in the sample indicated that their officers were in
more or less regular contact with government officials, only 11.5
percent of these associations have formal working agreements with
federal agencies. However, this latter percentage should not be
taken lightly because it represents one of the closest kinds of
governmental relationships. About one in ten of the national trade
and business associations in the sample have this close contact, and
even this small percentage adds support to the importance of the
general position of these associations in the governmental sphere.
The agriculture activity type again emerges as the most active
in terms of this kind of governmental relationship. Over 34 percent
of the large-scale national agricultural associations report the
presence of a formal working agreement with a federal agency, and
this percentage is particularly significant when compared with the
11.5 percent average for the total sample. Financial, insurance, and
real estate associations rank second to agriculture in the percentage
139
TABLE 20. Presence or Absence of Formal Agreement with Federal
Agencies by Activity Type
leg N9 Total
Activity Type Rk. Rk.
# % Ord. # % Ord. # %
Agriculture 13 34.2 1 25 65.8 7 38 100
Finance, Insurance and Real Estate 4 14.3 2 24 85.7 6 28 100
Transportation, Comm. 8 Utilities 3 11.5 3 23 88.5 5 26 100
Manufacturing 9 10.1 4 80 89.9 4 89 100
Services 4 6.6 5 57 93.4 3 61 100
Wholesale and Retail Trade 3 6.5 6 43 93.5 2 46 100
National business associations 1 3.0 7 32 97.0 1 33 100
of associations with formal working agreements with government agencies,
but the percentage is only 14.5, far behind agriculture. In addition,
over 10 percent of the transportation, communications, and utilities;
and manufacturing activity types report formal agreements with federal
agencies. Service associations, national business associations, and
wholesale retail trade associations rank somewhat below average in
extent of formal agreements with federal agencies. National business
associations rank farthest below average with only one association
or 3 percent of this activity type having a formal agreement with the
federal government. Table 19 showed that national business associa-
tions ranked somewhat above average in terms of formal federal, state,
and local government contact; but ranked last in federal contact only,
\Nith just 6.9 percent of these associations reporting such contact.
Iliese findings tend to suggest that the national business association
140
activity type is the least active of all large-scale national trade
and business associations at the federal government level, but that
it is still quite active at state and local levels. Data on formal
agreements with Federal agencies are summarized in Table 20.
The frequency of formal contact between agricultural asso-
ciations and the federal government is high. This is in line with
the amount of face-to-face contact reported in the business section.
Secondly, it is apparent that, in general, national trade and busi—
ness associations do not formally align themselves with federal
government agencies. It is suggested that governmental relation-
ships are really a facilitating mechanism and not a control mecha-
nism. Some associations (notably agricultural) can best sustain
themselves in the society through such formalization, but most of
these associations stay away from such a "tight knit" arrangement.
Many large-scale associations seek a more flexible arrangement
characterized by full use of governmental sensitivity to an emerging
society, but remaining free to adjust in a variety of directions to
emerging forces. This conclusion is supported by Table 21, which
is designed to get at the more informal or flexible interaction be~
tween these associations and the federal government. Table 21 is a
percentage-ranking of tne seven activity types of associations in
the sample that maintain informal c00peration with federal govern-
ment agencies. While only 11.5 percent of these associations re-
ported formal working agreements with federal government agencies,
Table 21 shows that 50 percent report informal agreements indicating
that the governmental tie exists.
141
Financial, insurance, and real estate associations rank high-
est in the extent of informal cooperation with the federal government
as almost 70 percent of these associations reported this type of
relationship. The agricultural and wholesale retail trade associa-
tions rank second and third respectively in extent of informal coop-
eration with the federal government. Although national business
associations ranked consistently below average in extent of federal
government contact in previous tables, they have 44.8 percent re-
porting informal c00peration with federal government agencies. The
services activity type has also ranked consistently below average in
government contact as shown in the previous tables, and ranks lowest
among the seven activity types in extent of informal cooperation with
government agencies with 41.4 percent of these associations reporting
positive responses. Both the services and national business asso-
ciation activity types tend to be relatively less active at the
federal level in many respects but they still exhibit a significantly
high percentage of informal cOOperation with federal agencies.
In the previous tables contained in this chapter the manu—
facturing activity type has consistently ranked near average among
the seven activity types in the extent of its governmental relation—
ship. It follows this same pattern in Table 21 with 49.9 percent of
the manufacturing trade associations reporting informal c00peration
with federal agencies.
Informal COOperation with federal agencies is a direct means
Of achieving sensitivity to changes in society through government
interaction, while still retaining individuality as an association.
142
TABLE 21. Presence or Absence of Informal Cooperation with Federal
Government Agencies by Activity Type
u,
Yes fig Total
Activity Type Rk.
# % 0rd . # % # %
Finance, Insurance and Real Estate 18 69.2 1 8 30.8 26 100
Agriculture 20 55.6 2 16 44.4 36 100
Wholesale and Retail Trade 21 51.2 3 20 48.8 41 100
Manufacturing 42 49.4 4 43 50.6 85 100
Transportation, Communications 8
Utilities 12 48.0 5 13 52.0 25 100
National business associations 13 44.8 6 16 55.2 29 100
Services 24 41.4 7 34 58.6 58 100
Totals 150 50.0 150 50.0 300 100
A good summary of this analysis of trade and business asso-
ciation activities in the governmental sphere requires a re-emphasis
of the importance of the relationship between these associations and
government. Because the assOciations in the sample are largemscale
national assoc1ations, this relationship is particularly strong at
the federal level.
Agricultural associations have the most frequent and closest
ties With the government. General farm legislation, price support
programs, and crop restrictions help to account for this finding.
Historically, government has played a definite role in organizing and
controlling food production in the United States and this has been of
such importance that agriculture has rated a cabinet position in the
143
federal government since 1889. Agricultural associations provide an
excellent example of usefulness of formal association in facilitating
governmental relations. It is through these associations that
farmers are able to express their own interests, and to adapt these
interests to a dynamic society. Often the interests of society as
set forth in proposals for legislation do not mesh with the interests
of a "tight knit" membership-oriented association. If membership
needs are to be fulfilled some compromise must be reached between
agricultural interests and interests of other groups in the society.
Agriculture offers a prime example of the congruency and adaptability
needs of associations as set forth in hypothesis II. The need for
adaptability to the changes mentioned above is apparent, and the
establishment of avenues for collective action with government is a
result. Such things as price supports and crop control programs
(soil bank) are products of the emergent forces of the society. As
suggested in hypothesis II, associations must remain congruent with
these forces, because these forces are directly related to perceiving
and meeting membership needs. United collective action through for-
mal association is necessary to achieve the type of congruency that
supports farmer interests. Certainly basic farm legislation affects
the competitive position and general welfare of each individual far-
mer, but by acting individually he would be less likely to be effec~
tive in promoting his own interests. It is through the collective
action of a formal association that his interests are given sufficient
organization and strength to be an effective force in influencing
governmental legislation. Thus, the trade and business association
144
has a difficult two-fold mission in the governmental sphere. First,
it must remain congruent with the forces of a changing society so it
will not be destroyed as being ancient and useless, and secondly, it
must accomplish something for its membership in the process.
While agriculture has served as a worthwhile example of the
interaction between government and trade and business associations,
the preceding points are equally applicable to the other six activity
types. These other activity types do not necessarily hold the same
official status that agriculture occupies in the governmental sphere,
but the importance of their activities in that sphere is apparent.
It is through governmental activities that association influence
directly permeates the total society. Government in our democracy
theoretically represents‘the interests of the people in it; therefore.
it represents the total society in the most general sense. Conver-
sely, this analysis has emphasized that trade and business associations
represent the interests of their respective industries in the general
sense, and of their individual memberships in the specific sense;
the promotion of either one produces some effect on the other. More
particularly, the promotion of trade association interests in the
governmental sphere may produce an alteration of the total society s
position regarding the specific interest involved, and conversely,
the promotion of the total society interests with respect to trade
associations can easily result in an alteration of the associationTs
position regarding the specific interest. It is the above intere-
lationship between government and trade and business associations that
145
that results in the proliferation of association activity throughout
the total society and continued congruency with emergent forces by
these associations. For example, suppose a major national trade
association wishes to have a high tariff levied on imported goods,
which its industry produces here, and it actively campaigns for this
tariff through congressional lobbying. Since the passage of this
tariff would no doubt raise the price of these goods to American
consumers, they, through the process of representative government,
make known their Opposition to this legislation. The interests of
the association have aroused in the greater society enough interest
to create Opposition to the proposed legislation; the final result
could easily be some compromise between the two interests depending
on the relative strength of the two forces involved. This compro—
mise represents an adaptation of interests in which the association
membership, the association, and the society have all been served.
These few examples are by no means the only ways that trade
and business association activities are felt in the total society
environment, but they do help to illustrate the way that their inter—
action with government on specific interests permeates the total
society. The government section of this chapter plays a crucial role
in supporting both hypothesis II and its corollary, because this
section clarifies the importance to trade and business associations
of remaining congruent and adaptable to the dynamic forces of an
emergent society.
146
The Public Sphere: The Significance of Trade
and Business Association Activities in Broad
Areas of American Public Life
Since governmental relationships are only one means of sus-
taining a given association’s position in the greater society, it is
necessary to extend the analysis into the broader public sphere of
activity. One of the significant ways of keeping abreast of change
in an emergent society is to be an active participant in public
matters that affect the association's interest.
Table 22 contains a summary of the percentage of associations
that take stands on public issues by the seven activity types. Over
one-half (58.4 percent) of the sample report that they do take a
stand on public issues. The national business associations, whole-
sale and retail trade, and agricultural activity types rank highest
with over 70 percent of the associations in each of these activity
types taking stands on public issues
TABLE 22. Trade and Business Associations that Take a Stand on
Public Issues by Activity Type
Take Stand Do Not Total
Activity Type Rk. Take Stand
# % Ord. # % #
National business associations 24 77.4 1 7 22.6 31 100
Wholesale and Retail Trade 32 72.7 2 12 27.3 44 100
Agriculture 27 71.1 3 11 28.9 38 100
Finance, Insurance 8 Real Estate 20 66.7 4 10 33.3 30 100
Transportation, Cbmm. 8 Utilities 15 62.5 5 9 37.5 24 100
Manufacturing 38 46.3 6 44 53.7 82 100
Services 22 39.3 7 34 60.7 56 100
Totals 178 58.4 127 41.6 305 100
147
It is easier to explain the high percentage of national busi—
ness associations and agricultural associations that take stands on
public issues than it is to explain the high percentage of wholesale
and retail trade associations that are also very active in the public
sphere. In the case of the first two activity types, there are dis-
tinct factors brought out in the governmental section that explain
their high degree of public activity. It will be recalled that the
national business association activity type is heavily concentrated
with chambers of commerce and service clubs. Earlier in this chap-
ter information contained in Table 19 revealed that these organi-
zations were particularly active at federal, state, and local
government levels. Since their governmental activities are strong
at both state and local levels, many of these organizations are
taking stands on issues involving state and local problems. Closer
analysis of specific associations indicates that this is particu-
larly true of the chamber of commerce type organization, as many
of these associations maintain legal offices in Washington that
serve as legislative watchdogs for issues affecting their respective
states. A major purpose of state chambers of commerce is to promote
the interests of their constituent memberships through taking
stands on public issues, and more particularly, those issues af-
fecting the business and professional community.
The other major component of the national business association
activity type is national service clubs, and they are also very active
promoters of a stand on public issues. Closer examination of these
associations indicates their stands usually emanate from local levels
148
and are often concerned with local issues. Lions, Kiwanis, and Zonta
are only a few of these organizations that are particularly active
in the public sphere at the grass roots level.
Since the agricultural activity type has continually been a
leader among all activity types in the extent of its governmental
activity, it is not surprising that it also ranks high in the per-
centage of its associations that take stands on public issues. Ag-
ricultural associations are primarily concerned with public issues
that affect the economic status of the farmer, and their activities
in the public sphere reflect this fact. All types of food programs,
school work laws, and school hours, are of interest to them at state
and local levels, and at the national level, they are concerned with
wages, foreign trade, and crop restriction, justifying their signi-
ficant activities on public issues at all government levels.
The high percentage of wholesale and retail trade associa-
tions that take stands on public issues is a little more difficult
to explain until a close examination is made of the particular asso—
ciations involved. Farm c00peratives, associations representing
specific types of distribution such as automatic vending machines,
trucking associations, all within this activity type are particu-
larly concerned with such areas as trade legislation, vehicle li~
censing, taxation, and import legislation, tnat can greatly affect
their respective competitive positions in the distribution process;
consequently, they are quick to make their position known on this
type of issue. As the data in Table 19 indicated, these problems
are usually federal with some occurring at the state level, accounting
149
for the fact that wholesale retail trade leads all other activity types
in formal contact with federal officials only.
The manufacturing and services activity types rank below average
in taking stands on public issues with approximately 39 and 46 percent
respectively of these associations taking such stands. The service
orientation of the services activity type helps to explain its degree
of activity in the public sphere. Such groups are primarily concerned
with serving existing industries in a professional capacity, leaving
much of the legislative activity to the industries themselves. Manu-
facturing associations are primarily involved with the production
process; and although this activity naturally leads to concern with
public issues, they exhibit less direct activity in this area than
many of the other industrial types with broader interest bases.
The finance, insurance, and real estate, and transportation,
communications, and utilities activity types rank above average in
the extent to which their respective associations take stands on
public issues. Legislative problems continually face these industries,
and close examination of these particular associations indicates a
strong amount of influence is exerted on issues of federal and state
importance.
An overview of Table 22 gives a striking indication of the
great extent of trade and business association activity in the public
spheres. Almost three-fifths of the associations in the sample take
stands on public issues which provides a good measure of how their
activities can be felt throughout the total society. Public issues
are issues of major concern to the greater society, and although they
150
may crucially affect some area of the economic world specifically,
the fact that they do permeate the greater society makes the position
of trade and business associations in the society even more pronounced.
Public issues also reflect change. Issues of today are
different from issues of yesterday. For example, the mere right
of labor unions to exist was effectively challenged until the passage
of the Wagner Act in 1935. Many associations tried to promote the
interests of their industries by vigorously Opposing this right and
hoping to keep unionization under control. But the forces of changing
society (depression, New Deal, etc.) prevailed and unions won their
right to exist in industry. More effective trade and business asso-
ciations had to adapt to this change and accept the right of the
unions to exist. As a result new stands were taken to control unions
and reduce their impact on the firms represented by these associations.
A more SOphisticated group of issues developed in the area of sound
labor relations. This example is more meaningful if a close lock is
taken at the types of issues upon which trade and business associations
take a stand. Certain areas such as labor relations emerge as being
significant to trade and business association activity, and important
conclusions can be drawn about issues and Change.
Table 23 places the public issues of concern to modern trade
and business associations into meaningful categories. The 178 asso—
ciations of Table 22 that take a stand on public issues are placed
into these categories by type of issue involved. Since many asso~
ciations take a stand on more than one issue, the totals do not equal
100 percent. The nine categories of Table 23 are particularly
151
'mportant because they tell a great deal about the nature of the dy-
namic forces that are referred to so often in this study. Forces
are constantly at work in each of tne nine areas that affect the
success of given associations. As change is imminent, stands are
taken by associations to modify that change and to make it easier
to live with, Type of modification sought is influenced by member-
ship needs and interests. Closer analysis of the table indicates
the areas of change where interests are most likely to be channeled
by activity type.
Of particular interest is the fact that over 50 percent of
all associations reporting a stand on public issues take a stand on
those issues dealing with taxation and fiscal matters. Over 70 per-
cent of the organizations in both the finance, insurance, and real
estate and national business associations activity types take a
stand on issues in this general area. Transportation, communications,
and utilities associations also rank high in this area. Interestingly
enough, the agricultural activity type ranks lowest with only about
one-fourth of its associations that report a stand on public issues
being active in the taxation and fiscal area. Table 23 indicates that
it is the agricultural, foreign affairs, and health and welfare areas
where agricultural associations are most ctive. While 55.6 percent
of the agricultural associations that take a stand on public issues
do so on agricultural matters, 25.9 percent of these associations
also take stands on foreign affairs issues and 18.5 percent take
sstands on health and welfare matters. In line with a previous discus~
sion, the export and import trade laws, and related food shipments
152
abroad account in great measure for agricultural association interests
in foreign affairs; and various food welfare programs along with pure
food and drug legislation help to explain their interests in health
and welfare matters. On the other hand, the interests of financial,
insuran'e,and real estate associations in fiscal matters is selfw
explanatory, and the high percentage of these associations that take
stands on taxation and iiscal matters would normally be expected.
Earlier, the interest of national business associations in promoting
issues at the local level primarily affecting the business and pro-
fessional community was established, and Table 23 indicates that these
interests often are centered around taxation and fiscal problems.
The interest of these organizations in problems at the grass roots
level is also indicated through the Wide range of issues on which
they take stands. At least 8 percent of the national business assow
ciations take a stand on issues involving every major category listed
in Table 23, and this is the only activity type with this widespread
representation. This national business association activity type is
particularly active in general legislation, health and welfare, labor
relations, and education; and the issues in LEGS“ :ateqories often
predominate at state and lo:al levels.
Manufacturing trade assOciatiOhs are particularly active in
areas that affect competition and produ, ion. Taxation and fiscal
matters are very important to costs of production and profits. Over
50 percent of the manufacturing trade associations take stands on
these issues. Thirty~one percent of these assOciations take stands
on foreign affairs issues. The rising tide of foreign competition,
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154
eyqaort-import restrictions, and government sales and purchases from
aeroad are of basic concern to manufacturing, Public resource issues
atytract the interest of 23,7 percent of the manufacturing associations
“wiich is significant; raw materials and public power interests of
rnariufacturers account for their interest in this area, It is sur-
purising that they rank fifth in taking stands on labor relations
:isssues with a 13,2 percentageo A plausible explanation for this
lcnwer ranking is that labor unions are more entrenched and accepted
iri manufacturing than in wholesale retail trade or services, and pose
lenss of a threat to the welfare of the respective memberships, These
Ilartter two activity types rank high in their interests in labor re—
lertions. Wholesale retail trade, which ranks first in this area, is
ccnastantly threatened with labor union inroads it feels it cannot
afFford from the standpoint of costs. Services represent a profes~
Simonal interest quite opposed to the ideals of organized labor° Many
Of: the services associations sustain managerial interests in regard
'tO labor unions°
While trade and business associations are most active in
taXation and fiscal matters they are least active in the categories
‘Df Civil liberties, military, and education, In fast, national busi-
flesss associations, with their diffusion of interests, are the only
aSESociations that are significantly active on these latter issues,
Thf? paucity of trade and business association activ1ty in these catew
gOJTies indicates that changes in these three areas do not signifi-
Carltly threaten them generally, It is clear from the preceding analysis
Of‘ Table 23 that change in particular areas of society is a basic
155
interest of trade and business associations. The emergent forces at
work in the area of labor relations are of particular interest to
wholesale retail trade. Inroads of foreign competition and the
attendant problems that face manufacturers generate a basic interest
among manufacturing trade associations in foreign affairs. Trans-
portation, communications, and utilities associations are continually
interested in issues involving the use and control of public resources.
Trade and business associations are generally concerned with taxation
and fiscal issues which affect costs and profits in their respective
industries. The fact has been established, as suggested in hypothe-
sis I, that these associations are membership-oriented institutions
and they exist to fulfill certain membership needs. Emergent forces
producing changes in basic areas such as those identified above
affect both membership needs, and subsequent demands made on asso-
ciations. Given associations, as suggested in hypothesis II, attempt
to flourish in the face of an emergent society by taking stands on
major issues that serve their respective memberships, and seek modi-
fications that help keep them congruent and adaptable to the dynamic
forces of the society.
While taking stands on public issues by trade and business
associations is a significant vehicle for influencing change in the
public Sphere, it often involves more reaction to forces rather than
actually shaping the forces themselves at the grass roots. An effec-
tive means of shaping the forces of change is to educate the general
putflic to a particular point of view. These associations do conduct
external educational programs directed at the general public,
156
Table 24 is an analysis of the extent of this external edu-
cational activity among the seven activity types. Nearly one-half
(46.6 percent) of all trade associations conduct external educational
programs directed at the general public. While this figure is con-
siderably less than the 83.3 percent that conduct internal educa-
tional programs as indicated by Table 18, Chapter IV, it is still
large enough to indicate that this type of activity plays an impor-
tant role in the functional nature of many of these associations.
The agricultural activity type ranks highest with 67.5 percent of
these associations reporting positive responses to the external edu-
cational activity question. The manufacturing activity type also
ranks above average with 53.3 percent of these associations indi-
cating that they have external educational programs. The wholesale
retail trade activity type ranks seventh with one-third of these
associations conducting external educational activity. The co-
hesive nature of the competitive problems that face agriculture and
manufacturing helps to account for their higher ranking when comm
pared with wholesale and retail trade. Transportation, communications,
and utilities associations face a high degree of governmental control
and also rank low in this activity among the seven activity types. How-
ever, the fact that nearly one-half of all the associations in the sample
do conduct these programs emphasizes grass roots activity that can be
used to influence the public. Disseminating knowledge favorable to the
association facilitates its adjustment to a changing environment.
Opinions are shaped, issues are recognized, and information is ex-
changed that support the trade or business association's position in
157
TABLE 24. Presence or Absence of External Education Programs by
Activity Type
Xss. N_o Mel
Activity Type Rk. Rk.
# % Ord. # % Ord. # 96
Agriculture 27 67.5 1 13 32.5 7 40 100
Manufacturing 48 53.3 2 42 46.7 6 90 100
Finance, Insurance and Real Est. 15 48.4 3 16 51.6 5 31 100
National business associations 15 45.5 4 18 54.5 4 33 100
Services 23 37.1 5 39 62.9 3 62 100
Transportation, Comm. 8 Utilities 10 37.0 6 17 63.0 2 27 100
Wholesale and Retail Trade 15 33.3 7 30 66.7 1 45 100
Totals 153 46.6 175 53.4 328 100
the greater society, and all this is accomplished at the grass roots
level, which is so vital in democratic government.
This brief analysis of the public sphere is not comprehensive
of all possible avenues of trade and business association influence
in that sphere. Instead, two basic vehicles were investigated that
are used by trade and business associations to shape and adapt to
change. The extent that these associations use each vehicle adds
further support to hypothesis II of this study.
Summary
It was hypothesized in Chapter I that trade and business asso~
ciations vis-a-vis society come into being, grow, and flourish to the
extent that their objectives are congruent with the psychological,
sociological, and economic forces of a changing society. A corollary
158
to this hypothesis states that survival of a given association depends
upon its ability to adjust to the emergent forces in the surrounding
society. The contents of this chapter are supportive of the above
hypothesis and its corollary. By focusing on the governmental sphere
and the broader public sphere, this chapter exhibits data that demon-
strate the important interaction between trade and business associa—
tions and the greater society. Governmental relationships and public
influence mechanisms emerge from the analysis as vehicles widely used
by these associations in their attempt to stay congruent with the
dynamic forces of the society. Table 25 contains a capsule summary
of the chapter by taking the important variables analyzed and assigning
high, medium, and low values to each of them by activity type. These
high, medium, and low values are assigned relative to the other ac-
tivity types. A given activity type can rank low or medium in amount
of activity in a given area when compared with other activity types;
but, as the data presented have shown, it can still conduct a signi-
ficant amount of activity in that area in the absolute sense. Table
25 shows that participation in the governmental and public spheres
is considerable, even on a relative basis. Five of the seven acti-
vity types rank high in at least one area of participation; and a
sixth (manufacturing) conducts a moderate amount of activity in all
areas mentioned. Services is the only activity type that ranks com~
paratively low in extent of participation in these two spheres, but
earlier analysis revealed that its participation was significant in
certain limited areas. Extreme specialization of interest which
characterizes services associations accounts for this finding. While
159
it is a significant fact that agricultural associations have the
closest ties with government, and are particularly active in the
public sphere, Table 25 indicates that the broader societal re-
lationships of the other activity types must not be undernempha-
sized. Particularly, the finance, insurance, and real estate, and
wholesale and retail trade associations are very active in
the two spheres. The economic development of the American society
is reflected in this finding. The financial problems of the 1880‘s,
trade legislation in the 1890's, and the highly cyclical nature of
economic activities in the first half of the twentieth century were
of basic importance to these two activity types. These problems
and ensuing legislation were products of a changing society, and
they, in turn, produced further changes that greatly affected fi-
nancial and business interests. For example, banking failures and
the subsequent establishment of the Federal Reserve System, the de-
pression of the 1930's and the bank reform and work projects that
followed created definite interest channels between government and
finance. The trade and trust problems of these earlier decades
that resulted in such legislation as the Sherman Anti-Trust and
Clayton Acts as well as later trade legislation have deveIOped si-
milar interest channels between government and wholesale retail trade
associations.
Although these examples refer to those activity types that
rank highest in governmental and public activity in a relative sense,
it is again stressed that other activity types also significantly
participate in these spheres. Similar explanations could be given
160
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for these other activity types, and each explanation would have one
thing in common. Communality is seen in the fact that activity in
the governmental and broader public spheres is considerable because
it is used to both influence and adjust to the psychological, socio—
logical, and economic forces of the surrounding society, which is.
fundamental to a given association‘s survival and success. Thus,
the tenability of hypothesis II and its corollary are clearly re-
flected in the findings of this chapter° In the governmental sphere
democratic government reflects societal hOpes, feelings, and changes;
and trade and business associations facilitate congruency and ad-
justment to these changes through the establishment of governmental
ties. The public focuses on the grass roots elements of the society,
and public activity such as stands on public issues and educational
programs by these associations are designed to influence emergent
trends in their favor. Activity in each sphere reflects the vital
importance to the association of being congruent with emerging forces,
and constantly adjusting to these forces.
The tenability of both hypotheses of Chapter I has been
supported. Chapter II tested both hypotheses through the historical
method. Chapters IV and V utilized the empirical method, With Chap-
ter IV testing hypothesis I and Chapter V testing hypOthesis II and
its corollary. Chapter VI that follows contains three case histories
of large-scale national trade associations that ha.e been carefully
selected to contribute depth and insight into earlier quantitative
discussion, and further test the validity of hypotheses I and II
through the case method. While they are not representative of the
162
data in any quantitative sense, they do give a very clear picture of
how the basic functions of trade and business associations have re-
sulted in dynamic activities designed to adjust a given association's
environment to the functional accomplishment of its goals.
CHAPTER VI
THREE CASE HISRDRIES THAT CHARACTERIZE THE GROWTH, ACTIVITIES,
AND RESJLTING FUNCTIONS OF LARGE-SCALE
NATIONAL TRADE ASSDCIATIONS
Introduction: The Use of the Case Study Method
in this Study
It is the purpose of this chapter to look at three particular
association histories in detail to demonstrate most clearly the na-
ture of the influences that have shaped the face of each association.
Primary attention is directed at testing the fundamental hypotheses
of Chapter I using the case study method.
The first chapter of this study of large-scale trade and
business associations indicates that from an historical standpoint
there are three primary focal points of analysis. Historically,
three distinct periods produced pronounced effects on the character
of large-scale national associations in terms of their activities,
functions, and growth, namely, World War I, the great depression of
the 1930's, and World War II.
In line with the findings and conclusions of the preceding
chapters, the case histories contained in the present chapter give
a clearer picture of how the numerous influences affected each asso-
ciation individually and the particular industry represented. Further-
more, these cases give more penetrating insight into the need ful-
fillment concept of hypothesis I and the emergent forces concept of
163
164
hypothesis II. Specifically, this chapter shows how these concepts
operated in individual cases. Moreover, the three associations have
been purposely selected in order that three major activity types
would be represented, namely, manufacturing; finance, insurance, and
real estate; and wholesale retail trade. In order to make each case
history more meaningful, a brief introduction is included prior to
each case which characterizes that particular association in terms
of the categories contained in previous chapters.
A History of the American Bottlers
of Carbonated Beverages
The first case history involves the American Bottlers of Car—
bonated Beverages, which is contained in the manufacturing activity
type. The ABCB's Washington headquarters, which moved from Detroit,
is highly departmentalized with five administrative departments. The
United States Chamber of Commerce and the National Association of
Manufacturers are among the large number of affiliates of this asso-
ciation. The ABCB membership contains managerial personnel repre-
senting 2,605 member organizations. Like most trade and business
associations, it is primarily financed by this membership through
their payment of dues. Its total revenue exceeds $375,000, which is
in the average range for these associations. Also, like many asso-
ciations, it has no formal working agreement with federal agencies
but does cooperate informally with the federal government. An in~
ternal educational program is maintained by the ABCB but formal exm
ternal education is not conducted. Finally, its staff size numbers
twenty—four, which is typical of the larger staffs of manufacturing
165
trade associations. Since the above description does not contain
extreme examples, this association can be regarded as being highly
representative of manufacturing trade associations.
An historical view of the American Bottlers of Carbonated
Beverages, the leading national trade association representing the
soft drink industry, provides insight into how the aforementioned
factors have affected the historical deve10pment of this particular
association. Much of the historical data contained in this analysis
were provided by John Riley's published history of the soft drink
industry.1
The American Bottlers of Carbonated Beverages Association
was formed in 1919 and was the outgrowth of earlier smaller asso-
ciations that served the soft drink industry from 1882 to 1919.
The earlier small associations were organized with protective goals.
For instance, the U. S. Bottlers Protective Association, founded in
1882, had as its principal objective the prevention of the pirating
of bottles, particularly the shipment of stolen bottles from one
part of the country to another; it also attempted to secure passage
of a federal law prohibiting the importation of carbonated waters,
duty free, into the United States. The earliest association in the
soft drink industry represents a clear attempt to both protect the
competitive position of the membership of the association through
regulating the type or extent of foreign competition, particularly
the importing of carbonated waters; and secondly, to promote the
1John J. Riley, A History of the American Soft Drink Industry
(Washington, D. C.: American Bottlers of Carbonated Beverages, 1954).
166
general welfare of the industry by regulating the traffic of stolen
bottles from respective producers. However, little progress was
made in efforts to secure the passage of a federal law prohibiting
traffic of stolen bottles or the importation of carbonated waters,
duty free, and a new association, the American Bottlers Protective
Association, was organized in 1889. This association was also de—
signed to protect the bottlers' property rights with respect to their
individual bottles, and its principal activities were designed to
carry out this objective. Pledged to the elimination of this loss,
the American Bottlers Protective Association continued to attract
new members and in 1894 a pr0posed federal bottle law was approved
and referred to a special committee for Congressional introduction.
Although the measure actually passed the House of Representatives in
1896, successive failures to secure its passage in the Senate re-
sulted in the association's 1899 decision to abandon the federal
approach and press for passage of stringent state laws. The Spanish-
American War, at the turn of the century, introduced the first
threat of a federal tax on soft drinks. This association was active
in showing the unfair and unproductive nature of such a tax and its
enactment was avoided. Another milestone was passed at a 1901
meeting when this same association endorsed a prOposal to require
bottle deposits as a step towards a solution of the still prevalent
stolen bottle racket. Again, the protection of competitive position
and promotion of general welfare of the industry represented is
clearly prevalent, and for the first time taxation arises as a major
problem of a national trade association. It will be recalled from
167
Chapter V that trade and business associations take more stands on
public issues involving taxation and fiscal matters than on any
other issue. Similarly, this early American Bottlers Protective
Association took a strong stand against the first federal tax to
threaten the soft drink industry and was successful in preventing
its enactment.
Annual meetings of this association were held during the
early years of the 1900's, but the interest of carbonated beverage
bottlers lagged. This disinterest was largely due to the fact that
membership of the ABPA included both bottlers of beer and soft
drinks, a situation that frequently resulted in divergent objectives.
In these early years many favored the reorganization of the asso-
ciation to include only bottlers of soft drinks. Since no action
was taken, however, the association entered the World War I period
considerably divided in its organization and objectives. This fact
gives a crucial example of what this study has alluded to in reference
to the promotional and protection functions of hypothesis 1. It is
obvious that the interests of the soft drink industry often con-
flicted with the general welfare of the bottled beer industry, and
as a result, a wide divergence in objectives and a cleavage developed
between the two segments within the same association. During the
early years of Wbrld War 1, beer interests were waning in this asso-
ciation, and the bottle beverage industry united in its efforts to
deal with new tax legislation designed to finance the war effort.
Naturally, as a protective device the association wanted to keep taxes
on its particular products at a minimum, but the changing demands of
168
the war years made this fight even more difficult. Taxation was the
compelling reason for the reorganization action taken at a 1918 asso-
ciation meeting with a new national association being formed specifi-
cally to handle financial problems. The name adopted was the Na-
tional Bottlers Association; however, this association was particu—
larly concerned with the soft drink industry. This organization
existed for only one year and its efforts were primarily directed
towards tempering the federal 10 percent soft drink tax levied under
a revenue act of 1918. The association was unsuccessful in efforts
to combat this tax. In 1919 it took a Tong look at itself and the
needs it must fulfill in order to meet its functional responsibilities.
It was decided that the organization must be made both stronger and
more representative of its industry. As a result, the association
was reorganized into the present American Bottlers of Carbonated
Beverages. While this case study concerns itself with the American
Bottlers of Carbonated Beverages, this association was strictly an
outgrowth of earlier organizations and each was essential in the for—
mation of a national trade association representing the industry from
its inception in 1882. The primary objective of the American Bottlers
of Carbonated Beverages was the elimination of the unfair federal
tax burden on its products, and in early years work was devoted alw
most entirely to this cause. By 1921 this association had been suc~
cessful in modifying the position of the government with respect to
the tax burden on the soft drink industry. The 10 percent tax on
soft drinks was reduced significantly as of January I, 1922.
In Chapter III the point was made that national associations
169
embarked on large-scale programs of trade promotion during the 1920's.
This was also true of the American Bottlers of Carbonated Beverages.
The association conducted special trade promotional campaigns with
emphasis given to placing the industry's production function on a
level equal to the steadily growing importance of the food products
field. Particular attention was paid to prOper plant Operation from
the standpoint of sanitation and product quality, and in the late
20's the scientific research began to appear. However, a basic
program of publicity and trade promotion was the primary emphasis of
this association during the period 1920 to 1930. The association
indicated that in the early 20's the American consumer was familiar
with carbonated beverages although he probably knew them by the name
soda water, soda, or pop, common terminology for many decades. But,
the industry's optimistic view, as reflected in the trade associa-
tion, was based to a large extent upon prOper cultivation of the
consumer preference for its product. Many customers were prone to
look upon soft drinks as one of those products to be enjoyed only at
a ball game or at a picnic and promotional activities were designed
to change the image of the soft drink into a more widely consumed
product. During the period 1926 to 1929, the American Bottlers of
Carbonated Beverages subscribed to a national advertising fund
totaling almost $900,000 which included a series of ads in magazines
of national circulation and in newspapers extolling the beneficial
and wholesome qualities of carbonated beverages. Trade promotion
was quite successful and bottled soft drink sales in 1929 reached
an all time peak that was not attained again for several years.
170
Thus, the widespread promotional campaigns of all trade associations
are clearly exemplified in the American Bottlers of Carbonated Bev-
erages. Furthermore, protection and promotion of the mutual interest
of the membership represented was clearly prevalent in this asso-
ciation during the 1920-30 period.
In Chapter III one of the conclusions was that the depression
of the early 1930's had a pronounced effect on trade and business
association activity and in reality presented a threat to the very
existence of many of these associations. In line with the activities
of many other national trade associations, the American Bottlers of
Carbonated Beverages continued their efforts in the areas of trade
promotion and product research, during the 1930's. These efforts
were an attempt to solve growing industry problems that primarily
involved declining sales. The broader aspects of the economic de-
pression were, of course, the nation's primary problem, but during
the depression the soft drink industry7s problems of discriminatory
taxation reappeared and this particular association renewed its
attempts to prevent high taxation.
The ABCB is a prime example of the way the NRA brought rea
newed life to many national trade associations. The NRA, with its
code of fair competition, expanded federal authority and regulation,
served as a substantial warning to the industry leaders that only
through a strong national organization could the problems of con—
stant change in a growing industry be met effectively. During the
depression years, the coordinated direction of activity through ABCB
171
under the NRA was a factor which helped the soft drink bottler to be
one of the first to regain his sound pre—depression position. It is
doubtful that without the impetus provided by the National Recovery
Act such a position could have been achieved in such a short time or
that the industry's trade association would have played a key role.
The latter part of the 1930's involved a reconsideration and expan-
sion of the most successful activities carried on by the trade asso-
ciation in the pre-depression period. The help of renewed strength
granted earlier under the NRA made the late 1930's a successful
period for the ABCB and the soft drink industry in general. In
fact, the industry progressed rapidly each year until the Pearl Har—
bor disaster on December 7, 1941.
The events of World War 11 created another era in association
activity that had no counterpart in the past. Restrictions of World
War I were insignificant in comparison to those of World War II. The
shortages of sugars, bottles, cases, gasoline, trucks, equipment, and
manpower required for production and business operations of the soft
drink industry were an everyday occurrence. Rationing created many
difficulties and the ABCB was faced with some of its most serious
problems. The bounds and ties of its relationship with the federal
government were both strengthened and more pronounced. Official ad-
visory committees appointed by the government from the association's
membership were constantly active and did much to alleviate the
greater difficulties. Even under these circumstances the industry
was able to maintain a modest record of sales growth during the war
years except for 1942. The exceptionally high demands for soft drinks
172
by the armed forces and workers in industrial plants, and by con-
sumers generally were contributing factors. Thus, in line with the
general conclusions of Chapter III, the American Bottlers of Car-
bonated Beverages emerged from World War II with stronger govern-
mental ties, higher sales, and a firmly established position in the
soft drink industry.
Significant advances were made in the application of sta—
tistics to industry problems through cooperation with wartime agencies
and these techniques made possible further advancements in the post-
war years. The post-war years were also characterized by a new
public relations objective on the part of large-scale national trade
associations and the American Bottlers of Carbonated Beverages was
no exception. This association undertook a program of several years
duration with its major purpose being to provide authentic infor-
mation about the origin of carbonated beverages in the health field
and their wholesome, beneficial, and refreshing qualities that could
be available to every individual. Association publicity and adver-
tising in the journals of the medical, dental, teaching, nutrition,
and other Opinion groups were important features of this ABCB program.
In addition to the intensive effort and time spent by the association,
generally, committees and members also took individual parts in the
activity; over a period of ten years a total in excess of $600,000
was expended for this important work.
Post-war problems of the industry also required the combined
assistance of the association membership in other directions. The
173
transition from a war economy to a new peacetime status presented
many obstacles to the industry such as scarcity of new equipment and
materials for manufacture, and shortages of structural steel and
other elements vital to remodeling many of the bottling plants to
meet new and expanded requirements. The solution to these and many
other conversion problems was greatly aided by the industry's asso-
ciation through its Washington contacts with the federal government
and its agencies. The strengthened ties with government as brought
about by World War II certainly continued in usefulness particularly
in the form of more open channels of government communication in the
post-war years. As was true with many industries, the profit squeeze
that followed the war was a major concern of the soft drink industry.
Again, the ABCB used its strong governmental ties established during
the war years to alleviate the problem of rigid prices. Through
this association's combined effort with other associations, prices
were allowed to return to a flexibility and freedom through com~
petitive interaction that permitted members of the industry to un-
dertake a readjustment of pricing levels. In addition to the pub-
lic relations activity that most characterized the post-war period,
this pricing adjustment was a vital factor contributing to the in-
dustry's growth.
Renewed emphasis on statistical research and development of
industry products is also exemplified in the activities of the Ameri~
can Bottlers of Carbonated Beverages. For example, during the 1950 s
the ABCB developed a special text and materials on job evaluation,
174
aptitude testing, sales training, and on the essential features of
cost controls and profit planning. All of these subjects were dis-
cussed and illustrated at the annual meetings and several series of
conferences or schools were held in various cities throughout the
country.
In summary, the ABCB is illustrative of the historical growth
of a particular large-scale national association that is very similar
to the growth of trade associations as a whole. In line with the
developments of Chapter III, both World War I and II and the 1930
depression had pronounced effects on this trade association's acti-
vities that later affected the way its functions were performed. For
example, the ABCB exemplifies the large-scale public relations and
expanded market research activities that occurred in the post World
War II era. It is interesting to note that the expansion of the
soft drink industry, along with many other industries was particu-
larly great during the post~war years and trade associations, in
performing their function of protection and promotion of mutual inw
terest seemed to embark upon activities of a much broader scale than
had ever been seen before. Certainly, they were still concerned with
taxation and fiscal matters, but by and large they were also under-
taking an entirely different kind of activ1‘y with respect to their
industries. This activity could be characterized as a renewed per-
ception of the importance of an enlightened public in the success of
any industry's products. Market research and public relations are
ways of both understanding and fulfilling the needs of an enlightened
PUblic. These needs are probably a result of an emerging affluent
175
society where goods are easily produced, incomes are high, and
wants are many.
This case history contains further evidence supporting both
hypotheses I and II. The membership need orientation of the asso-
ciation is clearly present in all its activities. The protection
and promotion of mutual interest of hypothesis 1, as seen in the
ABCB, have remained constant throughout its development as the
representative trade association of the soft drink industry. It
came into being, grew, and flourished to the extent it could meet
membership needs. In reality, the association was an outgrowth of
earlier associations which had failed to fulfill successfully their
need-oriented membership mission. The emergent forces concept of
hypothesis II is also clearly present in this history. Emergent
forces generated by the war years and depression period threatened
the survival of the association, and many steps were taken to re-
main congruent with these forces. As developed in Chapter V, in
order to survive, activity in the governmental and public spheres
was used by the ABCB to deal with these forces. Earlier associa-
tions in this industry did not adjust to change and thus failed.
A History of the Investment Bankers
Association of America
In contrast with the above case study. illustrative of manu-
facturing associations,tfiwalnvestment Bankers Association of America
founded in 1912 falls into the financial, insurance, and real estate
activity type. Possibly some differences will emerge between his-
torical growth of this financial association versus the typical growth
176
of a manufacturing association. Historical pamphlets published by
the IBA contributed many useful facts to this case history.
The IBA established its headquarters in Washington, D. C.
in 1954, moving there from Chicago. It sustains a headquarters
staff of twenty-three, not organized into administrative departments.
This association is primarily financed by its 795 member organizations
represented by managerial personnel. The total income of $386,000
in 1961 included some money from proceeds from sales and services.
Although the IBA does not have formal working agreements with federal
agencies, it is particularly active in both the governmental and
public spheres. It maintains informal c00peration with government,
particularly the treasury department. Stands are taken on public
issues, and it recently opposed withholding taxes on interest and
dividends. It also conducts both internal and external educational
activity.
The basic purpose of the Investment Bankers Association, as
stated in its Constitution, is as follows:
In order that investment bankers may the better serve both those
who purchase and those who sell securities through which the
necessary funds are raised for the operation and expansion of
business activities and for the carrying on of public functions
and they thus contribute to the increase in national wealth and
in its wide difusion. And in order that they may aid in these
directions through mutual cOOperation, through the maintenance
of high standards of service, through self regulation, and
through the support of apprOpriate legislation this consti-
tution is hereby adopted by the Investment Bankers Association
of America.
It is clear from this statement of purpose that this financial asso-
ciation still maintains the two key functions of protection and
177
promotion of the mutual interest of its memberships. Promotion of
mutual interest is contained in the statements involving the main-
tenance of high standards of service and through the general concept
of better serving those who compose their market. The concept of
protection of mutual interest is contained in the statements of
activities in support of apprOpriate legislation and self~regulation
within the membership. In fact, the historical analysis of this
association indicates that through its officers, committees, and
staff the IBA endeavors to keep its membership advised of signifi-
cant deve10pments affecting their interests and those of investors.
From time to time reports are published on various industries, govern-
ment, municipal and corporate securities, and other investment—re—
lated subjects. The association officers and committees also speak
for its membership on significant issues of the day. Through these
means an association is able to present its own interests and, since
theoretically the association represents its membership, the mutual
aid factor is present and the interests presented are generally the
result of the consensus developed within the association. In this
way, the interests of the membersnips of the association are protected.
The competitive protection function is important to understanding
the early founding and growth of the IBA. While this association was
actually founded in 1912, its roots go back to the older American
Bankers Association which was founded in 1875. The factors sur-
rounding the separation of the IBA from the American Bankers Associam
tion gives a greater understanding or this protective function and
178
also helps to show the way in which many of the newer types of
industries or enterprises developed with the growth of the particular
industry or enterprise. For instance, the Investment Bankers Asso—
ciation deals with a particular kind of investment banking and in
the late 1800's and early 1900's this particular activity was just
beginning to blossom in the American economy. But the emergent
forces of the great society continually pushed it further ahead in
growth and importance until by 1910 the interests of investment
bankers were crystalized and isolated as an individual activity
apart from all bankers. Thus, in 1910 a group of organizations en—
gaged in the investment banking business, including some commercial
and private banks, suggested to the American Bankers Association
that a separate section on investment banking be established. In-
terestingly enough, the American Bankers Association Executive
Council voted against this proposal, and as a result an organizing
committee of thirty investment bankers decided to form an inde-
pendent national organization. With their own interests crystalized
into a unified whole, investment bankers realized that in order to
promote these narrower interests they were better off in breaking
with the parent American Bankers Association.
This crystalization of interests among the investment bankers
led to their own separate national association. The Investment
Bankers Association of America, was organized at a 1912 meeting in
New York of representatives of 181 investment banking organizations
and banks drawn from all parts of the United States and Canada. Until
179
that time, this was the largest single gathering of investment bankers
in one meeting. This fact alone suggests the need fulfillment that
was being sought by members of this profession. In the early years
of this association, the kinds of interests that were of primary
concern to these people as investment bankers are clear. At the
first convention the members were interested primarily in the blue
sky laws of that period and subsequently adOpted a resolution re-
questing the legislative committee to draft a model state law rep-
resenting the best views of the association. Also, effort centered
in the first federal income tax law before Congress in 1913 and the
IBA legislative committee advocated changes designed to promote the
membership's interest. In 1915 the IBA taxation committee was active
in the income tax filing problems of IBA members and published an
extensive report in book form called Principles of Taxation. The
Federal Reserve Act of 1913 that set up the federal reserve system
particularly interested the IBA membership, and the special committee
on monetary legislation that followed this period had tremendous
impact in Washington on the relationship between investment banking
and the federal reserve banks- The function of protection of mutual
interest of its membership is clearly seen in the above actions. In
order to establish a preferred position with respect to membership
interests in the governmental sphere, this association resorted to
pressure in the form of a legislative committee formed to deal with
tax problems and other problems of importance in the investment
banking business. Also the promotional function emerges from the
creation of the special committee on education in 1914, which
180
formulated a bond course for young men entering the securities busi-
ness. Two years later a second education committee was appointed to
revise that course and to plan a companion course on investment
banking. In 1917 this same committee surveyed university and college
courses on investment and subsequently prepared a number of courses
in book form for training securities personnel. Traditional trade
association functions are apparent in this associationis activities
in the years that preceded World War I.
The World War I era had a pronounced effect on this trade
association. The case history of the American Bottlers of Car-
bonated Beverages indicated some of the unique problems that faced
manufacturing interests as a result of the war effort. The types
of problems that faced financial associations such as the Investment
Bankers Association of America were somewhat different from the
problems facing manufacturers because these problems involved a
purely financial base as Opposed to a production base. Nevertheless,
financial problems in any war period are certainly of equal impor~
tance to those of production. In fact, from 1914 to 1917 a deluge
of foreign securities was absorbed by Americans and hundreds of
millions of dollars were loaned to foreign borrowers who had pre-
viously depended on London for credit. Our financial community,
which had made practically no foreign loans prior to 1914, was stag«
gered by the requests for billion dollar Anglo'French credit late in
1915. The Invesiment Bankers Associa ion played a major role in
helping to solve the problems created by such requests. The tre~
mendous latent capacity of our financial machinery surprised the
181
European financial experts and they were anazed when our capital
market machinery went into high gear following the declaration of
war on April 6, 1917. The IBA and its members actively c00perated
with the Treasury Department in making the liberty bond drives a
success and from 1917 to 1919 over $24,500,000 in government bonds
were sold to people who had been described previously by a com-
mentator as not thrifty and unaccustomed to buying government bonds.
Also, by the close of the war our country loaned the allies more
than $10 billion. The facilitating functions provided by a na-
tional association of investment bankers certainly must be re-
garded as an aid to the financing problems that this period pre-
sented, especially since their function is to link those requiring
capital to those able to supply it. Strong forces of a wartime
economy threatened the financial sector and the ability of this
association to help that sector sustain itself in the war—time en-
vironment was a great contribution to its membership.
At the close of the war, the Investment Bankers Association
emerged as a strong financial force largely because of its strength-
ened relationships in the governmental sphere and its successful
pursuit of recognition in the role of financial advisor and aid in
government war finance. During the 1920's the IBA used its expanded
strength resulting from a successful war effort to help private en—
terprise with deferred financing in the domestic market. This effort
was so successful that along with the other efforts in American busi-
ness, the country became financially self-sufficient. Although state
182
and local governments expanded their debt greatly, IBA activities
facilitated funds for this expansion and many municipal improvements
became a fact during the 1920's. The IBA staff continued to expand
during the twenties to help handle this larger volume of financing.
Additional groups were formed throughout the country to work on local
problems and assist the national association at the national head-
quarters level.
It will be recalled from Chapter III and also in the example
given in the American Bottlers of Carbonated Beverages that during
the 1920's large—scale trade and business associations embarked upon
significant programs of trade promotion and national advertising
during this period. This was true in finance as well as in manu-
facturing. The Investment Bankers Association began a national adw
vertising campaign in 1924 to inform the public about the dangers of
"get rich quick" schemes and to foster sound investing. Much was
accomplished by the IBA publicity committee with a special budget
of $250,000 provided by membership subscriptions in the mid twenties.
In 1927 the IBA published a book on advertising investment securities
in c00peration with the Financial Advertisers Association. While
manufacturing trade promotion activities during the twenties cenu
tered in promoting speCific advantages of different types of products
produced by the industries which particular trade associations repm
resented, it is apparent from the IBA that financial trade promotion
often took the form of advertising on behalf of sound investing,
sound borrowing, or sound financing. During the ‘20 s the IBA also
emphasized some educational programs designed to acquaint people wit
183
the functions of investment banking° Applied to financial associa-
tions, these particular types of promotions were sympathetic to the
members of the respective association. In function, there is essen-
tially no difference between the manufacturing type trade promotion
and the financial type trade promotion in that each is designed to
promote the interest of the membership represented. In manufacturing,
of course, this interest represents a particular type of good, while
in finance a particular type of investment, credit, or banking in-
terest is involved.
This association entered the depression period as a strong
and vibrant association that was partially a result of the pros-
perous twenties. In Chapter III of this study emphasis was placed
on the tremendous impact of the great depression of the early thir—
ties on the activities, nature, and position of large—scale na-
tional trade associations. The great importance of the NIRA was
pointed out both in Chapter III and in the case of the American
Bottlers of Carbonated Beverages developed earlier in this chapter.
But probably no group of associations in American life felt the im-
pact of the great depression to any greater extent than did those
associations particularly involved with the financial aspects of
the economy. Further, probably no other association experienced any
greater impact from the depression than did this Investment Bankers
Association, which was particularly involved with the securities as»
pect of finance. The period following the stock market crash of 1929
was one of profound change and adjustment for the financial community
184
in general and the securities business in particular because it
marked the advent of a long series of federal laws designed to regu-
late both banking and the securities business. These regulations were
an outgrowth of the serious problems of American finance that were
fully realized with the hardships brought on by the depressed con—
ditions.
The entire financial segment of American life was about to
undergo a series of revisions and reorganizations. The Investment
Bankers Association became involved in this type of revision acti-
vity more than in any period of its history. The records of the
association disclose that its officers, committees, and staff were
devoted in large part to these problems, specifically in trying to
devise constructive contribution to these proposed changes and
additions to the law. In addition to the NIRA, the banking and
securities acts of 1933 and the Securities Exchange Act of 1934 were
key acts containing provisions dealing with all facets of securities
and their regulation. The nature of these acts in their final form
was certainly influenced by the legislative activities of the In-
vestment Bankers Association but their effectiveness in actually
changing any of the provisions can be questioned. Nevertheless, the
activities of the IBA in the governmental sphere were recognized and
given at least limited consideration, and the association entered the
1940's in a stronger position in the American economy than it had
ever before experienced. While the activities of the association in
the governmental area were a trying experience, they were important
185
and expanded in many areas designed to strengthen the position of the
industry. The organizational structure of the association was re~
vised in 1936 and geographical units were established to help deal
with municipal and state problems on a regional basis. But more
significantly. this association in finance, as the ABCB and others
in manufacturing, attempted to promote conridence and renewed demand
among American consumers and investors. In the mid—thirties the IBA
inaugurated a program to restore popular confidence in securities
investment and to provide an increased volume of funds for economic
growth. Groups and members were encouraged to conduct public forums
on securities and investing, and newspapers were urged to give ad-
ditional space to reporting the se:urities markets and related de~
velopments. Again, this general trend of trade association asti-
vities in the thirties centered around the problem of reviving the
economy, and the protection of membership interest took the form of
an expansion of activities designed to revive the life of the par-
ticular industry represented. In fact, in accepting the presidency
of the association in 1938 President J. C. Witter pointed out that
the association’s number one job was to revive the investment
banking business, not alone for the benefit of those in the busi-
ness but for the benefit of everyone in the country, the working man,
the farmer, the businessman, the man on relief. President Witter
also emphasized that the number two job was to explain the invest—
ment banking business to the American people and to correct the general
misunderstanding that has prevailed about the business. President
Witter saw this problem as did many men of other industries as one in
186
which the industry had to be revived at the grass roots level.
Just before World War II the IBA subscribed nearly $700,000
in addition to normal dues for a public information program conducted
by a public information committee with offices in New York. The
committee prepared booklets, speeches, and articles for publication
in magazines and also sponsored the first IBA film "America Looks
Ahead." This program was a part of President Witter's attempt to
continually revive the investment banking business because the full
effects of the depression on the financial segment had not been
counteracted by 1940. This program was continued until the start
of World War II and proved to be quite effective. The banking busi-
ness was certainly on the upswing and the census showed that right
after the start of the war in 1942 the aggregate capital of
the membership was extremely high. In fact, as early as 1939 the
sum had reached the $330 million mark. Thus, investment banking
entered World War II with renewed life and the IBA played a major
role in this revival.
In World War II, as in the first world war, the IBA co—
operated wholeheartedly with the U. 8. Treasury to foster the sale
of government bonds to finance the war effort. The Treasury created
victory fund committees in each of the twelve federal reserve dis-
tricts in 1942; many who had been active in IBA affairs served on
these committees throughout the war. Also, the IBA sponsored a war
finance conference at their 31st annual meeting at New York City in
1942 to discuss the vast job of financing the nation’s defense needs.
18?
Other attempts at solving war and postwar financial problems were
continued until the close of World War II under the sponsorship of
the IBA. As with other trade associations, the war effort strength—
ened government ties and emphasized the fact that there was no sub-
stitute for the organized association in helping to solve the mul-
titude of wartime problems of the respective industries. Certainly
as many other trade associations greatly aided production or services
in the war effort, the IBA greatly aided the financial aspects of
World War II and the effort was of comparable importance to the other
segments.
During the postwar years, like most other large-scale na—
tional associations, the IBA continued to grow in prominence,
strength, and numbers. This growth can, in part, be attributed to
the growth of the financial system itself. Over the sixteen year
period, 1946 to 1961, $120 billion of new money was obtained by in-
dustry through the sale of securities, and the investment banker
played a major, if not dominant role, in this operation. To assist
the association's officers and committees in these expanded activi»
ties after the termination of the war, a number of additions were
made to the IBA staff. A Washington office, in addition to the
Chicago office, was Opened in 1946. The staffs of the two offices
were consolidated into a single office in Washington in 1954. While
New York and Chicago emerge as financial centers in the locational
analysis in Chapter IV, it is important to note that this particular
association, while originally located in Chicago, in recent years
transferred its headquarters to Washington. The close association
188
of investment banking to municipal and other types of governmental
finance probably played a key role in this movement.
During the postwar years the IBA, like many other trade
associations, continually expanded its educational programs to in-
clude training courses, management seminars, and all types of group
educational activities. Public relations activities were increased
through radio, television, and other media. The civil suit brought
by the U. 8. Justice Department charging antitrust violations against
seventeen member investment banking organizations in 1947 had some
effect on stepped up education and public relations activities.
This suit dragged on for four years but was dismissed in November,
1951 without further action. The suit essentially charged that the
defendants entered into a combination conspiracy and agreement to
restrain and monopolize the securities business of the United States,
and that such business was thereby unreasonably restrained and in
part monopolized. Although this suit was dismissed in 1951, it
gives a splendid example of how protection of mutual interest as set
forth in hypothesis I as a major trade association function can be
Number of volunteer workers in 1960
regularly utilize
tolunteer workers? [3 No
7 Is the national D Yes II> If YES, how many distinct
headquarters composed departments are there ?
of distinct [:1 N0
administrative departments?
Does the association D Yes 9 Is there a manual of E] Yes
have a procedures to guide
tesearch department? E] No the employees' work? E] No
‘0 Is there a written §2 91 rules prescribing the conditions under which an [:1 Yes
Employee may be dismissed or otherwise released from employment? [3 No
Are there written job descriptions
specifying employee responsibilities
DYes, for most positions
DYes, for some positions
l and duties? [:1 No, not for any positions
‘2 Are the salaries or [:1 Yes Ci) If YES, E] 3 grades or less
wages of the national how _
association's employees D No many E] 4 6 grades
fixed according to a grades [3 7-10 grades
formally (written) are
tha 10 h
graded schedule? there? Elmore n ( 0‘" many?)
I 3 Does the association have an DYes
I employee retirement plan? DNO
REGIONAL, STATE, AND LOCAL STRUCTURE OF THE ASSOCIATION
Does the association have regional DYes CD If YES, how many
units (i.e. , units covering more such units
than one state) ? DNO are there?
Does the DYes C> If YES, how many
association state units
have state units? DNO are there?
If NO b How frequently are meetings DOnce a year
state unit, of the general membership
go on to I held at the state level? DOther (specify)
Question '
6
How many full—time employees work at
-—w
I}
the state headquarters of the association?
r-—0~
4 Who pays the D State unit
employed officials D Regional unit
of the [:I National association
state units? [3 Other
5 Are the paid officials of the state units D Yes
subject to the direct administrative
l authority of the national association? D No
Does the association have organized local units D Yes l:> If YES, how many
of any kind? (For example, does it have local local
chapters, societies, or groups organized on a DNO units _
municipal, county, or other basis?) are there?
1.1
221
If NO
local units, membership of these
6bHow often does the general
D Once a week
[3 Once a month
7
l
at all the local units of
go on to local units regularly meet ? D Other (specify)
Question
11 How many full-time workers are employed
the association ?
I}
8 Who pays the
employees at the
local units ?
D Regional unit
[:1 National association [:I Local unit
DOther (specify)
E] State unit
Are the paid officials in the local units
subject to the direct administrative
authority of the national association?
1
D Yes
DNO
I o Is there a prescribed
I maximum membership
L—_> If YES, please
specify
maximum
D Yes
D No
size
for local units?
" Where is the main activity of
the association carried out ?
E] National level
[3 State level
[:IRegional level [3 Local level
E ORGANIZATIONAL FINANCES
I What was the association's gross income
How much of the association's income
for 1960
for
was allocated
1960 to research? $
3“ How is the DMembership initiation fees DGrants from government agencies
2:2:1251311 DMembership dues DGrants from foundations
(What [:IAssessments of the membership [:IProceeds from sales or services
2:31:18: of DPublic fund-raising campaigns DReturns from investments or
its funds?) DUnited Fund or Community Chest endowments
industry
Gifts or grants from business or
DOther (please specify)
b NEXT :1)
IL
of its income.
Please circle the item[s
] from which the association receives 25% or more
222
4 Does the association own any buildings or land?
Yes D No
[:]Less than $25,000
DBetween $25,000 and $100,000
DBetween $100,000 and $500,000
If YES, please indicate the approximate value of holdings below:
DBetween $500,000 and $1,000,000
ClBetween $1 million and $5 million
DMore than $5 million
Approximately how many DNone D11 -2 0 D 51 - 100 DMore than 200
typewriters does the
Lnational association own? Dl-IO DZI-SO [3101-200
F INTERNAL AND EXTERNAL COMMUNICATIONS FUNCTIONS OF THE ASSOCIATION
i During the past two years, has the association taken an official stand on any public issues? -
DYes DNO
If YES, please indicate very briefly the name or nature of the three most important issues.
2 In what ways did the assomation make its posmon on these issues known?
B Advertising in newspapers or
DPublic addresses
(Please magazines B Public debates
check D Advertising on radio or television DPublic rallies marches etc
all DContacting Federal legislators DFormal resolutions
items DContacting State legislators D Other (please specify)
which DContacting Federal officials
apply) DContacting State officials
I I
3 Is it the policy of the DYes 4 How is the DNewsletter
, , , membership ,
assoc1ation to refrain DNO informed DBulletms
from taking an official about the Djournal
d l' ‘ association DForm letters
Stan on p0 meal or and its
controversial public
issues?
activities ? DOther (please specify)
_.J
223
Does the association actively carry on educational programs for its members?
DYes CD If YES, what DOrganized classes DLectures, talks, etc.
DNo what forms do DSeminars DOthers (please specify)
these programs DWorkshops
take ? DConferences
MEMBERSHIP Associations utilize a wide variety of classifications and methods for
TYPES, SIZE, countingtheir members. For this reason, a single figure for total membership,
AND while important, frequently fails to give an accurate picture of the complexities
COMPOSITION of an association's size and composition. It will thus be very helpful if answers
to the following more detailed questions about your membership can be provided.
"
Please list Classes or Types of Memberships Number
the classes
or types of l) __
memberships
. 2)
in the
association, 3)
and list the 4)
number in
each type. 5)
, Please describe briefly
the qualifications which
prospective members
must have in order to
join the association.
How many individuals and how many organizations 4 How frequently does the association
were members of the association in these years? hold a national convention?
Individual Member D Annually
members Organizations D Other (please specify)
1960 How many members of the association
1955 5 registered at its last national convention?
1950 L
1945
1940 May the association DYes
1930 Efiirfsrfj: 3381:1188? DNO
1920
1910 May a member DYes
be expelled for
1900 [file cause? DNO
224
Is your membership composed of persons from any of the following occupational groups?
Check all that are applicable, and include, if possible, an estimate of the number of members
from each group.
V Number Occupational group
Blue collar worker
Clerical worker
Retail salesman or clerk
Other salesman
Supervisor
Minor executive
Major executive
Small business executive
(sales under $50,000)
Large business executive
(sales over $50,000)
El DDDDDDDD
Number Occupational group
Engineer
Doctor
Scientist
Minister
Professor
Public school teacher
Government official
(federal, state, local)
Other (specify)
Cl DDDDDDD <
If
g
Y
b Is your membership widely dispersed among these occupational groups? EN?
9
Are all DYes [:INO |:> If NO, please explain
members of
the national
association
also members
of its
local units ?
N TE
0 It would be very helpful if the information
you have provided in this questionnaire could be
supplemented by copies of the following. (Please
check the material you are sending to us in the
appropriate boxes. )
DConstitution or charter
DOrganization chart
D Literature describing activities
E] Literature describing association '5
history
E] Literature describing membership
APPENDIX B
FINAL QUESTIONNAIRE
APPENDI X B
Study of American Associations
Michigan State University
CODE USE
A PRESENT AND PAST LOCATIONS OF HEADQUARTERS
I
1 Name of Association
I
2 Headquarters location ..... S
I City State
3 Year headquarters was ..... 6
I established in above city:
4 Previous location of headquarters . . . 7
I City State
5 Original location of headquarters 8
when association was founded: ' °
I City State
B THE GOVERNING BODY OF THE ASSOCIATION
l
L How many persons compose the governing body of the association? ''''' 9
I
2 How are the full DDirectly elected by the general membership
(voting) members of DElected by incumbent members of the governing body
the governing body DElected by representatives of the general membership ' ' ’ 10
selected? DOther (explain)
I
3 How long is their term of office?
B One year DMore than two years (specify) ,,,,, 11
I E] Two years [No time limit on term of office
I
4 Is there a limit to the number of terms [:IYes
L a member may serve on the governing body? [:INO ° ' ' 12
I
5 How frequently does the governing DOnce a year 13
bod hold re lar meetin 8? Other (specif ) """
I— )! an s [:1 Y
6 Do the members of the governing body receive any remuneration?
D None D Travel expenses 14'
I E] Salary DOther (specify) °°°°
7 How is the president DDirectly elected by the general membership
(i.e. , highest officer) DElected by the governing body 15
of the association DElected by representatives of the general membership ' °
selected? DAppointed by:
8 Do the responsibilities of the association's A. Federal B. State C. Local ' ' ° ° ° 16
principal (voluntary or paid) officers . . . . . l7
require them tobe in regular contact with D Yes D Yes Yes 18
federal, state, or local government officials? D No D No D ‘No ' ' ' ° '
SAA62 ' page one
226
227
EMPLOYEES, RULES, AND STRUCTURE
How many full-time, paid employees work at the association's
headquarters? (Include paid staff of all ranks and grades.)
..... l9
Are there any other full-time employees, paid by the national association, whoggnot
work at its headquarters?
DYes E] No ----------------------------------------------------------- , ..... 20
l:> If YES, please enter the number of additional l
full—time employees paid by the national
association here:
, ..... 21)
Does the job of the highest paid official require his (her) D Full-time
services on a full-time or part-time basis throughout the year? DPart-time ----- 22
Does the association have an E] Yes 23
employee retirement plan? E] No °°°°
Is the national headquarters composed of distinct administrative departments?
my... UN. .............................................................. 24
D If YES, how many distinct departments are there?
Is there a manual of procedures [:1 Yes 25
to guide the employees' work? D No """
Is there a written set of rules prescribing the conditions under which an D Yes 26
employee may be dismissed or otherwise released from employment? E] No """
Are there written job descriptions D Yes, for most positions
specifying employee responsibilities D Yes, for some positions ..... 27
and duties? CI No, not for any positions
Are the salaries or wages of the national association's employees set according to a
formally (written) graded schedule?
DYes DNo ------------------------------------------------------------ 28
9“ D If YES, enter the number of grades here
i
10 Does the association have a written policy stating the D Yes 29
1 conditions under which employees may be promoted? D No """
l
I ‘ Does the association have an organization chart [3 Yes ----- 30
. depicting its administrative structure? D No I ..... 31)
l .
REGIONAL AND STATE ORGANIZATION OF THE ASSOCIATION I ...32)
Does the association have regional units (units covering more than one state)?
I DYes D No ----------------------------------------------------------------- 33
I“ ::> If YES, how many regional units are there?
page two SAA62
CODE USE
228
CODE USE
Does the association have state units?
Yes N
D D 0 --------------------------------------------------------------- 34
If %a If YES, how many state units are there?
. """"""""""""""""""""""""""""""""" “I
NO S—‘atg “mtg” Zb What is the total number of paid staff
go on to employed at the several state units, combined?
Section E DNO paid staff is employed at the state units °°°° 35
DThe national association does not keep records of the number of
{l employees in the state units
2c Who pays the DState units
employed DNational association , , , . , 36
officials DOther:
of the DThe national association does not keep
state units? records on officials in state units
23 Are the paid officials of state units subject to the direct DYes ..... 37
l administrative authority of the national association? DNO
E LOCAL UNITS OF THE ASSOCIATION
I Does the association have organized local units Of any kind? (For example, does it
1 have local chapters, societies, or groups organized on a county or city basis?)
DYes Elm .......... 38
If 1“ If YES, how many local units
, I are there in the United States?
NO local units, I
0 on to 2 Does the association maintain records that DYes
g ‘ indicate the number of local units in each state? DNO
Section F 2“ If YES, please attach a list showing the number of local units in
I each state for the year 1961, or send under separate cover.
r
8 3 How Often DOnce a Week
do the local DTwice a month , , , , , 39
units usually DOnce a month
‘ meet? ‘ ‘ DOther: '
I What is the combinedtotal number of paid
4 staff employed at the various local units?
DNO paid staff employed at local units '''' 40
National association does not keep records on number Of paid
staff in local units
5 Who pays National association D National association
the paid Local unit does not keep records ,,,,, 41
staff of the E] State unit on who pays the paid
local units? DOther: staff in local units
6 Are the paid officials in the . D Yes
local units subject to the D NO ' ..... 42
direct administrative authority D No paid officials in
Of the national association? , local units
SAA62 page three
229
3
l
CODE USE
F ORGANIZATIONAL FINANCES
i What was the association's gross income for 1961? ..... 43
I
2 How is the association financed? (Please check offall items from whichthe association
receives income.)
DMembership dues C] Grants from government
DMembership initiation fees E] Grants/gifts from foundations
DMembership assessments [:1 Proceeds from sales/services ---- 4’4
DPUbliC fund-raising D Returns from investments or
[limited Fund/Community Chest endowments
DGifts from business firms D Other:
3 Please C IR C LE the item[s] above from which the association receives 25% or more ..... 45
I Of its income.
I
4 Does the association compile and publish an annual financial statement?
I DYes D NO ____________________________________
1 l:> If YES, and if it may be released tO us, please attach or send under separate
I cover the association's financial statement for 1961.
I
5 Does the association own any buildings or land?
I DYes D No ___________________________________________________________ 46
5’ l:> If YES, please CI $25,000 or less D $500,001 tO $1 million
‘3 indicate the approximate [:1 $25,001 tO $100,000 E] $1,000,001 to $5 million
I value ofthese holdings here: [3 $100,001 to $500,000 U More than $5 million
I
6 Approximately how many CI None [3 11-20 C] 101-150 [I More than 300
typewriters does the C] l- 5 C] 21-50 [3151-200 (SPeleY) ----- 47
I nationalassociation own? C] 6-10 E] 51-100 [3201-300 I I
6 INTERNAL AND EXTERNAL COMMUNICATIONS
P
1 How is the membership D Official journal
informed about the C] Bulletin ..... 48
association and its E] Newsletter
activities? D Other:
I
2 Does the association actively carry on educational programs for its members?
I DYes D No ________________________ 49
2 12> If YES, what [:I Conferences D Talks, lectures
forms do these D Workshops
D Other:
programs D Classes
take? E] Seminars
[:I Demonstrations D Other.
What was the (approximate) total number of members who were ..... 50
reached by these several types of educational programs in 1961?
page four SAA62
230
Does the association actively carry on educational programs directed at the general
public?
DYes D No
-----------------------—---—-—------—-----------—--------
If YES, E] Conferences DTalks, lectures
what forms [:I Workshops
do these D Classes DOther:
programs [3 Seminars
take? D Demonstrations DOther:
What was the (approximate) total number of persons reached
by these several types of educational programs in 1961?
During the past three years, has the association taken an Official stand on any public
issues?
CIYeS D No ---------------------------------------------------------
If YES, please indicate the name or nature of the three most important issues
below:
(1)
(2)
In what ways did the association make its position on these issues known? (Please
check all items below which apply.)
[1 Formal resolutions of the governing body E] Contacting business firms
U Formal resolutions of the general DContacting officials of other
membership associations
Advertising in newspapers or magazines DOrganizing or participating in public
E] Advertising on radio or TV assemblies, rallies, etc.
D Contacting Federal legislators DPublishing pamphlets, booklets, etc.
Contacting Federal officials
U Contacting State legislators DOther:
Contacting State officials
Is it the policy of the association to refrain from taking an DYes
official stand on political or controversial public issues? DNO
DYes [:INO
RELATIONSHIPS WITH OTHER ASSOCIATIONS AND FEDERAL
AGENCIES
Is your association itselfa member of, or affiliated in any way with, any other
associations?
-------------------------------------------------------- d
(:1) If YES, please list names of other associations below. (NOTE: If space is
insufficient for complete listing, please attach separate sheet.)
Please CIR C L E the associations listed above on whose governing bodies your
association has an official representative.
SAA62
CODE USE
..... 51
..... 52
..... 53
..... 54
..... 55
..... 56
..... 57
..... 58
page five
231
Do any associations have official representatives on the governing body of your
association?
DYes D No
If YES, please list
--------------------------------------------------------- q
the names of associations
here. NOTE: If space is
insufficient for complete
list, please attach separate
sheet.
_
CODE USE
..... 59
Does your association have any type of formal (written) working agreement with any
associations other than those you have listed above?
DYes DNO
D If YES, please list
the names of these asso-
ciations here. (As before,
if space is not sufficient
for complete list, please
attach separate sheet.)
..... 60
Does your association have a formal (written) working
agreement with any agencies of the federal government?
Does your association carry on any cooperative
activities with any federal agencies? No
If YES to either
Question 4_o_r_4a,
please list the .
names of those
federal agencies
here:
..... 61
..... 62
‘xi‘ “+V“—_€t—§ —""—‘*—X‘ —‘”'———’s’—N-
Has your association ever merged with, absorbed, or branched off from another
association? ,
D Yes, merged D No
C] Yes, absorbed
Yes, branched off
Name of Association
If YES, please list here
the names of the asso-
ciations with which yours
merged, branched off
from, or absorbed - and
give the year it occurred.
THE MEMBERSHIP OF THE ASSOCIATION
.....63
How many individuals were members of your association in 1961?
How many organizations (e.g., business firms, schools, colleges,
other associations, etc.) were members of your association in 1961?
Are the individuals in these member organizations counted as members DYes
of your association and included in the figure you entered in Question 2? DNO
‘ we" Ni'-‘h-r
page six
SAA62
232
..A-
D Yes
Does the association maintain records indicating the
number of members in each state in the U. S.?
If YES, please attach a list showing the number of members in each state for the
year 1961, or send under separate cover.
0\"— Vi"?
Are all members of the national Yes
association also members of its NO
local units? Association does not have local units
EIJD
Yes
No
Are all members of the national
association also members of its
state units?
DUE!
Association does not have state units
In what year was the association founded?
Obi“
How many individual members and how many member organizations did the
association have in the years listed below?
Individual Member Individual Member
Members Organizations Members Organizations
1955 1930
1950 1920
1945 1910
1940 1900
—-\O
9
Does the association regularly utilize volunteer workers?
DYes D No
D If YES, please indicate the number of volunteers utilized in 1961:
-p‘~A—i-‘
“ O
E] Yes
D NO
May a member be dropped or expelled from the association
for any cause (other than non-payment of dues or fees)?
May the association impose fines
on its members for any cause?
C] Yes
D No
Please describe
completely the
qualifications
prospective
members must
have in order
to belong to
the association:
Please attach, or send under separate cover, any printed matter which might
supplement the above description of qualifications for membership.
PURPOSES OF THE ASSOCIATION
r
I“
Please describe
the purposes
of
the
association
here:
Please attach, or send under separate cover, any printed matter which might
supplement the above description of the official purposes of the association.
CODEUSE
. ..67
..... 68
. ..69
..... 70
. ..71
..... 72
SAA62
page seven
233
OCCUPATIONAL COMPOSITION OF THE ASSOCIATION'S
MEMBERSHIP
~5qu—
Please check those occupational categories, below, from which your membership is
drawn.
BUSINESS AND INDUSTRY, ETC. GOVERNMENT
D Owners 8: managers of small businesses El Managerial and supervisory
E] Owners & managers of large businesses D White-collar workers
D White collar (office workers, retail D Professionals
clerks, salesmen, etc.) DMilitary officers
D Blue-collar workers [3 Enlisted personnel
Professionals
OTHER
FARM! ‘G [3 Students
DSmall farmers D Housewives
ULarge farmers 81 farm managers DRetired persons
Please CIR C LE each category above from which 25% or more of your members
are drawn.
Which of the following age groups [:1 Adults
are included D Adolescents
in your membership? C] Children
.hr—u)-—N
Is your membership composed of D Males
males, females, or C] Females
both sexes? [3 Both sexes
At several points in this questionnaire we asked for detailed information
about your association. In some cases we did not provide space for the information
to be filled in, but requested that you attach it as a separate sheet or forward it
to us under separate cover. We wish to remind you here of the items of information
which were requested above. Please place a check mark by each item you are sending.
D1961 financial statement
[:IHistorical description of the association
[:INumber of members in each State
[:INumber of local units in each state
DCopy of constitution or charter
Please return to:
American Associations Study
114 Morrill Hall
Michigan State University
East Lansing, Michigan
CODE USE
..... 73
..... 74
..... 75
..... 78
page eight
SAA62
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