The roots of the National Association of Credit Management are deeply embedded in the legislative process. They go back to the turn of the century.
In the early 1890s a few years before the NACM was established, our country had moved more rapidly than our resources at the time justified. We suffered from economic astigmatism. We had become a nation of egotists. Rugged individualism had been the characteristic of American business up to that point.
In 1893 it all came to a head. Commercial failures that year and in the aftermath of 1894 were the largest in number, and in dollar amount, that had ever befallen the nation. Failures rose by 40 percent in the one year from 1892 to 1893.
When the curtain fell on this era of over exhilaration, we had registered one of the most disastrous depressions that had ever before come upon this country. Out of the flurries and terrors of the Panic of 1893, as it was called, there arose the realization that rules and principles had to be laid down to guide American business toward orderly and permanent development.
The Great Exposition in Chicago in 1893 was supposedly aimed at resurrecting the morale of the people. They too were celebrating a centennial in those days. In fact, they were celebrating a quatro centennial, recognizing the anniversary of the discovery of America 400 years before. A number of conferences were held in conjunction with the exposition. One of these was a Congress of Credit, Collections, and Failures. We don't have any record of that congress. We don't know what was said or done. But we know that the proceedings brought about the realization that something more had to be done.
We do know that one person who was invited to address that Chicago Congress of Credit, Collections and Failures became nationally identified with the idea and with the organizational movement that led to the establishment of the National Association of Credit Management in 1896. He was Mr. W. H. Preston of Sioux City, who became the first national president of NACM. He is sort of like the George Washington of business credit. After the Chicago conference, he took a lead in calling the meeting in Toledo in the summer of 1896 to unify the various local associations which were cropping up across the country, an effort that led to the formation of NACM.
The young NACM got off to a rolling start in the legislative field. The first piece of legislation it got its teeth into perhaps I should say, got its gums into, because it was still in its infancy was the national bankruptcy act.
The country has never really had an effective bankruptcy law. The first one had been passed in 1800, but it was repealed in 1803. It didn't permit voluntary bankruptcy, and it applied only to traders. Each state had treated insolvencies as it pleased. A second National Bankruptcy Law was adopted in 1841. It lasted two years. A third act, passed in 1867, was repealed in 1878. So, despite this traditional antagonism, the chaotic conditions existing in the 1890s led many credit minds to realize that a uniform insolvency statute for the nation was absolutely imperative.
The National Association of Credit Men, through its Legislative Committee, endorsed and worked for a bankruptcy law drafted by Judge Jay L. Torrey of Missouri. There was considerable difference of opinion, both in NACM and out, but the Torrey bill in reconciled form was passed by Congress on July 1, 1896.
NACM had gotten its legislative feet wet. It had made its influence felt in Congress. It had taken part in the leadership of framing and securing passage of a National Bankruptcy Act that was to stand for 40 years. And in so doing, NACM had begun to create the realization that a new business body had been undertaken to protect the interests of debtor and creditor alike.
With this legislative accomplishment under its belt, NACM turned with a determination to curb one of the favorite practices for defrauding creditors selling stocks of goods in bulk by debtors, who flitted away after the sale had been consummated and could seldom be reached or heard from again. From this agitation there arose the Bulk Sales Laws that are now in control in all states and territories of the nation. This particular piece of legislative work, started nationwide by NACM, has saved creditors a vast fortune over the years.
At the turn of the century, NACM began a program for the adoption of fictitious names laws, now on the statute books of the great majority of the states.
There were, of course, other things that had to be done before credit could circulate throughout the nation and greatly broaden the production and movement of commodities. Financial statements needed to be made popular and useful as a form of information in the extension and management of credit. Thus, in 1904, NACM began efforts to improve False Financial Statement Laws. NACMs Model Act is now in effect in most states.
Time passed, and in 1913 NACM took an active part in legislation that led to the establishment of the Federal Reserve Board. In 1918, NACM framed recommendations for Uniform Conditional Sales Laws. The organization was active in initiating legislation to provide for arbitration of commercial disputes. In 1926, our organization secured amendments to the National Bankruptcy Act to meet the evils of collusion, fraudulent compositions, and discharge of dishonest debtors. At the same time, the NACM Fraud Prevention Department was established as a separate body within NACM to concentrate on fraud detection and prevention.
In 1935, NACM sponsored the Federal Miller Act. This required separate performance and payment bonds on Federal public works projects. In 1938, six years of intensive study by NACM led to the modernization of the National Bankruptcy Act, known of course as the Chandler Act. For the last five years or so, we have once more been closely involved in the development of a new National Bankruptcy Act to replace the 40 year old Chandler Act.
In the 1940s and 1950s, NACMs legislative achievements were prominent in the field of bankruptcy, the machinery of the bankruptcy process was improving, and the function of the Federal Reserve System was refined. In the sixties, NACM successfully supported federal legislation to exempt company retained copies of Census Bureau reports from legal process by other government agencies. It helped to gain improvements in lien laws. It won restoration of contractual lien priorities over unrecorded tax liens. It worked for bills to fight organized crime all the while, advancing legislative efforts to protect the interest of creditors in bankruptcy proceedings.
More recently, NACM was instrumental in the Equal Credit Opportunity Act. In 1986, NACM submitted testimony to the House Banking Subcommittee in opposition to amendments to the Equal Credit Opportunity Act which could create new notification and record keeping burdens for credit departments. Again in 1988, NACM worked with the staffs of the House Small Business Committee and the Federal Reserve Board to ensure that proposed amendments to the Equal Credit Opportunity Act retained the exemption granted to trade credit under Regulation B.
In the present decade, NACM provided the House Judiciary Committee with testimony regarding provisions in the Omnibus Bankruptcy bill pertaining to reclamation rights, the DePrizio decision, creditor committee reimbursement language, and limitations on the debtor's period of exclusivity. NACM also testified before the House Small Business Committee to amend and implement the Federal Prompt Pay Act, provided testimony to the House and Senate Judiciary Committees regarding passage of the Bankruptcy Act Amendments of 1993, and helped draft legislation to correct the Motor Freight Undercharge crisis.
Perhaps the greatest NACM legislative accomplishment occurred in 1972. NACM brought a cross section of its members and executive vice presidents face to face with federal legislators and other Washington decision makers for an NACM Washington Legislative Conference. This was another first for NACM, and a fulfillment of a commitment of the membership. This undertaking was a success and has become an annual event. Each one has been an improvement on the last. These Washington Legislative Conferences give members a chance to hear informal, first hand reports by spokesmen from the legislative arena on matters affecting the role and contribution of business credit in the business life of the country.
Members see the dynamic legislative process in action. They speak directly to influential government officials and decision makers and make their own positions known on vital issues. They come away with a new awareness of the process of government. For their part, the government participants in the conference, as well as individual members of Congress, gain a new awareness of the existence of NACM and of its ability and intention to speak with a loud and concerted voice on issues in Washington that affect our members.
As 1977 Legislative Committee Chairman George Wolz put it, It is incumbent upon the membership of NACM that we become more aware, better known to our lawmakers, and that we fulfill to a great degree, our role as the voice of business credit.
The NACM Legislative Conference just celebrated its silver anniversary with another successful session in March. The Conferences show no signs of slowing down and neither does NACM's legislative affairs strategy. If the past 100 years are an indication, NACM will continue to make its presence felt on Capitol Hill for years to come.
