GENTLEMEN'S AGREEMENTS. Where two or more rivals in business meet privately and agree as to what prices they shall charge or what areas they shall serve or what goods they will or will not handle, the arrangement is known as a Gentle men's Agreement or honourable understanding. Such arrangements have always been a common feature of local trade. Coal dealers will meet and agree not to cut below a certain price, or arrange that one shall confine his canvassing to the north side of the town and the other to the south. The grocer and the greengrocer will agree, the one not to sell oranges if the other will not sell packet peas. At the other end of the economic scale steel or shipping magnates will meet and come to an understand ing as to tonnage, prices, markets, freights or routes. Such ar rangements are essentially informal and temporary; there are no documents, there is no association, there is no bond except that of good faith; but they are not on that account of negligible im portance ; they are, indeed, a particularly insidious and undetec table form of trade combination. They do not necessarily make for ill ; they may serve a useful purpose in restraining vicious competition and in avoiding the overlapping of services; but be cause they are secret they lend themselves the more easily to the exploitation of the buying public.
In the United Kingdom such arrangements are not illegal un less they involve an illegal act, in which case they constitute a breach of the common law. In the United States they are for bidden under the Sherman Law, which declares illegal "every . . . conspiracy in restraint of trade or commerce," but the detection and penalising of "honourable understandings" has proved to be one of the most difficult of all the applications of that law. The most notable example of the Gentlemen's Agree ment in industrial history is the "Gary Dinners" which the presi dent of the United States Steel Corporation gave to presidents of other American steel companies from Nov. 1907 to Jan. 1911. At these dinners "honourable understandings" were reached be tween persons controlling some 9o% of the entire steel output of the country.
At one stage of the development of the "Open Price Associa tion" movement in the United States (see ASSOCIATION, INDUS TRIAL) the plan was tried of regular meetings of Association mem bers at which the prices quoted by members were openly announced and discussed without any agreement being reached as to what prices ought to be and would be charged ; but this was held in the courts to have the effect in practice of establish ing a concerted price on the ground that members conformed, by an honourable understanding, to the conclusions reached in the course of the discussion. (See TRUSTS and COMBINATION for an account of other forms of trade combination.) (J. H.)