THE CASE FOR PRICE MAINTENANCE 1. Other arguments in opposition.—In the pre ceding chapter those arguments have been presented which seem to be the strongest that the opponents of price maintenance have offered. To each of them, as has been shown, there is a counter-argument offered by those who believe that the manufacturer, when he cares to do so, should be permitted to control the re sale prices of his goods. The reader is to judge for himself the relative weight of these arguments and counter-arguments. In the present chapter those arguments are presented which are usually considered the strongest that can be offered by the friends of price maintenance. In this chapter, as in the preced ing one, the method used is first to state some criticism frequently voiced by those who oppose the principle of controlled resale prices, and then to show how the criticism is met by the other side. The arguments on the two -sides are not the author's. He has collected them from all that has been written and said on the subject, and he does not necessarily stand sponsor for any of the contentions on either side of the con troversy.
2. Are fixed prices to be considered similar to con spiracy fixed by the manufacturer, it is said, are no different from conspiracy prices. The argument is: If a manufacturer says that his shoes shall be sold for no less than five dollars hy all the retailers in Denver who handle them, the result- is that all wearers of those shoes in Denver must pay five dollars for them. So far as the consumer is con cerned, the result is no different from what it would be if all the sellers of those shoes met, discussed the situation, and unanimously agreed that no one should sell the shoes for less than five dollars. The latter would be a conspiracy price, and would be against public policy. Why is not the price fixed by the manufacturer also against public policy? In the case cited, the immediate effect of these two practices on the consumer is the same. But the sim ilarity stops there. The two practices are wholly different in principle and in final results. If the re tailers may get together to fix a price on one article, they must be permitted to fix it on all articles; and if dealers are permitted to conspire to maintain a price, the same privilege must be extended to competing manufacturers. If the legality of conspiracy prices
is recognized, we have legalized opportunity for re striction of all price competition and for the develop ment of complete monopoly thru voluntary combina tions in all fields. No such results can come from price maintenance; it has nothing in it that encourages monopoly. The price fixing is not done by the co operation of competing units; it is done by a single manufacturer, who, operating in a competitive field, must fix a price that will sell his goods in competition with many other similar articles.
The Honorable Louis D. Brandeis, now Associate Justice of the Supreme Court of the United States, said in the December, 1913, issue of Associated Ad vertising, that it was regrettable there was "confusion of price maintenance by independent manufac turers with price fixing by monopolies. People know that the Standard Oil Company fixed prices ; that the Steel Trust fixed prices ; that the Tobacco Trust fixed prices ; that the Sugar Trust fixed prices. It was natural to conclude that anything that fixed prices was therefore objectionable, and against the public interests. An atmosphere was thus cre ated which permeated the courts and which led them to stamp as illegal anything in which the attempt was made to protect the price. The distinction is, of course, perfectly clear. On the one hand you have a combination of individuals form ing a capitalistic monopoly and using their power to fix the price of a standard article. On the other hand you have an individual concern in a competitive line of business under taking to preserve his own creation—that which he has con tributed to the world—and has marketed in a manner which he believes is essential to secure fair and adequate distribu tion. . . . He who sets the price, fixes it knowing that if it is too high either one of two things happens : either people will not buy largely, or if they do buy, and if his profits are large, new competitors will come in and share his market.