5. Weakness of thc monopoly chargc.—The lack of basis for the common charge that price maintenance and monopoly are inherently related—that price main tenance per se gives a manufacturer a monopoly—is indicated by a concrete case. John Doe manufactures flour in a small way. His output is small, and he sells it all by putting it on a wagon and driving around from house to house. Of course he may charge any price that will sell the flour; no one questions his right to do so.
Later he expands his business. He makes more flour than he can sell himself, and hires men to help him. Each one of his assistants loads flour onto a wagon and travels a prescribed route for the purpose of selling it to consumets. Air. Doe does not want one of his salesmen selling the flour at $1.40 and an other selling it at $1.60. If this were done, a woman who paid the higher price might hear of the lower; she would resent what she might think was the at tempt to cheat her, and she would probably be lost as a future customer. Therefore, Mr. Doe calls his salesmen together and says to them: "The price of this flour is $1.50 a sack. I want you to get that— no more and no less." And they would have to get it on pain of losing their positions. No one can ques tion Air. Doe's right to fix this price and to. make his salesmen get it.
The business keeps on expanding. Selling flour from house to' house by means of salesmen becomes cumbersome and expensive. John Doe finds an in n creasing demand for his product. Woinen who have bought it once, like it, and ask their grocers for it. The grocers go to Doe and ask him to sell them his flour. He says: "All right. I will give you a fair dealer's discount, but I don't want my trade demoral ized by a different price being charged for the flour in every store in town. I want you to sell at a uni form price of $1.50." The dealers agree, and the flour is sold on this basis. Is this monopoly? Is this restraint of trade? Is this a conspiracy price and in justice to the public? The opponents of price main tenance say it is. Its friends say it is not; they main tain that the third method of selling is no different in principle from the first two, and that, if a manu facturer has the right to name the price at which con sumers shall get his product when he sells direct, he should have the same right when he sells thru an intermediary. If he is granted the right in this latter
case, he certainly is being given no privilege which has the most remote connection with monopoly, either present or future.
6. Does price maintenance discourage retail COM petitioe—Price maintenance is said to be in restraint of trade because it tends to discourage competition among retailers. The people who make this charge say that fixed prices tend to build up merchandising monopolies—that they result in the increased develop ment of large business units and in the decreased pros perity of the smaller units. The purpose of the oppo sition to price maintenance is ostensibly to limit the concentration in merchandising and to restore com petitive opportunities for the man with small capital.
As a matter of fact, unrestricted price competition is said to defeat this very purpose. This, it is main tained, has been proved in the development of trusts and industrial combinations. Furthermore, it should be remembered that a substantial cut on standard goods means going close to, or below, the profit line. Who can afford for long to sell any one line of goods at little or no profit? The man with much capital or the man with little? The friends of price maintenance say that it is only the large, well-capitalized retail store that can use the price-cutting weapon. They point out that cut prices on standard goods, offered for advertising purposes, are used chiefly by chain stores, department stores and mail-order houses—the three types of organizations that approach most nearly to the idea of monopoly in merchandising. If they are permitted to use the price-cutting weapon—if they are permitted to continue to attract trade by offering prices on standard goods that are often below the profit line, then they will continue to increase in size ; and their small competitors who do not or who can not meet their prices, will decrease in number and in importance. On the other hand, if prices on stand ard goods are maintained, the man with small capital is in exactly as strong a competitive position as the man with large capital. Competition then becomes a matter of service, in which the small dealer is on just as secure a footing as the large dealer.