It is in this way that the friends of fixed prices answer the charge that they are seeking to benefit big business at the expense of small business. They maintain that, on the contrary, cut prices will build up merchandising monopoly; while price mainten ance will destroy one of the strong and exclusive competitive weapons of the largely capitalized retail organization. • 7. Summary. of arguments for price maintenance. —It has been shown that many manufacturers of nationally advertised goods and of other lines in large demand, believe that their business is seriously hurt by indiscriminate price cutting. It has been also shown that the friends of price maintenance believe that if the price-cutting weapon on standard goods is taken away from retailers, it will encourage retail competition by making success more possible for the small dealer who finds himself in competition with large merchandising organizations. These argu ments, together with some additional ones, are sum marized in the following manner by those who believe that if a manufacturer wants to maintain resale prices and if he can find retailers who are willing to work -with Min to that end, he should be permitted to enter into a contract which, if broken, would serve as the basis of a suit for damages.
8. Interest of the C011811111M—The comparatively small number of customers of cut-price stores would, under price maintenance, lose the difference be tween standard and cut prices on standard goods. Others would lose nothing, and would be protected Irn their purchases of identified merchandise. All consumers would retain the advantages resulting from buying identified merchandise guaranteed by the manufacturer, advantages which might be lost if the manufacturers were to suffer continually the losses due to price cutting. And, finally, consumers would he protected against the possibility of monopolistic re tailing which is said to be fostered by the use of the cut-price competitive weapon.
9. Large retailer's is usually the large retailer who employs cut prices on standard goods for advertising purposes. He does not main tain that the maintenance of resale prices would bring him any direct loss. He contends merely that he would be deprived of the advertising value of these cut prices. By price cutting he is able to take ad vantage of the producer's reputation and obligations, and thus give to his customers an extra price induce ment to trade with him rather than with his small competitors. Under price maintenance he would lose this privilege. He would gain, as all retailers and consumers would gain, from the assurance of the continuance of the system of standard goods, identi fied and guaranteed by the manufacturer, and adver tised by him to the consumer.
10. Small retailer's small retailer is, next to the manufacturer, the chief sufferer from price cutting on standard goods. He loses trade to large competitors, and in some lines the ultimate re sult of continued price cutting is to force small re tailers out of business as independent concerns. Under price maintenance the small retailer ordinarily loses nothing, and in many lines is able to save his profits and to stay in business. It is not to be un
derstood that price cutting by competitors is the only thing threatening the existence of the small dealer. It is simply one of the many things he has to contend with.
11. Jobber's interest.—Jobbers are often given to price cutting, as well as retailers. Price cutting is said to injure the jobber, because it drives manufac turers into direct selling to retailers. Many manu facturers sell direct, not only to avoid the loss of re tailer good-will occasioned by the jobbers' varying prices, but also to keep close enough to retailers to show them the advantages of maintaining prices. Di rect selling by manufacturers, of course, is a severe blow to the jobbing system. In addition, the jobbers' price cutting reduces the jobbers' profits, which, at best, are not extravagant. Finally, a continuance of price cutting by large retailers, as has been shown, is likely to lead to merchandising monopoly—it is likely to decrease the size and profit of the small dealers' sales—and ultimately to put many small dealers out of business. As the relatively small retailers arc the ones who need and support the jobber, their disap pearance or decreasing business would immediately affect the business of jobbers. These things can be avoided partly by permitting the maintenance of stan dardized resale prices on those kinds of standard goods which are almost exclusively the subject of cut prices for advertising purposes.
12. Manufacturer's price cut ting, it is maintained that the property value of the manufacturer's good-will is impaired, and in many cases his business is likely to be greatly injured, by the destruction of his own profits and the profits of his dis tributive organization. As a result, the inducement to producers as a class to devise new products is likely to be materially weakened. A reasonable system of price maintenance, on the' other hand, serves to stabil ize the market, protects the profits of distributors, and conserves the good-will of consumers, retailers and jobbers for the manufacturer's goods.
13. Nature of the price maintenance Nobody contends that manufacturers should be forced to maintain prices. Many manufacturers prefer to do business without price restrictions. Many others, however, who have created large consumer demand, believe that price cutting hurts them. Similarly, nobody contends that dealers should be forced to handle price maintained goods. Some do not want to do so ; certainly they must continue to do busi ness as they please. But there are many other dealers who believe that they are helped by keeping standard prices on standard goods. The friends of price maintenance contend that when a manufacturer wants his prices maintained, and when he can find dealers who agree with him, they should be permitted, with suitable restrictions, to enter into a formal agree ment without danger of prosecution, and with the as surance that the market will not be demoralized by the breaking of the agreement after it is made.