anti-trust laws-specifically including Section 3may sue for an injunction. Furthermore, business men are always confronted with the fact that an illegal contract is non-enforceable. Debts contracted in pursuance of an illegal contract are not collectable by legal means. Any contract of the sort specified may be outlawed, therefore, unless a court shall decide that it is so insignificant as not to "substantially lessen competition or tend to create a monopoly."

CHAPTER VIII

THE PROBLEM OF "PRICE-CUTTING '

START the discussion of "price-cutting" in any convention of sales-managers of popular and nationally marketed specialties, and the air will soon be filled with impassioned oratory, philippics against the wickedness of "price-cutting" mingling with jeremiads over the trade devastation it has caused, while strident above the tumult of denunciation, invective, and objurgation will rise from time to time the words "pirate," "cutting-off," "price maintenance," "department stores," "mail-order houses," "chain stores," and "the Stevens Bill."

Start the discussion of "price-cutting" in the United States Attorney's office-but no, you would never be so foolish as that! Listen to the United States Attorney when he starts it-and three times out of five you will hear him begin by questioning the manufacturer to see whether the various manufacturers in his line are cutting each other's prices, and whether there has been any agreement, writ

ten or oral, verbal or tacit, expressed or implied, direct or indirect, in any way, shape, form, or manner regarding prices. If he exhausts this line of inquiry without finding anything, you will next hear him inquire whether the manufacturer has any agreement with his dealers regarding resale prices. The thoroughness with which the United States Attorney will search for anything that can be twisted into an agreement-written, oral, verbal, tacit, expressed, implied, direct or indirect-will impress you. And when, at the close, he tells the manufacturer that he is going to send an investigator to the manufacturer's office tomorrow morning to look through the manufacturer's letter files, salesmen's reports, sales charts, scrap-books, and business records for the past four or five years, you will conclude that United States Attorneys are suspicious by nature and persistent to the point of obstinacy!

Perhaps, if you tarry after the anxious and bewildered manufacturer has departed, the United States Attorney will let you see the Government's brief in the Watch-case suit, which has

been referred to in an earlier chapter; and there, in the course of the discussion of "price-cutting," you will read denunciation, invective, objurgation, philippics, and jeremiads that would strike dumb a whole convention of the sales-managers.

"Defendants' attack on the 'price-cutter' as an 'undesirable,'" said the Government in the Watch-case suit, "is a direct attack on the freedom of competition which the anti-trust act is intended to preserve. Price-cutting is nothing more and nothing less than competition in selling, and it is one of the only two ways in which the consumer gets the benefit of competition, the other being if economy in production is carried to the consumer. It will not do to assail competition in selling by the use of adjectives or designating it as 'secret rebating' or 'underhand pricecutting,' etc. . . . A 'system' by which prices in resale are controlled and fixed is condemned.

.. Nor does it make any difference whether the goods sold are of one or several manufacturers. Such system is against public policy, whether done in combination or rigged up by a single manufacturer..

"The price-cutter is the fighting representative of those who still believe in being permitted to

run their own business without external interference. This court has recognized his true value. The 'price-cutter' is the sole representative in the trade who persists not only in believing but in acting as though the anti-trust act actually preserves for him freedom in the direction and conduct of his own business. Eradicate all pricecutting . . . and you eradicate at that moment all real competition and leave the Sherman Law and its legislatively declared policy of preserving conditions for free competition an absolute nullity."

Now, there is an explanation of the Government's point of view; but in order to understand it you must go back to ancient history and to fundamentals.

The kind of "price-cutting" that first obtruded itself upon the attention of the lawyers and the judges charged with the enforcement of the antitrust laws was the "cutting" by one manufacturer of his own prices below those of his competitormanufacturer. This kind of "price-cutting" was often followed by a period when all the competing manufacturers were in a secret agreement to maintain prices, and there was no "price-cutting" between them at all. Then, eventually, this