easily. For in his consignment agreement he can make his distributor his legal agent, and, with the same positiveness and legal safety that the manufacturer fixes the price list at which his own salesmen sell, he can prescribe the price at which the distributor shall sell. It is only "price-cutting" upon the multitude of popular-branded goods which cannot be marketed on this basis that raises any practical problem.

"

'Cutting-off" the "price-cutter," by refusing to fill further orders from him, is very generally resorted to. Sometimes, the manufacturer tells the dealer more or less plainly that he will fill his orders only so long as he refrains from "pricecutting," or that he will cease filling any more of his orders unless he stops "price-cutting." Sometimes, the manufacturer simply refuses to fill the "price-cutter's" orders without stating any reason for his action. Sometimes, the manufacturer not only tells the "price-cutter" why he is refusing to fill his orders, but he also tells other dealers what he has done, and why, and asks them not to supply any goods to the "price-cutter." Sometimes, instead of refusing to fill the "price-cutter's" orders, the manufacturer simply quotes him a higher price than he charges other dealers.

Sometimes, as in the Cream of Wheat case described in the first and second chapters, no harm results to the manufacturer from this "cutting-off." Sometimes, as in the Grape Juice case described in the second chapter, considerable risk is run by doing only a few of these things. And sometimes, as in the Watch-case suit described in the second chapter, a Government prosecution and an injunction by the court are liable to result. None of these methods of "cutting-off" are, therefore, free from danger, and the United States Attorney is generally pretty alert to make trouble on account of any of them, when any of the surrounding circumstances convince him that they are part of a price-maintenance plan.

One manufacturer I know of, who markets a line of popular-branded goods that is peculiarly subject to "price-cutting," has accomplished surprisingly satisfactory results by personally writing each "price-cutter," as soon as he learns of his "price-cutting," and explaining the damage which the "price-cutter"-unwittingly, it is always suggested-is thereby causing to the manufacturer. This manufacturer has found that a brief, manly statement, courteously expressed in language that the dealer can understand, and setting

forth some of the chief considerations that I have already discussed, succeeds in inducing the "pricecutter" to desist when threats of "cutting-off" might be both futile and legally dangerous.

"I cannot believe," said Mr. Justice Holmes, dissenting from the opinion of the rest of the Supreme Court in the Dr. Miles case, "that in the long run the public will profit by this court permitting knaves to cut reasonable prices for some ulterior purpose of their own and thus to impair, if not to destroy, the production and sale of articles which it is assumed to be desirable that the public should be able to get." And it is interesting to learn, from the experience of this manufacturer, that even "price-cutters, when they really sit down and seriously reflect upon the economic laws governing the distribution of popular-branded goods, and upon the consequences of "price-cutting," sometimes come round to Mr. Justice Holmes's view, and voluntarily desist from this practice.

CHAPTER IX

WHY JOIN A TRADE ASSOCIATION?

ASSOCIATIONS are the order of the day. The Federal Trade Commission, in its cordial recognition of the good work of trade associations, has struck a responsive note in the heart of every progressive business man. The good work of trade associations in advancing the arts, in encouraging scientific management, in teaching better methods, in pointing the way to manufacturing and selling economics, in perfecting safety appliances for operatives, in reducing fire risks, in working out traffic problems, in maintaining credit bureaus, in co-operative trade advertising, and in a thousand and one other ways, deserves and has received the heartiest official commendation. Can there be any question, Mr. Business Man inquires, regarding the propriety of trade associations?

There can be, and is. Trade associations of

coal operators, coal dealers, railroads, pipe manufacturers, wholesale grocers, retail grocers, paper manufacturers, lumber dealers, retail druggists, powder manufacturers, plumbing supply manufacturers, butter and egg dealers, wire manufacturers, horse-shoe manufacturers, cable manufacturers, coaster-brake manufacturers, steamship lines, bill-posters, confectioners, tow-boat operators, publishers, produce dealers, and jewelry dealers have all been successfully prosecuted under the anti-trust laws! Criminal proceedings, have also been successfully prosecuted, and fines amounting to several hundred thousand dollars in the aggregate have been imposed against members of associations. Nor is this the end, for the Department of Justice now has pending civil suits and criminal actions against a number of such associations under the anti-trust law. Before this display of judicial and governmental disfavour, Mr. Business Man has excellent reason to be cautious.

ASSOCIATIONS WRECKED BY ANTI-TRUST LAWS

No time need be wasted over trade associations which fix prices or pool profits or divide territory in respect of the sale of unpatented articles.