Price fixing

“ Hence prices are fixed within the meaning of the Trenton Potteries case if the range within which purchases or sales will be made is agreed upon, if the prices paid or charged are to be at a certain level or on ascending or descending scales, if they are to be uniform, or if by various formulae they are related to the market prices. They are fixed because they are agreed upon. And the fact that, as here, they are fixed at the fair going market price is immaterial. For purchases at or under the market are one species of price-fixing. ”

“ Where the means for price-fixing are purchases or sales of the commodity in a market operation or, as here, purchases of a part of the supply of the commodity for the purpose of keeping it from having a depressive effect on the markets, such power may be found to exist though the combination does not control a substantial part of the commodity. ”

“ It is probable that price reductions would reach economically unwise and self-defeating limits before they would reach constitutional ones. Any constitutional problems growing out of price fixing are quite different than those that have heretofore been considered to inhere in rate making. A producer would have difficulty showing the invalidity of such a fixed price so long as he voluntarily continued to sell his product in interstate commerce. Should he withdraw and other authority be invoked to compel him to part with his property, a different problem would be presented. ”

“ In an effort to ensure a uniform price policy under a decentralized process of price fixing, the law spells out the responsibilities of all entities concerned with pricing, from the Council of State down to the individual enterprise. Jurisdiction over prices for products and services is to be allocated among the various sectors and levels of the economy, and the State Committee for Prices will be responsible for the correct application of the law. ”

“ There should have been a general board of strategy to supervise the entire price-fixing programme and to coördinate it with the Government's fiscal arrangements and with the various steps taken to control the production and consumption through priorities and rationing. Some progress was made in this direction, but it remains true that the price-fixing operations were not sufficiently correlated with taxation and borrowing (inflation) on the one hand, and with rationing and priorities on the other. ”

“ Those who can get stabilized markets, assured margins, and freedom from price cutting will find a price-fixing license an attractive alternative to the more arduous methods of maintaining their competitive positions. Competition tends to become impaired not by reason of the public's preference for the patented article but because of the preference of competitors for price fixing and for the increased profits which that method of doing business promises. ”

“ The jobbers and the retailers, to whom the wholesale dealers and manufacturers sell, are not so likely to take currency insurance into consideration in fixing their selling prices; but to whatever amount the cost price of their goods has been enhanced by the necessity of insurance against currency fluctuations, on that same amount they estimate and add for interest and profits; the total enhancement of prices falling ultimately on the consumer, who, of necessity, can rarely know the elements of the cost of the article he purchases. ”

“ It is on these two points that price ceilings differ from price floors: to hold that a combination may be inferred from the vertical dictation of a maximum price simply because it may be permissible to infer a combination from the vertical dictation of a minimum price ignores economic reality; to conclude that no acceptable justification for fixing maximum prices can be found simply because there is no acceptable justification for fixing minimum prices is to substitute blindness for analysis.
Resale price maintenance, a practice not involved here, lessens horizontal intrabrand competition. ”

“ Finally, with all this the Supreme Court had to predict the disaster that has come, were it not to receive still further and better assistance. And all these high experts were dealing with the easiest possible cases of price fixing; all of them had all the resources of the Government at their service, and, as has been said, none of them had to act hourly, with no time for deliberation or investigation, as is inevitably the case in the sale of commodities. ”

“ To put him where he must do so beyond reasonable doubt of error is to create a dilemma where, if he guesses right, he goes to jail, and, if he guesses wrong, he becomes a bankrupt; so that Governmental price fixing, as to all going business ultimately but means that there will be no trade sufficient even to pay for the keep of those men, heretofore carrying on the business enterprises of the United States, in the jails that will have to be provided for their occupancy. ”

“ In fixing a uniform price for identically the same labor or material, whether on a small poverty-stricken road or a main trunk line, no serious injustice is done, provided the price fixed is one which, from a strictly engineering standpoint, is a reasonable figure for cost of reproduction. The differences in class are due, not to special differences in cost of physical property, but rather to differences in earning ability on account of good or poor territory served, efficient or inefficient management, or other reasons not connected with the physical structure ”

“ The fixing of an initial 'in-line' price establishes a firm price at which a producer may operate, pending determination of a just and reasonable rate, without any contingent obligation to make refunds should a just and reasonable rate turn out to be lower than the 'in-line' price. ”

“ The present purpose, therefore, is to inquire into this vital though neglected part of the subject; to call attention to the economic truths that money and credit fluctuate as much, and often more, than commodities; again to point out that continuing trade is, in substance, only its original form of barter; to show that an exchange of a commodity for money constitutes but a single step, the second and most vital step being the replacement of the commodity with the money thus obtained. ”

“ The Emergency Price Control Act provides for the establishment of the Office of Price Administration under the direction of a Price Administrator appointed by the President, and sets up a comprehensive scheme for the promulgation by the Administrator of regulations or orders fixing such maximum prices of commodities and rents as will effectuate the purposes of the Act and conform to the standards which it prescribes. ”

“ Moreover, if the actual price charged under a maximum price scheme is nearly always the fixed maximum price, which is increasingly likely as the maximum price approaches the actual cost of the dealer, the scheme tends to acquire all the attributes of an arrangement fixing minimum prices. ”

“ For the moment, let us leave money out of the question. Could any man justly be indicted, should the result of the transaction be that he had borne all the expenses and risks, and yet, had ended with but one pound of goods to replace his original pound? ”

“ Fixing his eyes on the yellow marble mosaic under his feet, he realised once more the frightful contrast that had struck him a few hours before in the lighted salon at Lancilly. "La belle Hélène," as everybody called her; the pale, beautiful girl with the sad eyes and enchanting smile, walking through the long room with her boy cousin, himself in his slender élancé beauty a perfect match for her, so that the eighteenth century might have painted them as two young deities from the Court of Olympus, come down to earth to show mortals a vision of the ideal! ”

“ That this second step is really the determinative one; and that a continuing business is but a continuing repetition of these cycles from commodity back to commodity, which does not chiefly consist of money, but in which money is merely a device for facilitating the barter. ”

“ And when we come to the Austrian kronen, the man who had simply gotten his pound for pound cycle completed, would certainly go to jail when it was proven that in the intermediate illusory money step he had apparently made a profit of six thousand six hundred and sixty-six and two-thirds per cent.! This is taken only as a single illustration, for all other things in relation to commodities are fluctuating in the same way, though in varying degrees. No man ever has or ever will be able to forecast such situations with even ordinary certainty. ”

“ It takes us some distance neither wholly to accept nor wholly to reject price ceilings as just compensation. The complications introduced by the displacement of free market prices by controlled prices serve to intensify the usual wariness against undue generalizations in ascertaining the value of specific property taken for public purposes. ”

“ The reasons for dispersion are principally three: (1) Many prices are restrained by previous contract, by legal prohibition, or by force of custom. (2) Some prices are intimately related to the money metal. (3) Each individual price is subject to special variation under the influence of its particular supply and demand. There exists, however, a compensation in price movements in the sense that the failure of one set of prices to respond to any influence on the price level will necessitate a correspondingly greater change in other prices. ”

“ Whereever adopted, the depreciation charge is based on the original cost of the plant to the owner. when the great changes in price levels incident to the World War led some to question the wisdom of the practice of basing the charge on original cost, the Chamber of Commerce of the United States warned business men against the fallacy of departing from the accepted basis. [22] And that warning has been recently repeated: 'When the cost of an asset, less any salvage value, has been recovered, the process of depreciation stops; the consumer has paid for that particular item of service. ”

“ If, again, I over-estimate the cost to me, and ask a price greater than your estimate of the value to you, there is no bargain, and I have lost the opportunity of earning a price measured by the real cost of the performance, so that the cost of my mistake again falls on me; while, the market being open, and a thorough adjust ment of supply to demand being established, others will make a juster estimate, whose services you will procure and you will suffer no inconvenience. Competition will regulate any disposition on my part to overcharge. ”

“ It is self-evident that we must either restore commodities to a level approximating their dollar value of several years ago or else that we must continue the destructive process of reducing, through defaults or through deliberate writing down, obligations assumed at a higher price level. ”

“ The argument—heard less frequently now than formerly—has been advanced, drawn inductively from statistics, that protection does not raise prices; because, after duties are put on, a larger quantity is produced, the advantages of large production are reaped, and then the price of the manufactured commodity falls lower here than it was before the duty was imposed. ”

“ Self-regulatory or legislative bodies interested in expanding consumer repair choices will need to determine whether the model’s approach or a more price and duration-prescriptive approach is appropriate. ”

“ To cut rates, to have a different price for each customer, to substitute one article for another, are the prevailing policies of the seller. To give uncollectible notes, to claim rebates, to make assignments and compromises, to use one shift or another in order to get possession of goods and pay less than the contract price, are the prevailing aims of the buyer. ”

“ But more to the point is the fact that, although one may calculate what a cost is, and of course all of our costs are carefully calculated, no one knows what a cost ought to be. One of the ways of discovering what a cost ought to be is to name a price so low as to force everybody in the place to the highest point of efficiency. The low price makes everybody dig for profits. We make more discoveries concerning manufacturing and selling under this forced method than by any method of leisurely investigation. ”

“ In most cases these regulations established maximum prices, sometimes by agreement with the manufacturers concerned. But it is obvious that such measures could not be satisfactory in the long run. Once a scarcity of goods is felt, fixed prices are of no use; and confusion necessarily results when there is no rise in price, as in a free market, to bring about the balance between the supply and demand. ”

“ No advocate of an increased volume of money denies that in a few departments of manufacture there have since 1873 been improvements tending to economize labor and cheapen products; but they emphatically deny and challenge proof that improvements of mere detail in the manufacture of some articles will account for the extraordinary fall of price since that time in almost every product of industry. We are also told that the development of the system of transportation, both by land and sea, have tended to lower the price of commodities to the consumers. ”

“ In particular, when total consumer demand (at least within that price range marked at the bottom by the minimum cost of manufacture and distribution and at the top by the highest price at which a price-maintenance scheme can operate effectively) is affected less by price than by the number of retail outlets for the product, the availability of dealer services, or the impact of advertising and promotion, it will be in the interest of manufacturers to squelch price competition through a scheme of resale price maintenance in order to concentrate on nonprice competition. ”