Chapter VI — On monopolies lawful and unlawful. On sale with an agreement of resale

I. A monopoly is a convention or conspiracy by which many deliberate concerning such a ware not to be sold, save at this or that price designated by themselves. There are four (others reckon twelve) chief kinds of monopoly. First, when one or many seek out and buy up wares, that, scarcity being brought in, the rest may be compelled to buy from them at a dearer price. Second, when one obtains a privilege from a prince, by force of which he alone, the rest being excluded, can sell such wares. Third, when many hinder foreign wares from being brought into a city, that they themselves may be able to sell at a dear price their own, perceived from their own estates or sought out elsewhere, to the detriment of the common good. Fourth, when merchants conspire together and determine that wares are to be sold at so much and not less; or on the contrary, when buyers conspire together and determine that so much and not more is to be paid for wares.

II. A monopoly of the first kind all disapprove. The second they approve, when the privilege obtained from the prince is a just one and consonant with the public good. For if the privilege were obtained from the prince by crafty art and fraud, and turned to the prejudice of subjects, then it would be unjust, and the use of it unlawful. The third kind of monopoly all condemn as unjust, and teach that the monopolists are subject to restitution. The fourth is similarly unjust, as will presently be plain.

III. QUESTION I. Is it lawful for sellers to enter upon an agreement of not selling wares save at the highest price? ANSWER. The Salmanticenses affirm it, who cite Lessius, de Lugo, Tapia, Navarrus, and others: because merchants have a right of selling at the highest price, which is otherwise just. The contrary opinion is to me the more probable. For although the highest price be within the confines of the just price, nevertheless a conspiracy of not selling save at the highest price, and of not buying save at the lowest, is unjust and detrimental to the commonwealth. For this perverse convention being excluded, many merchants would buy and sell now at a middle, now at the lowest, now at the highest price, which would turn to the great advantage of the commonwealth. The end of merchandise is the public good. Therefore trade becomes vicious as often as it is opposed to this end.

IV. QUESTION II. A monopoly being once constituted by merchants of selling wares at an unjust price by excess, do other merchants, not partakers of that monopoly, sin against justice if they sell their wares at this unjust price? ANSWER. The Salmanticenses with Diana, Bonacina, and Reginald deny it, because, they say, that the price is unjust is by accident to them, from the injustice of others. Is not this an excellent reason? Is it by accident to you that the price is unjust? It is by accident that the monopolists fixed the price; but the price is unjust per se. Do not the monopolists sin in exacting this unjust price? You say yes. Why? Because the price is unjust. Therefore you also will sin by accepting an unjust price. Distinguish the sin which the monopolists committed by increasing the price from the injustice of the price constituted. The former is by accident to you. But the exaction of an unjust price is of itself a sin to you. The said opinion therefore is to me false. Read what Cicero writes, Book III of the Offices, chapter 12.

V. QUESTION III. What is to be said of an agreement of reselling and of rebuying? ANSWER. This agreement can be added either in favour of the seller, or in favour of the buyer, or in favour of both together. It is made in favour of the buyer if you say: I buy from you this book on this agreement, that at a time appointed by me you buy it back from me. It is made in favour of the seller if you say: I sell you this book on this agreement, that at an appointed time you sell the same back to me. It is made in favour of both when to each is left the faculty of withdrawing from the contract.

VI. An agreement of this kind is lawful when it is made in favour of the seller alone, if the following conditions be observed. First, that contracts of this kind be celebrated in good faith and with a sincere mind of selling and buying, all palliated usury being excluded. Second, that the quantity of the price be tempered according to the added condition of the burden. Third, the condition is that the thing be sold at the price current at the time of the resale. Fourth, that the danger or advantage of the thing sold be thrown back upon the seller, and that the identity of the thing sold be preserved: as if a vineyard be sold with its fruits, it ought likewise to be resold with the fruits.

VII. QUESTION IV. Is the contract of kinship lawful? ANSWER. In Italian that contract is called the jus di ricupera, or the right of redeeming a thing sold. This right is granted to the blood-relations of the seller of recovering within a prescribed time an estate sold. For movables, however precious, can in no way be redeemed. The right of drawing back estates sold is confirmed by the laws of all nations and princes. And this order is observed in such a contract. The price at which the estate was bought ought to be paid to the buyer. This right is granted to the nearer blood-relation, and by degrees to the rest. If the nearer yield this right, the next of kin succeeds. He who by guiles and frauds hinders this right sins against justice. Blood-relations also sin when they recover estates sold in favour of friends, from whom they receive money with which they redeem the estate. Likewise when they recover in order to sell at a greater price. At the least they work against the end and spirit of the law, which regards the preservation of families, and by no means affords a handle for thrusting out lawful possessors and disturbing the public peace.

VIII. QUESTION V. Is the Mohatra contract lawful? ANSWER. The Mohatra contract is entered upon when a man in need of ready money buys from a merchant wares of which he has no need, at the highest price — say, 56 — with an agreement added by the merchant that they be resold to him by the buyer at the lowest price — say, 50. The agreement can be added either expressly or tacitly. The contract can also be celebrated without any agreement, whether tacit or express, either with a different or with the same merchant. In the first way it is a usurious contract, condemned by Innocent XI in this thesis: The Mohatra contract is lawful even in respect of the same person, and with a contract of resale entered upon beforehand with the intention of gain. Under the cloak of a contract of selling and buying usury is hidden, as is plain to all. For the feigned seller gives 50 on loan, that he may receive 56. Now all disapprove this contract, once defended by some. Cardinal de Lugo, Vol. II, disputation 26, section 1, no. 208, although he adheres to the common opinion, nevertheless widens the buckles. Read Vol. VII, Book 3, chapter 5, no. 9.

IX. Theologians dispute whether, every agreement both tacit and express being excluded, and scandal and the danger of infamy being excluded, the aforesaid contract be lawful. The common opinion of the younger authors affirms it. But in practice it scarcely happens that the prescribed conditions are observed. Wherefore the contract of sale is to be separated in mind and in fact from the contract of loan, the masks being stripped off.

X. QUESTION VI. Can those who undertake wares to be sold from a lord retain anything for themselves, if they sell the same for more than was prescribed by the lord? ANSWER. If these, whom St. Antoninus calls Riratticri, exceed the limits of the just price in the sale, they are bound to restore the excess to the buyer. If they recall the wares to a better state by their own industry, they can retain for themselves the increase of price which corresponds to their industry. Similarly, when the lord consents that they retain for themselves what they receive beyond the price which is prescribed — provided nevertheless that the limits of the just price be not overleapt — they in no way sin. This agreement and peculiar industry being removed, brokers are bound to render the whole price to the lord. Since by no title can they retain anything for themselves. Not by reason of the ware, because it is the lord's; not by force of the common industry employed in the sale, because they let out this industry to the lord at an agreed price. Nor is it to the purpose that you object that the lord designated the price: since he designated that the ware was to be sold at so much and not at a cheaper price; but for the rest his intention was not, nor can it by right be presumed, that it should not be sold for more, the occasion being given, unless, as I have said, they expressly declare it. In good faith therefore ought intermediaries of this kind to conduct the lord's business, since they cannot enrich themselves with another's wares. What has been said of selling is to be said also of buying. Wherefore tailors are thieves when, buying cloths for the making of garments by the lord's commission, they retain something for themselves, under pretext of having bought more cheaply.