In the early 20th century, there was a term commonly used in the business world called the “gentlemen’s agreement”. At its core, it referred to an informal agreement between two or more parties that essentially allowed them to bypass laws and regulations in order to achieve their own business interests. The term itself is actually a misnomer, as these agreements were often done between powerful businessmen who were anything but gentlemen.
One of the most notorious instances of a gentlemen’s agreement occurred in the United States in the 1920s. At that time, a number of automobile manufacturers came to an agreement to limit the number of cars they produced each year. This allowed them to keep prices high and avoid intense competition. It was a clear violation of antitrust laws, but the manufacturers were able to get away with it by not putting the agreement into writing.
The practice was not limited solely to the United States. In Japan, gentlemen’s agreements were common in the pre-World War II era. They were used to control the production and export of silk and other products, and were often enforced through the use of violence and intimidation.
Of course, the practice of gentlemen’s agreements is not limited to the past. It still occurs today, particularly in industries with limited competition or those where regulations can be easily circumvented. Examples of modern-day gentlemen’s agreements include price-fixing schemes among airlines and agreements between tech companies not to poach each other’s employees.
While gentlemen’s agreements may seem like a clever way for businesses to get around regulations or to increase profits, they are ultimately harmful to both consumers and the economy at large. By limiting competition and enforcing monopolies, they stifle innovation and prevent new businesses from entering the market. They often result in higher prices and lower quality products for consumers.
In the end, the term “gentlemen’s agreement” is something of a misnomer. There is nothing gentlemanly about these types of informal agreements, as they only serve to benefit the rich and powerful at the expense of everyone else. As our laws and regulations become more sophisticated, the practice of gentlemen’s agreements will likely continue to decline. But as long as there are those who are willing to cut corners and break the rules, these types of agreements will never truly disappear.