New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1917-11-26
Trade Council
Urges Liberality
In Price Fixing
Says Maximum Output Is
More Important Than
Cost


Of which James A. Farrell. president OF
the United States Steel Corporation, Is
chairman, has submitted a report to
the President and Congress on the
principles underlying the coordination
of price fixing, taxation and the main
tenance of foreign trade. The state
ment is made that practically all the
money in the Allied countries and most
of that held by neutrals can in time
be made available for our war emer-
gencies if production is allowed to pro-
vide a proper basis for foreign trade.
The report was prepared for the
councils committee on banking faclli-
ties for foreign trade by Lewis +.
Pierson, chairman of the board OF di-
rectors of the Irving National Bank.
1t will be submitted also to the mem
bers of the Ways and Means Commit
tee of the House and the Finance Com
mittee of the Senate. as we'll as to
other officials of the government.
The Most Serious Problem
II was prepared in the effort OF the
council "to offer a suggestion which
may be helpful to the government in
the formation of its plans to meet per-
haps the most serious and difficult
problem it has ever encountered in
relation with business interests
namely, the fixing of commodity prices
and the taxing of business profits
Pointing out that in an ideal plan
for price fixing and profit taxing high
production and not low prices should
be the controlling consideration, Mr..
Pierson says: 9,
"The relation of price fixing and
taxation to the maintenance and de-
velopment of foreign and domestic
trade in war times Is direct and or
the greatest force. There cannot be
too clear or appreciative recognition
of this fact on the part of the gov
eminent. II is natural economic law
that whenever the government requires
the total possible production OF any
article. whether for war or peace. 10
must pay such price for that article
as will return a fair profit to the pro-
Queer; otherwise, and if that producer
cannot secure fair return or prott
upon his labor and investment, he VIII
not labor or invest. and production
necessarily is curtailed.
Highest Cost Should Control
an the arbitrary fixing of prices by
the government profits should be estl-
mated upon the highest normal cost
of production instead of upon some
lower cost made possible by larger IN
vestment, broader experience, superior
methods. or any other cause tending
10 improve the efficiency OF produc-
tiou. Naturally this method will re
suit in comforting the advantage OF
higher profits upon the concern pro
ducinc most cheaply, but this adyan-
tage can be neutraized effectively by
the application of an intelligent plan
of profit taxation.
an an ideal plan for price fixing and
nroft taxing by the government, high
production and not low prices should
he the controlling consideration. IL
tho fnaI determination Of the war IS
- he measured to any considerable
extent by the relative economic power
Of the belligerents and, OF course "
will be so measured--the existence o,
the things which money can buy WIZ
be of FAR greater importance than INC
possession Of money itself. ne un
desirable effect of unreasonaoly hlgh
prices even, would be only temporary
as. when the emergency arises the
through proht taXaton'
will be able to recover for war pur-
poses the greater portion of the I'M
duly high profits
Production Should Be Stimulated
Grave dangers will accompany the
active assumption by the government
of the power TO fix prices and levy
profit taxation, the Trade Council s
report saye, unless II recognizes the
Importance OF stimulating production
so as 10 avoid the impairment OF the
sources from which the required reve-
rue is TO be derived.
II is recommended that the govern
uent. in arbitrarily exercising the
power of price fixing and proht taxa
alton. should proceed with particular
reference to the national interest IN
foreign markets. Along this line the
report adds: g..
"JJnless the conditions surrounding
are normal instead of be-
inc hampered and embarrassed by ar
hifrary regulations based upon ina
pined expcdiercy rather than upon
sound scientific principles of economies,
the future OF our foreign trade be-
comes exceedingly uncertain and even
its present value in contributing 70
our success in winning the war Will
be very materially diminished.
1.-THE relation among these three
Functiors, price fixing. taxation and
stimulation of production, is of the
most intimate kind, and il is absolutely
essential that the government. in CO.
ordinating energies and abilities to
meet its enormous tasks, recognizes
this fact
"The first Of these tasks naturally is
to win the war. and the inevitable re-
suit of this obligation to win the war is
enormous expense. The problem, then,
is how 10 meet this expense. The gov
eminent already has decided that war
expenses shall be met by two measures
loans and taxation. These means
actually are only temporary expedi-
ents., The real fundamental enduring
means is the DEVELOPMENT Of the wealth
Of the nation and the accumulation of
gold. which. after all. is the sole means
Of sustaining national credit"
Government Policy Criticised
In the performance of the duty of
price fixing and taxation Mr.. Pierson
says that developments thus far indi-
ate that the government has not con-
,idered the plan in its largest form. In
ion, however. il is pointed out that a
most effective plan has been worked