New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1917-04-18
Prices and Supply
Setting Maximum Rates Bound To
Be a Failure
To the Editor of The Tribune.

To the Editor of The Tribune.
Sir: Among the London dispatches this
morning is an important statement by Mr..
Hoover, head OF the American Commission
for Relief in Belgium, who is coming home
TO take charge of the new food board TO be
established here lie outlines the work to
be undertaken by the board, and as to the
question of prices he says:
"Nor can we allow speculation or profteer
ing to burden our own people with high
prices. We must devise and enforce methods
to reduce and maintain more reasonable
prices, both for our own people and the
Allies"
Prices of commodities. We know. are fixed
By the law of supply and demand, except
where monopoly enters to disturb this law.
BY legislation we have attempted, more or
less successfully, to control monopoly, and
the governmental supervision of stored
products would no doubt have good results
if extended further and honestly practised.
But If the setting of maximum prices is in.
tended it should be pointed out that mere
governmental fiat cannot abrogate an eco
nomic law. To interfere with a natural law
involves interfering with one of it's factors.
This can be done by the control of suppIy.
and has been done abroad since the war
with partial success. Government super-
Vision and control tend TO equalize supply
and at the same time to keep prices at their
real value. As to the futility Of fixing maxi
mum prices, we have all read accounts from
sojourners in Germany Of the subterfuges
practsed to circumvent price regulations;
and just now comes an article from an Eng
l.sh paper which discusses the proposed
measure for England. An extract may prove
interesting to your readers:
THE policy Of fixing maximum prices, which
has proved a failure in Germany, is now, by
and with the authority of lord Devonport. to
be tried in England. We have yet to learn
that the differences between Germany and
ourselves extend 20 economic law and 20 be
assured that the operations OF competition
under a common system of production for
profit vary as between one country and an
other. The policy Of fixing maximum prices,
TO which we have always taken exception on
economic grounds, can be plainly shown, both
practically and theoretically, to be doomed
70 failure wherever and whenever il is tried.
On the practical ground it fails by reason Of
high an cutlery agains, undue profits is in
oytably raised, while if they are fixed too
low production ceases or the law becomes
dead letter. And nobody knows, nor Is
there any uniform means OF discovering, the
mean between either of these extremes On
the theoretical ground, the objection 10 fix
ing maximum prices is even clearer What is
it that determines price in the normal cir
cumstances? Il is supply. Supply. in the
economic sense. determines price as bly,
as the movement OF the sun controls the in
dcx shadow Of a dial. Price, in short. IS
Lothing more than the index OF market
supply. 1t follows, therefore, that the at
tempt to control or fix prices without con-
trolling supply is nothing else than trying
10 alter the course Of the sun by shifting the
position of sun-dial The condition, we
repeat, c. fixing prices is the control Of
supply. and by no other means is the opera
ton possible" BERTHA W. HOWE.
Great Kills ~ Y. April Is, 1917.