The sun., 1917-08-10
CABINET SPLIT
OVER DRASTIC
PRICE FIXING
Reports of Revolt by Big
Industries Against
U. s. Scale.
CONTRACTS TO STAND
Schwab Named i'm Insurgent
RumOr-Steel and Coal
Seizure Urged.
CONTRACTS TO STAND
Special DespatcA 70 Tnr SUI.

Special Despatch 10 Tm Sun,
WASHINGTON, Aug. with leglsla-
tion now in the Presidents hands giving
him virtually dictatorial powers over
many lines Of business in this country
the problem OF prices and price fixing Is
commanding attention.
1t was learned to-day that whatever
radical steps are taken there is no in
tention of abrogating existing contracts
between American manufacturers and
foreign Governments Some complaints
have been made by foreign Governments
that they have been compelled to pay ex-
tortionate prices in some Of these con-
war, but the position is taken by the
War Industries Board that a contract is
contract, and once signed it cannot be
interfered with by this Government,
much as it would like to see some of the
prices scaled down for its allies.
AS yet nobody has openly challenged
the Government In price fixing, but re-
ports of contemplated moves are reach
ing here daily. Flouting of the Govern
ment would bring out the Governments
intentions. For this reason much inter-
est attached to-day in the Wall Street
report that Charles NJ. Schwab had re-
fused to deliver his proportion Of $50, 900
tons of steel rails to be used in France
at the price demanded by the Govern
ment, said to be $40 a ton. on the ground
that this was virtually what 1t cost him
TO produce the rails.
Baker Sees Adjustment.
Secretary Baker admitted there had
the Bethlehem Steel Corporation on the
order. He denied the Bethlehem COM
pany had challenged the Government.
and said that negotiations looking to an
adjustment of the difficulties were pro-
ceeding.
Regarding the general plans OF Gov
crnment regulation there is already a
division of opinion within the Cabinet.
Secretary Baker and Secretary Daniels
are the heads OF one group. They ad-
vance the view that drastic cuts in the
basic prices of practically all commodi-
ties used in the production of war ma
terial and regulation OF prices to a
degree heretofore unneard of in Ameri-
can economic history or even theory,
must be effected. Secretary McAdoo Is
believed to side with this group.
On the other side are said to be Secre-
tary of the Interior Lane, Secretary OF
! Agriculture Houston and Secretary OF
! Labor Wilson, who counsel moderation
To which group the President leans has
not been disclosed, but past perform
ances with regard to Cabinet schisms
! have usually found the President and
! Secretary Lane In complete accord.
The whole situation threatens to pro
! duCe serious divisions and has giver
| rise to views In the Presidents circl'
which seem to be wider apart than any
policy which has been presented since thu
| President took office. Meanwhile thu
business world is waiting for some an
nouncement that will show how far thu
| Governments policy is to be carried.
With the passage OF the food contro
bill the President now has power Il
! seize plants. Mines carriers and almos
any industry whose operations even In
directly deal with the production of nee
essaries. Almost anything, it is pointer
out, can come within this classification
by reason OF the broad language II
which the licensing section OF the foot
bill Is drawn. ..
Radical Action urged.
There are members Of the Cabinet ant
certain radical friends OF the Presiden
| who are urging at once the most drastic
use of these powers. They would hav
the President start in at once to seiz
coal mines. They are predicting tina
the steel people never will accede to tn
Governments terms. and that the situa
ton both here and in the allied coun
tries demands that the Government TAX
steps at once to create sort Of Fedora
monopoly OF this and other industries.
OficlaIs are divided as to whether tn
Government can enforce the plan re
specting allied purchases without tn
support OF additional legislation. ON
cIaIs who believe the Government ha
power 10 enforce It's policies concernn
allied prices and costs to the America
public hold that the priority bin nov
before the President for signature give
the Government sufficient power to
what il wishes. Manufacturers, the
say, who refuse to sell at prices pre-
! scribed could be handled by denyln
I tnem lne use VI tiie iallU"uS ~ tidHf
porting their goods. Control OF export
also, it is said might be used and pre-
ducers who failed to make fair price
to the allied Governments would be RI
fused licenses to ship their goods. TIL
disadvantage of this plan. though. woul
p be that the buyer might suffer becaus
of the delay, - ......
At the morning session OF the Ws
Industries Board Herbert Hoover, VIII
will sit on the boards purchasing con
: mittee to handle the buying Of food wa
called In and IN the afternoon the boar
conferred al length with Col I. w. Lite
, in charge OF construction OF army car
tonments