The New York herald. [volume] (New York, N.Y.) 1920-1924, 1920-10-06
PRICES KEPT UP BY
MAKER'SGUARANTEE
Trade Commission Hears How
Rates Otherwise Would Have
Fallen After War.
PLANTS CLOSED IN PLOT
Artificial Shortage Created So
Manufacturers Would Not
Have to Stand Loss.

WASHINGTON, OCT. 5.--Partiai re-
sponsibillty for continued high prices
was laid to-day on the trade practice OF
manufacturers guarantee against price
decline by those who protested against
the custom at hearings before the Fed
eral Trade Commission. More than 400
spokesman for business interests were
present to advise with the commission
In formulating policy on the subject
The statement that prices would have
gone down soon after the armistice In
many lines had the price guarantee
practice been unknown In commerce
was brought out In answer to questions
by Chairman Murdoch. who asked for
opinions on that phase. Without exc
ception opponents of the system de-
clAred their belief had been confirmed
by breaks in commodities In which It
was not employed. They cited the sugar
and silk markets as typical.
JamesNA. Goldsmith of New York. rep
resenting the Silk Association Of Amer
toa, said the guarantee could be con-
strued in no other light than az means
Of maintaining "a generally high level
Of prices and mitigating against any re-
duction which would have followed nat
urai operation OF the law OF supply and
DEMAND" Silk prices. he said, had de-
elined so per cent In the last six months.
which would have been impossible had
the wholesalers been guaranteed against
loss by the manufacturers.
Il would say further" he continued.
that the guarantee against decline not
only tends to hold up prices, but means
that plants will be shut and industry
stagnated In order that the guarantee
ing manufacturer will not have to dig
into his pocket and repay the wholesaler
ahut down and the demand remains. SO
prices stay high"
What about holding UP artificial
prices, like war prices and would they
have been reduced except for the price
guarantee?' Mr.. Murdoch inquired.
"Unhesitatingly I would say they
would have fallen long ago." Mr.. Gold
smith replied Il would not attempt
to say to what extent the guarantee
has maintained the prices, but It GER
tainly has held them much larger time
than had the old law OF supply and de-
mand been permitted to operate"
Only two speakers defended the prac-
tice, but their side of the questioned
will be heard fully tomorrow. r. u.
Delepenha, New York, representing the
National Preservers and Fruit Products
Association. voiced approval Of the Gus
tom. saying Its benefits more than off
set any III effects depicted by the OPP
ponents Of the practice.
L. +, Boffey of tho National Associa-
Ion OF Purchasing Agents held that no
legitimate attack could be made on the
guarantee system on ethical grounds. as
the law established the right Of citizen
20 employ trade methods of any kind 90
long as they did not tend to monopoly
or discrimination.
That the practice did tend to monop-
oily and discrimination was asserted by
George d. McIlvain of the Tin Plate
Manufacturers Association. He argued
that the guarantee given by the big
manufacturers could not be met in most
cases by little" producers who were
compel'ed either to sell out or close up
practically bankrupt" T. D. McClos-
hey o. the Nat.o.ia6 Association OF Sheet
and Tin Plate Manufacturers, a related
organization. took the same position.
BY including these two unpaid items
in the statement, the Indictment ex.
plains. the defendants intended that the
Shipping Board should enormously credi.
the corporation OF which Fox Is presi.
dent with an amount equal to the sum
OF S9,1S610. and that the Government
and the Shipping Board would thereby
be cheated. swindled and defrauded.."