Evening star., 1933-06-25
Spread Work, Higher Wages,
Minimum Prices and
Quotas Cited.
WAR ON DISTRIBUTION
EVILS KELD LATER AIM
Economist Declares Business Should
Quit Fearing Labor Clauses and
Prepare for Benefits.
Special Dispatch to The Star.

! Special Dispatch to The Star.
NEW YORK, June 24-The national
industrial recovery act calls for five
main lines of action, four Of which
the Government is stressing at the
present time, according to Edgar L.
| Heermance, industrial economist of
New Haven, Conn.
The act aims to regulate hours by
agreement SO as to spread work" Mr..
Heermance said in an interview here
! today. 1T authorizes the raising of
wages to increase purchasing power 1t
| permits the producer to charge mini
mum prices. 1t allows the setting of
production quotas to approximate de-
mand. Eventually it will regulate un-
fair practices in the distribution of
| goods
Mr.. Heermance. author of the recent
book. Can Business Govern Itself?"
study Of industrial planning, has
spent the last 10 years in research on
the trade association movement in this
country on which he has come to be
recognized as an authority.
The industrial recovery act" Mr..
Heermance explained, will add to
general purchasing power not only by
spreading employment, through the re-
duction of hours, but by actual increase
of wages for the shorter working week
The average business man is dazed by
this act. His chief reaction is worry
over the labor clauses in the law.
Labor, however, will not be allowed to
interfere with the primary purposes of
the act, for there will be no extortions
through unioniZation. The business
man should forget the labor side of it
and throw his whole energies into the
new privileges given to him by the
Government
Minimums Provided.
Manufacturers will be permitted to
set minimum prices. Heretofore some
lines of American business have tried
to agree on actual prices just as the
German cartel or the English trade
association tried to do. This is diff
cult. almost impossible because price is
a mechanism to adjust demand and
supply and as such a mechanism it
cannot be pegged.
There is no freedom to fix prices
under the recovery act. There is to
be an agreement on minimum prices.
This is important because some manu-
facturers now are selling below costs.
While business men cannot agree on
actual prices, they can rule out selling
below costs through the setting of
minimum quotations.
The first problem here is to fix
the minimum price. Assume a certain
Price line for an industry Some
manufacturers are bound to produce
below that line of costs. others Just
ahC1t m tho linz nd otI ho,
The problem, then, is to reach a mean,
strike an average which will show
costs that will permit a profit on the
minimum prices. At that level some
business men will be either put out
OF business or compelled to bring
their costs within the defined range.
This minimum price will work cut in
trade where there are not too many
small, high-cost manufacturers. If
there are too many such manufac-
turers there will be much bootlegging
Of prices
Business will be able to control vol
ume of production to keep it in balance
with what people will buy This will
require industrial budgeting-that is,
budgeting by whole industries rather
IMAM merely by companies, This will
be complex problem for it will mean
10 an entire trade There are in the
United States about 500 trade asso-
cations of manufacturers representing.
perhaps 1000 fairly distinct lines Of
products. Fifty out Of the thousand
certainly not more than that-are pre-
pared for budgeting in some form.
Quota Plan Proposed.
An industry proposes to set up with
the cooperation of the Government a
national quota which will be based on
certain period, perhaps the prcduc-
tlon season. The various divisions of
the industry will then have to decide
on how much each division can pro-
duce and in turn the division will have
to allot production to individual COM
panes. once that production quota Is
set it will become law and violators
VIII be subject to penalties.
There are two difficulties with this.
First, this industry is not prepared to
set future quota, for it has neither
The technical staff ncr the technique,
SO 1t Will have to guess and its guess
may be either high or low. Second.
what should each units quota be and
how can such quota be enforced?
Every manufacturer will be COM
PEELED 10 report all sales by sending a
duplicate sales slip to his trade aSso-
citation. Furthermore, every business
man will have to make out regular re-
ports on the schedule of working
hours, wages paid, costa subject that
the average business man does not
knoW-and shipments, which in many
cases never have been tablrlated.
The problem right now before the
average trade association is to educate
the small business man in what the
industrial recovery act calls for. This
means that the little business man will
have to learn something about cost
accounting, statistical reports and busi-
ness management"
copyright, 1933.)