Evening star., 1933-07-16
TOUGH PROBLEMS FACING
RECOVERY ACT DIRECTORS
Success Depends on Aid of Regulated
Industries in Enforcing DEGREES and
Making Minorities Conform.

! PEELED to reduce output. Under such
conditions the purpose of the industrial
recovery act would be defeated. since
the net result would be to throw the
newly employed men out of work.
May Offset Higher Wages.
Another danger resulting from
rapid advance in prices of industrial
products grows out of the temptation
to introduce labor-Saving machinery to
offset the effect of higher wage pay
ments. Moreover. industrial consumers
of high priced products may decide to
emancipate themselves from dependence
upon outside sources of supply by en-
gaging in manufacturing on their own
| account. 1t is significant, for instance,
that the cotton manufacturers have
recommended that the installation of
new machinery for other than replace
ment purposes should only be permitted
after official certlficatiOn that its intro
duction is consistent with the purposes
of the recovery act. The possibility of
duplication of equipment by buying in
duStr1es has also been brought to the
attention of the cotton industry by the
report that tire manufacturers have
been considering plans to manufacture
tire fabrics, II prices are raised markedly
through adoption of the cotton code
difficult question also arises in con-
nectlon with the general price policies
to be followed by organized industries
Gen. Johnson made an initial appeal
to employers not to increase prices for
several months. Later he modified his
proposal to urge that prices should not
be raised faster than higher costs
justify, admitting that manufacturers
could not be expected to sell below cost.
TINS nnlirv nf pndpoy 70 ;,,or
wages in advance of rise in profits is
IN conformity with the theory upon
which the Governments price raising
program is based. but the timing and
regulating of price advances present an
administrative task of extreme delicacy
Price agreement and plans to raise
prices by direct restriction of output
not mere limitations upon hours of
Work-are the chief objective of the
majority of organized industries. If
sales below cost are to be forbidden
under codes Of fair practice. some form
OF price fixing will be necessary and
restrictions upon output will necessar-
lily follow. Consequently the govern
ment administrators should be prepared
to outline methods for establishing
standard costs for the purpose of as
certaining what are fair prices. To pro-
tect the public against an eXtortionate
scale of prices, high enough to cover
the expenses of the least efficient pro-
ducing units, such cost computations
should be based on efficient perform
ance and revisions should be frequent
to allow for changes
Importance of Co-Operation.
The work of policing to prevent vio-
lationS Of the agreement will have to be
largely delegated. rs previously stated.
to the industries themselves. Some of
them are already effectively equipped
to undertake this work, have indeed
been carrying it on in disregard of
legal prohibitions. even extending their
systems Of espionage to embrace an
cillary groups. On the other hand
many unorganiZed industries repre-
sented by small widely scattered estab-
lishments present especially difficult
control problems. which the industries
themselves are not qualified to solve.
Thus. the groups which are most diff
cult to organize are the ones which will
give the Government officials the least
amount of effective cooperation in the
enforcement Of codes of fair practice.
The work Of the administrators will
be continuous. for they will be COM
PEELED to modify and expand their origi-
nal rulings and decisions at frequent
intervals to accommodate them to
changing conditions and to correct I'M
foreseen weaknesses. Ready adaptable
ity is essential indeed. to prevent or
ganized industries from lapsing into a
routine destructive of initiative and
progress. There is no denying that
unregulated competition has failed to
bring about an equitable apportionment
Of the profits of industry. but competi
ton has at any rate provided a sort
of distributive mechanism which does
not make extraordinary demands upon
individuals. Under a regime in which
prices are fixed in conformity with an
industrial control plan instead Of them
selves determining the direction and
scope of productive activities. the in
telligence and skill shown by the ad-
ministrators of the national recovery
act must be of high order to assure
success of the experiment.
Copyright. 1899