Evening star., 1934-02-05
PROBE Of STEEL
PRICES LAUNCHED
First Major Investigation Of
N. R. A. to Be Made by
Trade Commission.
By the Associatec Press.

|
/ BY the Associated Press.
The first major investigation Of
N. r. AS powers to relax the anti
trust laws, center Of an American big
business dispute for 80 years. was ready
for initiation today by the Federal
Trade Commission in the form Of a
study into allegations Of monopoly
under the steel code.
Acting by authority Of Senate
resolution, the commission will inquire
If steel prices have been raised by
concerted action; the effect of higher
prices on the public, and whether, If
such practices are found to exist, they
tend to create q monopoly.
N. r. AS proponents hold that
while 1t gives business some instru-
mentS for fixing prices, which formerly
were regarded as the major device of
monopoly, monopoly itself still is for
bidden.
A high Trade Commission official
today privately defined monopoly as a
system fostering or permitting prac-
tices which would eliminate COM
petitors for other than reasons Of
greater efficiency.
A small business might be DESTROYED
If a group of big competitors forced
all members of the industry to charge
high prices when the small companies
had hitherto been successful because
they charged lower prices on the basis
| Of lower costs.
Many Complaints Received.
The commission Is reported to have
received many complaints about codes
under N. r. A., including the steel
code, but as yet has taken no public
action.
The situation Is somewhat compli-
Gated because the new conception OF
business practices also requires the
courts to redefine their attitude. They
must now set out a new border line
between actual monopoly and unfair
competition. Many officials have con-
ceced that business cannot be entirely
sure OF its step until this new body
Of law Is created.
Meanwhile, a recommendation for
immediate temporary suspension of
provisions in codes which make for
unauthorized price fixing was sub
| mitted yesterday to Hugh S. johnson
by N. r. AS division administrator,
Arthur D. Whiteside, in partial re-
port on price increases since the Blue
Eagle program began.
Whiteside Urges Study.
Whiteside urged that the waiting
| period" in open price provisions Of
codes-whereby a member of an in
| dustry sets a price and makes it
| public to his competitors or 10 days
before it becomes effective, allowing
powerful firms to put pressure on him
to raise them to their own level-be
suspended from the majority of codes.
He advised, however, that it be al
lowed to continue in few codes for
purposes Of further observation, so
that clinical study may be made
before final conclusions are reached.
The proposal. accompanied by
other important recommendations
resulted from public hearing sew
Of profiteering under N. r. A. dis
closed extensive price fixing by sew
eral industries Behind the COM
plants shaped up a volume of dis
satisfaction which spurred the re-
covery unit into quick corrective
measures
Already johnson has decreed that
no more waiting periods shall be
written into open price listing provi-
sions of codes pending a final deci-
sion, and he has suspended a num-
Der of them during the past two
weeks. Whiteside's new plan would
call for an order of suspension for
virtually all those in the 257 codes
now In effect
Other proposals included:
That abolition Of reasonable cash
discounts" by many groups in the
effort to get rid of unfair discounts
made by many to land orders. is not
advisable, since proper discounts
constituted "a long and widely ac-
knowledged trade custom with sound
justification.
That elimination or reduction of
quantity discounts to universities,
State and city governments and hos
pitals should be reconsidered as many
industries catering to these classes
have been built up on quantity dis
counts amply justified by the eco
| nomics Of mass production"
THAT provisions limiting sales Of
seconds or inferior grades of goods
should be re-examined because,
though aimed at widespread abuses,
they may be inadvisable for three
reasons: Manufacturing processes
which turn out many defective units
would have unduly high cost on first
grade production If all seconds had
to be thrown away; there may be
real demand for second grade in
products easily broken, lost or stolen,
making durability q secondary item;
If quality Standardization can be
adopted so that the customer recog-
nizes the grade purchased there can
be no objection to seconds at lower
prices
Whiteside also concluded that fix
ing cost as the rock-bottom price
may in some instances dictate a
price level higher than the custom
ers should pay and higher than the
industry can maintain In the long
rum"
The report strongly advised that
the Economic Division Of N. r. A. be
put to making a continuing study of
what has happened in industries un-
der N. r. A. and what used to occur
before, with particular attention to
the comparative results of various
types of price rules.
So that this could be done free of
prejudice. he recommended that the
economist staff have no direct con-
tact with the industries investigated,
but be made to deal through routine
N. r. A. organization.
FIRMS PENALIZED