The Bismarck tribune. [volume] (Bismarck, N.D.) 1916-current, 1934-11-16
ECONOMIST TELLS
OF NRA PROBLEMS
UNDER new SETUP
Features Must Be Coordinated,
Unworkable Principles
Discarded

SsVVu N0~uO
Discarded
BY COILS STOCKING
Department Of Economics, New Yor1
University
As the MIRA enters its second phase
the test Of the administration is tina,
Of shaping an inchoate mass Of leg.
lslation and rulings into more
definite and permanent governments
policy. Various features Of the pres.
ent program. must be coordinated
contradictions eliminated, and un'
workable principles discarded.
The task that lies ahead is by nc
means an easy one. During the early
period in which new regulations were
being projected the situation was
fraught with excitement which at
times bordered on hysteria. I'm
ner the circumstances many provi-
sions were slipped in which now ap-
pear to be very questionable II not
utterly untenable. Codes must be re-
vised. But before effective revision
can be accomplished the matter OF
general policy must be determined
Such q definition Of policy hinges
primarily upon the Qualification OF
the three most disputed provisions OF
the present laws. Clause "a, con-
corning the right OF labor to organ
ize, must be interpreted definitely
and finally. The question of price
fixing and the limitation OF output
must be settled.
Minorities Problem
While clause IA quite clearly gives
the laborers the right to be repre-
sented by representatives Of their
cwn choosing, it does not specify Just
what is to be done with minority
groups. The American Federation OF
Labor IS determined that the clause
shall be interpreted so that in labor
disputes, as in political matters, the
majority shall rule for the whole
group. President Roosevelt In con-
nection with the automobile dispute
In February declared that the law
permitted independent representation
Of any number OF groups within any
company or industry. The president
was criticized for this, stand on the
ground that 1t robbed the law OF its
effectiveness and spirit. In Septem-
Der the National Labor Relations
board very definitely reversed the
presidents earlier position and in the
Houde Engineering Corporation case
held that the majority had the right
to negotiate for all laborers. The
Houde Corporation has refused to
abide the boards decision and the
department Of justice has declared
its intention to prosecute.
With regard to price fixing, 70 per
cent Of the codes approved include
some type Of minimum price fixing
provisions. In general such provi-
sions have been opposed by the Con-
sumers' Advisory board on the ground
that minimum price fixing tends to
establish monopolistic conditions to
the detriment OF the consumer. Many
Of the members OF industry who were
responsible for the price provisions
are now inclined to doubt their wis
dom. Heretofore our experience with
price fixing has been confined pri-
marily to the regulation Of public util-
ity prices. Such price fixing has been
based upon IN entirely different prin-
ciple from that involved In the codes
r. connection with public utility reg
ulations emphasis has been placed
upon maximum and not minimum
prices. These maximum prices are
supposed to be determined in the
light Of the broad social interest OF
al concerned. The principle in
volved may be stated as the fixing Of
- price which will insure efficient
service at the lowest possible figure
consistent with fair return to the
supplierS Of the service"
Protects Inefficiency
The minimum price fixing Of the
codes. instead Of protecting the in
terest Of all concerned. has tended
to protect the inefficient producers
against the comparatively lower prices
Of the efficient producer. On this and
similar grounds the price fixing pro-
visions have been denounced by some
o. the Code Administrators and have
been declared to be unenforceable
Where they have been enforced the
effects have been to freeze industry
1t fractional capacity. t. further un-
employment, and to tax the consumer
IN the form OF higher prices.
With yoyorA - 1,e4;kctS@n ~..l~A
IS per cent Of the codes fix q limit
TO the numcer Of hours that machines
may be operated, and few codes e
70 the extreme OF limiting the install.
latton Of new machinery. The lin
itation Of machine hours IS q logical
corollary Of price fixing provision,
and has worked out With the same
o. similar undesirable results. Many
glazing examples Of this fact are ia
be found in the textile industry. A
small efficiently operated plant may
find that It has orders enough te
enable it to operate It's machine.
continuously. A limitation upon thu
number Of hours that the machines
may b operated means that such q
concern Is unable to fill all its order,
ana must discharge some Of it's ma.
chine tenders. The lost business /,
captured by the over-equipped plant
which. because Of code provisions, i
able to operate machines which woult
otherwise be idle. Such q polio,
does not necessarily result In any mel
increase In production or employ.
meut.
There are probably no features o.
the MIRA which engage the attention
of Official bodies in Washington more
than the ones here discussed. TIT
conclusions which these officia
bodies reach concerning these matter,
viii 90 far IN determining the futur.
q the MIRA. What these conclu.
GionS are to be Is indicated by a.
examination and analysis OF previou.
decisions and recommendations.
price Fixing Opposed