Evening star. [volume] (Washington, D.C.) 1854-1972, 1935-06-10
VOLUNTARY n. R. A..
PLAN IS SNAGGED'
Extent to Which Business
Can Make Agreement
Is Question.
BY DAVID LAWRENCE.

with the United States Government
to preserve certain standards of hours
and wages and in return get the privl-
lege of agreeing among themselves to
fix prices and, If necessary, limit out
put?
This broad question underlies the
snag that the proposed extension OF
an abbreviated N. R. A. has encoun-
tered in Congress and is almost as
fundamental from an economic stand
point as the Supreme Court decision
In the Schecter case was basic from a
constitutional viewpoint.
Behind the scenes working with this
problem in the utmost secrecy has
been for several days a committee of
the so-called Roper council. whose
official name is Business and Advisory
Council of the Department OF Com
merce. President Roosevelt sent word
to the Roper council a week ago that
he wanted plan or program sug-
eested
One Central Idea.
All sorts of plans have been under
consideration, but there is one central
idea. which has not yet been placed
before the Roper councils full men,
bership, and which touches vitality the
theory of voluntary acceptance oy
American business and industry OF a
certain measure of Federal control.
If the step is taken voluntarily. OF
course, the constitutional difficulties
disappear. and the only question aris-
ing then is how to make the arrange
ment effective, particularly as TO those
units in a given industry which refuse
to enter into the pact
It is within the power OF Congress
to regulate commerce by forbidding
trusts or monopolies or restraints OF
trade. 1t is, therefore, within the
power of Congress to make exemptions
from the antitrust laws. as has been
done repeatedly in the case OF labor
unions and farm organizations OF a
cooperative character.
The present discussion centers
around the idea of swap whereby
industrial groups will agree to certain
Federal proposals and will be giver
certain privileges in return. The vague
wording of the resolution to extend
the N. r. A. for nine months would
seem to permit the President to sane
ton such agreements.
.. Question Of Economic Effects.
So with the question of legal valid
fly disposed of. the question turns te
economic effects. The Roosevelt ad-
ministration. being interested in curry
ing favor with labor unions. Is. Of
course, going to insist that any who
sign the voluntary agreements must
put themselves under the authority Of
boards or tribunals regulating hours
wages and working conditions.
But what would industry get ou'
Of it? Obviously. a privilege thai
virtually amounts to monopoly. First
If antitrust law exemptions are made
possible. then concerted activities or
the part of producers to Ak prices, u
limit output, to discriminate with ref
erence to competitors, all become ar
advantage which the group submitting
itself to such a program would enjoy
over a group that does not come into
the plan.
The Government. on its part. could
withhold Government contracts from
producers who didn't accept the vol
untary plan and by other indirect
methods compel adherence. Also
there is talk of using the taxing power
to impose penalties on those who re-
train from the voluntary plan.
Consumer Pays for All.
What is the effect on the consumer
He pays for it all. He pays for the
higher prices, he pays for the ineffl-
ency of the high cost members OF
the voluntary group, who. of course
want a price high enough to protect
their ineff1ciency. and he pays for the
enormous profits which the low-cost
producer in any such voluntary group
makes because the price fixed has te
be high enough to take care of high
cost units
This kind OF economics has been a,
the heart of the NJ r. A. from the
beginning. 1t has been denounced
by such disinterested agencies as the
Brookings Institution as a barrier
rather than an aid to recovery. As
for those business men who want it
some of them are willing to exchange
anything for a chance to make profits
without the necessity of fierce compe-
tition. They. of course. would be
glad to shorten hours, pay high rates
of wages and satisfy almost any de-
msnd of labor. provided they can pass
the buck to the consumer who In
some Instances cannot get substi-
tute and hence is forced to pay a
higher price
Buyers Strike.
What the sponsors of the theory
forget, on the other hand. Is that
buyers have a way of striking and
doing without things that 60 too high
In price and that they also f1nd sub
stitutes that are cheaper, SO that I'M
less all products that compete with a
given group of producers are also I'M
der voluntary control the scheme
collapses.
Members OF Congress are girdine
for the fray this week. Men like
Senators Borah and Nye have been
fighting the N. r. A. for. more than
q year on the ground that 1t means
the extinguishing of small businesses
and the encouragement of monopoly
but those Senators have never had
the opportunity to get so clear and
convincing case of how monopoly
is encouraged than in the plans being
discussed to waive antitrust laws in
exchange for the granting of certain
concessions Of political or social
character sought by the administra-
ton 50 as to vindicate its N. r. A
philosophy.
The administration, on the Other
hand, probably will get the power II
wants from Congress and then If the
whole thing doesn't work the business
men who conceived it will be blamed
as the selfish" and "monopolistic'
groups who broke it down.
tCopyrieht. 1850
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