Evening star., 1935-10-02
CODES REvAMP|NG
IS FORWARD STEP.
Harmonious Business Pacts
Form True Basis of
Recovery.
BY DAVID LAWRENCE.

By DAVID LAWhkNCE.
Obscured by the formal language Of
executive orders and legal phrases, the
announcement by the White House of
action to reorganize the codes Of fair
competition Is perhaps the most i'm
portant President Roosevelt has taken
since the national industrial recovery
act was declared unconstitutional.
And because the step is in the right
direction and affords an opportunity
to stabilize competition in many in
dustries, praise for the undertaking
must be coupled with q warning not
to expect too much from the plan until
1t has had at least two or three years
In which to operate.
Many persons, including this corre-
spondent, began in the Autumn of
1888 to point out that the system Of
compulsory codes was not only uncon-
stitutional but that the price-fixin
features were uneconomic as well as
in conflict with the spirit and letter
Of our laws against monopolies.
Commission Proper Agency.
Al was ncoCl OCd LAlCAI tllnJ IAIC INCW
Deal had encompaSsed too much In
It's plan to stabilize competition and
that it was running the risk of losing
by confusion Of method and purpose
much of what had been gained over a
period of 20 years in developing fair
trade practices through the Federal
Trade Commission originally set up by
President Wilson.
The suggestion was made in 1888,
and repeated periodically throughout
1894 and 1885, that the logical agency
to handle the whole subject was not
the loosely built and inexperienced
N. r. A., but the Federal Trade Com
mission. and that Mr. Roosevelt had
the power by simple executive order
to delegate the task to the Trade Com
mission.
Mr.. Roosevelt now has done this and
deserves to be commended for taking
the action. belated though 1t is. His
move marks a signal victory for con-
structive criticism and proves that in
q democracy dissenting voices are often
useful in shaping public policy and
that 1t is harmful to 'yes" the Presi-
dent just because 1t may be unpopular
at the moment to do otherwise.
Just what is involved In the Presi-
dents executive order will not be ap-
parent for many months, till busi-
nesses and industries become familiar
with the great advantages and oppor-
tunities that are opened up by the new
procedure and until they learn just
how to adapt their own situations to
the requirements of the voluntary code
scheme.
No Boycotts Involved.
First Of all. the plan is voluntary.
Nobody is compelled to go to the Trade
Commission. There Is no boycott or
legalized intimidation.
Secondly, the members of an indus
try or group who do go before the
Trade Commission do not get i'm
munlty from antitrust prosecution as
a monopoly or price-fxing combina-
ton. and they do not deserve it.
Third. the industry which proposes
voluntary code does, however, get
immunity from being prosecuted as a
combination in restraint of trade when
it seeks only to eliminate practices that
are unfair. that are wasteful. that
mean ruinouS competition.
To put 1t another way, what has
Just happened under Mr.. Roosevelt's
order Is something for which friends OF
revision Of our antitrust laws have
been clamoring for many years.
chance To see the Government render
Affirmative help in getting industries
| organized for cooperative effort, in
stead Of sitting back and applying
negative restraints in the form Of Law
suits. actual or threatened
The antitrust laws have ever since
1890 been left to the courts alone tc
interpret and really to administer. The
decisions revealed, however, q gradu.
ally increasing area permitted by the
courts to businesses that wished to act
comparatively. 1t is cumbersome and
time-consuming, nevertheless. to wait
for law suits to perform the functions
Of an administrative tribunal. So, ir
the Federal Trade Commission we now
have at last what President Wilson
designed 1t to be-an administrative
body, quasi judicial in its attitude as
between conflicting interests and q
mediative agency with which industry
can sit down and work out its prob.
lens as they touch the laws of COM
petition.
N. r. A. Went Too Far.
How does this differ from the
N. r. A.? The latter was not safe
guarded with provisions for proper
hearings and careful procedure, nor
did 1t frown upon price-fixing As. a
matter of fact, N. r. A. tried to do
too much and to force in industries by
compulsory action or by Blue Eagle
coercion what actually there was no
Federal right to do. The N. r. A.
defied the laws of economics and sur
rendered to the emotionalism of a
crusade for purchasing power arti-
ficially raised.
A voluntary pact is a different thing.
The units In an industry which stay
out Of the combination will find them
selves arrayed against larger units
which will be able to produce goods
at lower costs-through the elimina-
ton of waste in certain phases of COM
petition-and thus in the end the CODE
governed group will enjoy advantages
in the sale Of goods that may eventu-
ally drive the recalcitrant or minority
group into the code as q matter of
self protection.
The danger Is that the public may
refuse to pay the high price and may
turn to substitutes. Hence, considera-
ton of labor provisions, insofar as they
relate to maximum hours, turn usually
upon rates per hour, and this requires
caution lest the N. r. A. blunders be
repeated. The drive must be for higher
volume at less cost rather than smaller
volume, limited output and higher
costs.
The N. r. A. had as its main OBJ
jective increasing wages without re-
gard to the final cost TO the consumer.
The consumers groups and their