Detroit evening times. (Detroit, Mich) 1921-1958, 1941-02-21
BY HUGH S. JOHNSON

ONE of the principal causes of
" war time shortages and sky
rocketing prices is the fear of
them. The manager of any com-
pany making finished goods out
OF raw materials is responsible
for continuous supply.
If he sees ahead what seems
TO be a period of scant material
and rising prices, he not only
covers" by buying for his usual
output for six months or maybe
a year. but he goes as far
beyond that as his resources will
permit.
This is good business" from
ev = angle. 1t is good specu-
lative risk from the angle of
probable rising prices. 1t is good
insurance against possible future
shut-downs or delays due to
inability to get materials later.
Finally there is a temptation
even to borrow money to in
crease stock piles and inven-
tories to abnormal size. A period
of price initiation is a good time
to owe money and to own
things.
THE combination of all these
l. reasons is almost irresistible.
Apply them TO all the thousands
of business concerns. big and
little, and you have a tremen-
douS national force working
everywhere TO create the very
condition of fear which has
caused il.
Part of these reasons work
In the same direction for all
individuals and for the great
war purchasing government de-
partments. All people like to
buy while they "can get the
stuff and before the price rises"
An officer in charge of an
arsenal or navy yard turning
out munitions has really
dreadful responsibility for pro-
ducing on or ahead of time and
in quantity. He. too, fears the
delays that future shortages
may cause and. to the extent of
his powers. will overstate his
requirements and build up his
inventories.
OF COURSE. this is a form Of
~ boarding" which is a war
time word OF evil omen. 1t is
truly evil because the certain
result of these practices is soar
ing prices, to the detriment of
the whole nation and sometimes
with result of complete Geo.
nomic collapse and disaster.
1t is impossible to believe
that Just this process is not
getting under way at this mo-
ment. There are indications
that the reported or feared
shortages in aluminium are
partly due to these causes.
That some people fbut not
this writer fear of our capacity
TO produce our requirements of
steel stems from the unusually
heavy orders on the mills.
These. in turn. are not 10 be
completely accounted for by any
increase yet experienced an the
reported output Of finished steel
products. II is probable that the
stock pile of every fabricator Of
steel products is rapidly in
creasing.
In all ordinary prudence this
Is tendency that must be con-
trolled, and controlled at its
beginning before the harm is
done. There is only one author
ity that can do it and that is
the federal government.
THIS column has continuously
Il argued against Capitalization
of federal power, but in war
economy some Capitalization is
necessary in the public interest.
In the haste to get the defense
program through the Legisla-
ture. not enough attention has
been given to this phase.
We need simpler and more
direct emergency statuatory
authority TO control price.
priority and increasing inven-
tories. This is a subject that
should have the immediate
attention of Congress-exen be-
fore tax legislation.
We could lose more through
price initiation in year than
increased taxes could recover in