Evening star. [volume] (Washington, D.C.) 1854-1972, 1941-05-27
By JAMES FREE.


It Is Leon Henderson's job to pre-
vent repetition Of the imitation that
boosted this country's expenses
during the World War by about
$4,000, 100000.
And Mr.. Henderson believes that
the record of the first year of de-
Tense effort indicates that the task
Of keeping prices down can be &C
complished.
In the 12-month period, the ad-
ministrator of the Office of Price
Administration and Civilian Supply
has pointed out, the Nations indus
trial production as measured by the
Federal Reserve Boards index has
jumped from around lis to 145-one
of the most rapid increases on
record.
Living Costs Up Per Cent.
"Ordinarily, when the level OF
business activity rises sharply" Mr..
Henderson said, wholesale prices
and the cost of living tend to show
similar rising tendencies. - Yet,
despite this marked upswing in the
past year, the cost of living as meas
ured by the Bureau of Labor Sta
tistics has risen only about per
cent for the country as a whole and
wholesale prices have gained only
about 7 per cent.
These price increases are much
smaller than those registered during
the comparable period of our World
War armament effort. And the rec
ord over the past year indicates that
we can do much to avoid the sort
of imitation we had during the World
War"
Where shortages have developed
because of defense production re-
quirements and production could not
be stepped up fast enough to meet
the increased need, it has been
necessary to establish maximum
prices or ceilings"
Commodities Under Control.
This has been done on used ma
chine tools, aluminium scrap, zinc
scrap, scrap iron and steel. steel and
combed cotton yarn. Prices were
fixed on soft coal during the APP
palachian coal strike, but were re-
scinded when the strike was term
mated.
In addition, Mr.. Henderson has
issued warnings several times con-
corning prices of other commodities,
such as farm equipment and copper
and brass ingot. On other occasions
he has asked cooperation of private
industry in holding prices at present
or suggested levels. Yesterday, for
example, he requested producers and
distributors of ammonium sulfate,
an important chemical in manufac-
ture of fertilizer, to maintain cur
rent price levels.
Mr.. Henderson explains that his
philosophy, or objective, in fixing
prices, is to minimize increases in
manufactured or northumberland
goods by stopping unjustifled price
increases on raw materials.
Would Raise Costs.
eff we permitted prices to run on
at q time when supply could not be
increased rapidly" he said, "a COM
petitive bidding situation would de-
velop. This would bring windfall
profits to producers, but it would
raise costs not only to the Govern
ment for the products needed for
defense but also for all types OF
civilian goods using these essential
raw materials. Sharply rising prices
might in themselves be sufficient to
touch off an inflationary spiral with
all the dangers inherent in such q
condition"
Mr.. Henderson insists that price
ceiling does not preclude an in
dustry's right to earn a fair return
on its invested capital. All price
schedules have relief clauses pro-
tecting Arms from undue hardship,
he added, and in come cases cost
studies have been undertaken to
determine effects of ceiling prices
on operating results.
Besides price fixing, Mr.. Hender-
sons Office Is charged with respon-
Sibility for:
A. Stimulation of supplies Of ma
Eerials and commodities for civilian
use, once military needs have been
met.
B. Seeking equitable distribution
among competing civilian groups of
materials and commodities not
needed for military purposes. And,
G. Protection of consumer in
terests.
In the months to come, defense
officials believe, Mr.. Henderson's
Office will assume more and more
important role in the preparedness
program.