Detroit evening times. (Detroit, Mich) 1921-1958, 1941-12-12
Price-Fixinq
Board Seen
As Necessity
House Bill Restricts
Power TO Buy, Sell

L is dry subject, but / am
going TO keep harping on il at
the risk of boring my readers
until l am licked. / sincerely
believe that price stability is
vital to the effective mobiliza-
ton OF our resources for de-
Tense.
Recently I discussed the adj
visibility of setting up a price
fixing board representative of
the great demand agencies, con-
sumner supply army. navy, mari
time commission and. perhaps,
treasury and lend-lease. Such a
board should insure an apprecia-
ton of the important interrela-
tionship of PRICE and SUPPLY.
The original bill authorized
the President to buy and sell
any commodity upon such
terms as he shall deem neces-
sary 10 obtain the maximum
necessary production of margi-
nal or high-cost producers, or
to prevent price increases incon-
istent with the purposes. of this
act"
The House bill restricts the
power to buy and sell in order
TO obtain the production of
Marginal or high-cost pro-
ducers."
Two points are here involved,
whether the power is adequate
and what is the appropriate
agency TO exercise such power.
Some power is clearly required.
Whenever prices are fixed a
highly probable result is that
some possible additional output
must be foregone. This is a
simple consequence of the fact
that output varies with costs.
IN SOME instances the pos
L sible addition 10 output is
negligible. In other cases it
may be large but unimportant.
But, in a complex system such
as ours. there are many in
stances where a significant ado.-
ton TO output can be made at a
higher cost.
In still other instances a
small but crucially important
addition 10 the military pro-
gram may be made.
In many cases 1t is unwiSe 10
fix a price high enough TO bring
out maximum output which
would merely result in windfall
gains TO many producers. This
procedure was on occasion fol-
lowed in the World War.
The result in the case OF steel
was a price high enough 10 cover
Bethlehem, which was then a
high cost producer-mainly be-
cause of the cost of its ore sup
plies and considerably higher
than was necessary for other
producers.
The present bill provides
ample authority for such cases.
In the Bethlehem case the gov
eminent could have bought and
delivered the ore and thus
avoided the necessity of fixing
a special price for the steel pro-
duced by Bethlehem.
CUPPOSE the government
~ wished 10 buy up the entire
supply OF some material at
fixed price and after taking the
amount necessary for defense,
sell the residual for what it
would bring.
In many cases this would pro-
vide convenient method OF pre-
venting profiteering W hout
introducing elaborate and cum
bersome rationing by ALLEGATION.
1t is doubtful whether the
more general power 10 buy and
sell in order 10 prevent price in
creaSes inconsistent with the OBJ
iectives of the bill. is either
desirable or necessary.
Whether the power 10 buy
and sell should rest in this or
that agency is an open ques-
ton. An agency set up to fix
prices certainly would not be APP
propriate for this type of work.
The RFC defense corpora
tons and the procurement serv-
ices appear TO be the logical
agencies.
1t appears 10 me. however,
that Jesse Jones corporations
and the procurement services
have shown reluctance 10 buy
high-coSt output. because il
looks bad" on the books.
Perhaps a proper solution is
10 have the price administration
decide when and how much 10
buy and 10 have the existing
agencies carry out the decision.
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