Evening star. [volume] (Washington, D.C.) 1854-1972, 1942-05-24
Ceilings 10 SqueeH
Earnings Sharply,
Magazine Fears
Business Week Says
Wage Increases Will
Add to Troubles
Special Dispatch to The Star.

Special Dispatch to The Star.
NEW YORK, May 23-The head
line news was not the real news this
week, says Business Week today.
Though the Russians battered away
at Kharkov. and the Germans
claimed Kerch, and people in the
Eastern States argued over *
cards and 3D. cards for gasoline
rationing, the big event for business
was that retail price ceilings went
into effect, the magazine states. For
the first time in history, this coun-
try is operating in a price-controlled
economy. And business men every
where are trying to make the best
of this new order.
THE standout fact is that profits
will be squeezed" the magazine
added. The once of Price Admin
istration. this week reasserted that
it will not permit retailers to pass on
higher costs to consumers, that it's
going to hold the retail price line,
even if workers get higher wages.
And William H. Davis, chairman
of the National War Labor Board,
indicated that some boosts event.
ually will be granted. So irresistible
pay increases are bound to push. UP
against an immovable price ceiling
with retailers, wholesalers and
manufacturers profits in between.
Favors Moderation.
Chairman Davis, however, did say
that the NJ w. L. B. would attempt
to keep wage increases down to so
per cent Of the increases in the cost
of living since the last wage adjust
ment. And that puts brake on ris-
ing operating COSTS Also, so far as
feasible. the board will award wage
boosts in War savings bonds. Thus
In theory. the pay advances will not
add directly to the volume of excess
purchasing power floating around.
However, workers with accumu-
lated savings. in the form of Wal
bonds, are apt to expand their nor
NAL expenditures (reduce voluntary
savings so that the effect is likely
to be a rise In spendable income de-
spite the bond device.
Moreover, so far as the manu-
facturer, wholesaler or retailer Is
concerned, 1t makes no difference
whether the payment is in bonds OF
cash. 1t adds to his costs; unless he
can pass the boost along, his profit
and-loss account suffers.
%. P. A. has instituted q new
wrinkle in price administration
When the price ceilings were first
announced retailers talked inces-
sanity of the 'roll-back.' hoping they
would get relief by having the price
squeeze rolled back on wholesalers
and manufacturers. But 0. P. A. has
turned things around. Enter the
roll forward And wholesalers and
retailers get hurt.
Retailers to Be Hurt.
This week o. P. A. permitted
packers of canned vegetables te
raise their prices above the March
ceilings, under the following form
ula: First the packer takes his price
for the first go days of the 1941 pack
to it he may add per cent to COM
penSate for increased operating
costs; then he may add the actua.
increases in raw-materials costs
The net result is that packers can
60 above the ceiling, but wholesalers
and retailers are held to their March
prices. So the squeeze" on margins
rolls forward to retailers. not back
from them.
This roll-forward policy is far
from capricious. The Nations food