Evening star., 1942-05-04
.0.P. A. Will Subsidize
Plants Rather Than Lei
Price Ceilings Crack
Costs to Be Controlled
For RetoiI Buyer at All
Hazards, Foinsod Says

The ONCE of Price Administra-
tion will grant subsidies to manu-
facturers rather than permit rup-
ture of the price ceiling for any
article, it was revealed yesterday.
DR.. Merle Fainsod, administrator
of o. p AS Retail Trade and Serv-
ices Division, said the subsidies will
be granted when production costs
do not otherwise permit price cuts
ordered by o. P. A. to prevent in
flation.
On two items-sugar and coal sold
in North Atlantic States-subsidies
to meet increased transportation
costs are in effect or now being
arranged.
In two broad fields-clothing and
canned fruits and vegetables-sub-
sides are under serious study be-
cause of higher raw materials costs.
Not a Pie Counter.
o. P. A officials made it clear,
however, that they would be chary
of any general handouts. One off,
cial indicated that industries which
have enjoyed substantial profit mar
gins in recent years would be re-
quired to Give on their fat" for a
time and increased costs of pro-
duction will have to be absorbed all
along the distribution line through
pairing profits of the retailer, whole
saler, jobber and manufacturer.
The prevailing o. P. A. view was
that such aid would be given on an
industry-wide rather than factory
by-factory basis; that o. P. A. does
not propose to help the inefficient
manufacturer if other firms in his
field are doing nicely.
1t was thought likely funds for
such subsidies would be supplied by
Reconstruction Finance Corp, its
subsidiary agencies, or possibly a
new r. F. c. agency.
During discussion of the recently
issued maximum price regulation
before the National Shoe Retailers
Association in New York, the Asso-
ciated Press reported, Dr. Fainsod
said
I'VE have had to move quickly,
and I say frankly that we don't
have all the answers. Universal
price control is an au-out war
measure to meet very grave con-
dition. Believe me, it will be worked
out with a minimum of hardship"
Quick Action Necessary.
Price control Is the core of the
Government program to stop infla-
tion," he went on. ''In instances
where a fixed maximum price will
not give an industry or a group OF
the industry a sufficient margin,
even after all frilis and waste and
non-essential methods are elimi-
mated, the Government will make
subsidy to the manufacturer. How
ever, these subsidies will not neces-
sarily permit the continuance Of the
same margin as usual or peacetime
profits.
Prices to Be Maintained.
"At all costs, marked prices will
be maintained. Whatever ADJUST
ments are necessary will be made
within the framework OF those
prices. =
We know that realignment Will
be necessary. We want the retailer
and the manufacturer to come to us
with their problem, and in this way
we will be able to take supple
mentary action and make refine
ments."
The 35-year-old former Harvard
professor asserted that price control
was essential if disastrous imitation
was to be avoided.
Moreover" he said, "it is the one
phase of the war effort that has an
immediate and direct bearing upon
the day to day lives of each and
every individual in the Nation. And
to successfully prosecute the war,
to safeguard our economic functions
that may outlast the war, this now
unified effort to wipe out excess
consumer buying and to hold prices
to sane level is indeed vital"