Evening star., 1942-05-31
More Rationinq
Foreseen Under
Control
Research Institute
Warns Business of
Vast Changes
Special Dispatch TO The Star.

Special Dispatch to The Star.
NEW YORK, May 30.-That busi-
ness patterns while the war lasts
will be sharply changed by price
control regulations and that what
happens to price itself should be
regarded as only symptom, so to
speak, Of tremendous alterations In
our economy Is made clear by a
150-page analysis published by Re-
search Institute of America.
Titled simply Price Control" this
is said to be the first full-scale
analysis of the subject to appear
since the general maximum price
regulation was issued by OPA at
the end Of April.
Your labels, your grades, your
contracts. the margins you allow
your distributors. your accounting
and inventory methods, your for
ward commitments, your method of
costing. estimating and pricing must
be checked against OPA require
mentS," 1t points out.
1t terms the price control act "the
most far-reaching of all economic
legislation ever enacted in this
country"
Henderson Urges Study.
In a foreword to the Institute
publication, Price Administrator
Leon Henderson calls price control
"the main line of defense against
imitation" He warns that action al
ready taken affects every individual
in the country, and advises:
"It is important that every busi-
ness man become familiar with the
general pattern OF price control and
know the details of 1t as 1t applies
to his particular business Not
only his business existence, but the
existence of our free American way
OF life may depend on his under
standing and cooperation"
Price control means trade prac-
tice control and 1t inevitably leads
to further rationing of goods and
services, in the opinion of Research
Institute.
Price is not only expressed In
dollar terms" emphasizes the report.
The price of a commodity is
composite Of credit terms, discount
terms, freight charges, quality speci-
flcations, service charges and SIM
liar trade practices. Thus, price
control quickly becomes trade prac-
tice control and quality control"
As to the relationship between
price control and rationing, it states:
Because price control and rationing
are so intimately linked, both are
administered by OPA. One of the
clearest lessons of British experience
is that price control does not work
without rationing and that ration
ing does not work without price con-
troll The need for rationing
and the need for price control both
arise out of the same combination
OF limited supply and active de-
mand.
In the absence Of price control,
scarce commodities go to those who
are willing to pay the highest price.
When price control eliminates this
method Of channeling goods to con-
sumers some other method Of ef-
fecting distribution becomes neces-
sary; that method iSrationing. -
Rationing Speeded.
The general freeze will accelerate
the trend toward rationing OF most
consumer goods. General ceilings
on goods sold at retail means that
the price can no longer of itself
work as . rationing device, by d.
recting goods to the higher bidder.
Thus, where q scarcity exists. OPA
will have to ration so that sudicient
amounts get around to everybody or
In order to distribute commodities to
persons who need them most. Ra-
tioning will also be used to relieve
pressure on prices"
1t is the opinion Of the institute
experts that non-essential and lux
ury goods will, for the most part, be
permitted to go to the highest bid
der. They further hold that it Is
not enough for the business man
simply to keep himself informed of
the literal contents OF price con-
troll orders which apply to him.
The broad aspects of imitation
control should not be overlooked in
charting business plans" according
to this authority. The effort to
absorb excess purchasing power by
stimulating production of civilian
goods not competing with war pro-
duction, and by stimulating amuse-
ment and other service activity, may
present business opportunities.
The effort to syphon OF purchas-
ing power with high taxes and COM
pulsory savings may dry up mar
kets, make credit risks shaky, place
a premium on low-cost items, make
top-heavy inventories unwise. etc.
Rationing may make it desirable to
concentrate on quality articles and
key overhead expense to lower
volume"