Evening star., 1943-06-17
0PA Move 10 Control
Industry by Curb
On Profits Charged
Smith Committee Counsel
Says Ginsbure's Files
Disclosed Policy
Continued From First Page J

with regard to profits is that the
act does not confer upon the ad-
ministrator any direct authority to
control proflts-rather, than such
restraint on profits as the admins
traitor exercises through price con-
troll is Incidental to and inseparable
from price control itself.
The requirement that maximum
prices be fair and equitable has been
interpreted not as a directive to re-
duce profits to reasonable levels,
but as a limitation upon the admin
lstrator's powers to establish max
imum prices. Specifically, we have
interpreted the act to require that
!. With regard to prices that have
not risen since October l, 1910, the
administrator may not reduce the
price, even though he deems the
profits in the production of the
commodity to be unreasonably high ::
2. With regard to prices that have
risen since october l, 1910, he may
not, in establishing maximum
prices, reduce the price below a
level which permits of profits equal.
apart from speculative conditions,
to those prevailing in October, 1910,
or the months Immediately follow
ing, even though he deems those
profits excessive, and
3. That to be generally fair and
equitable. a price must be high
enough to permit the producers of
the bulk of the product affected
to enjoy reasonable profits, and the
administrator may not. therefore.
establish a maximum price which
does not permit of such profits.
The executive order (925O) verv
definitely alters our powers and
extends them. The administrator
may establish prices which directly
reduce earnings to levels which he
deems reasonable-in fact, he is di-
rected to do so. This raises the
question whether prices should be
cut back, industry by industry. so as
to reduce profits to the level which
we have, up to this point, regarded
as reasonable, or to some other level
which would be defined as reasona-
BILE in the light of the executive
order"
Brown Denies Charges.
Replying TO Mr.. Aliens charge.
Henry Hart, jr., of the OPA legal
stan, read a statement prepared by
Price Administrator Brown, which
declared his Office has no program
with respect to the reduction of
profits"
The office. the statement said has
been granted no authority by the
Congress to control the profits of
concerns. 1t has not been
directed by the President to do so.
1t has never sought to do. In the
very nature of the case, it would
not be able TO do So"
The statement further declared
profits OF individual companies may
be controlled by the ''renegotiation
OF contracts or by taxation"
Insofar as profits are the governing
criterion IN reducing maximum
prices" the statement said, the OPA
is guided by the profit margin real
lied during the year prior to October
!. l94l. Whenever industry-wide
profits have risen so far that they
a larger margin on the
sales dollar than they did before
Pearl Harbor, it will normally be
found that such proof are so un-
reasonable and eXorbitant that the
price ceiling which permit them have
ceased to be generally fair and
equitable"
In taking this position, the Office
does not question the relatively high
margins of profit enjoyed by many
before the war. It is con-
cerned only with the increases in
those margins that have occurred
during the war. Nor has the Office
sought to prevent increases in
profits. Its policy permits indus
tries to realize an increase in profit
which is proportionate to its in
crease IN sales. an increase in aggre-
gate profits, and an increase in re-
turn on investment. But it does
not permit an industry to employ
the abnormal circumstances of war
AS an opportunity so to widen it's
margins that it may enjoy and in
crease in profits which is more
man proportionate to its increase
in sales"
Profits Taken Into Account.
The OPA, according to the state
ment must establish and maintain
its ceilings at levels which do not
involve discrimination between diff
terent industries"
The Office" it said, has ALWAYS
taken profits into account in deter
whether maximum prices will
be increased where costs have risen
and in determining how large an In
crease will be made. 1t must also take
profits into account in determining
whether maximum prices will be re-
duced where costs have declined"
The OPA policy, the statement
also declared, is not only of profit
CONTROL but on the contrary "a
element in a program of
price control"
1T is designed" the statement
said, not to regulate in detail the
income of the owners of industry,
but to prevent imitation. It's pur-
pose is not to attack private profit,
but to preserve for the postwar Pc
riod an economic structure in which
production for private profit will
continue to be the handspring of
economic progress"