Evening star., 1943-12-01
Philosophy Of Subsidies
Explained in Detail.
70 the Editor OF The Star:

TO the Editor OF The Star:
In the spring and summer Of 1912
those Of US on the operating line at
OPA were given instructions not to use
the word subsidy" At the same time
plans were being made to work out
support prices" compensatory adjust
ments" or any other combination Of
words to mean the same thing as the
term which had been forbidden.
In July OF 1912 I made a trip to Cam
ada to learn what the Wartime Prices
and Trade Board was doing on the
various problems which We had split up
amongst more agencies than could ever
be counted correctly at one time.
Shortly thereafter went on record"
with a memorandum recommending
that OPA come out in the open with
the horrid word subsidy; really ex-
plain Its meaning and use, and ask for
appropriations to be used in specific
ways 50 that all might know the pur-
pose for which definite amounts OF
money were to be spent. I also urged
that we should do this by demonstrating
greater benefit than its cost. The
idea was to break from and reverse the
past efforts to obtain broad, vague
grants Of power which We could then
interpret" according to changing con-
ditions."
But, OF course, that was not done
then. Instead Of sincere attempt at
public information on this vital subject,
OPA merrily Cor rather stormily) went
ahead with unexplained subsidy pro-
grams which finally mustered up enough
opposition to have the House of Repre-
sentatives kill subsidy programs by q
whopping majority.
If the Senate concurs, then that is the
will of the people and must be carried
out regardless of consequences. For the
people have every right to be wrong, If
they want to-. BY which do not mean
to say that full ban on subsidies nec-
essarily is wrong. That depends on the
kind OF economy we wish to have and
the extent we wish to go in preserving
some OF the details of the so-called
American way. And since this appears
to be bit cryptic, 1t should be clarified.
A great deal has been written and
said recently about subsidies. so 1t will
not be necessary to point out the fact
that they are very old devices in Amer
lean history, beginning with the first
tariffs and most notably the mail con-
tracts for carriers. And be it said to
Chester Bowles' credit that he has ex-
planned the value of applying subsidies
at the first stage in any production
process IN order to keep down the final
retail price to the consumer. He has
made clear that nickel at the farm
level may well save the consumer a dime
at the retail store. And either Mr..
BoWles or somebody else has explained
that 1T is cheaper to pay an extra dime
to a few high-cost producers in order
to get out the last bit of needed pro-
ductlon than it is to let the price for
all the production 60 high enough to
let the high-cost producers break even
and SO give us the material nation at
war needs.
Those two illustrations are enough to
set up more or less generally applicable
principles for the use OF subsidies which
perhaps would have the support of the
majority of the people.
Thus the first principle would be that
subsidy would only be applied where
given nxed price Is to be maintained
at retail.
Second, . slhsidy should b paid only