Evening star., 1944-04-09
Low-Price Policy Held Vital
To Maintaining Jobs for ALI
Business Warned Against Postwar Policy of
Taking All Profit Traffic Will Bear,
Thus Cutting Consumption
By Charles g. Ross.

tiOnSh1p. AS mas Deen SHOWN, we cannon
expect the prosperity for which we have
all the elements-natural resources a
highly trained labor force, managerial
skill, the desire of the people for more
and better goods-unless we combine
them In a way that will bring about a
higher general standard of living. To
make our production economy
work we must have mass consumption
Obviously, if the private-enterprise
system Is to survive, prices must yield a
profit. But if profit-taking, through
greed or short-sightedness, is allowed
to run wild-if the only criterion of price
policy is "all the traffic will bear
inevitably the result will be lower con-
sumption and the twin attendant evils
of lower production and lower employ
ment.
The conclusion must be that if our
economy is to produce prosperity and
not stagnation, the gains which industry
makes from improved ways of doing
things must be passed on to the con-
sumer in the form of lower prices.
The mammoth automobile industry of
today, with all it has meant to the
national well-being and to the ultimate
gain in the producers themselves, stems
directly from the low-price policy inau
gurated by Henry Ford.
Housing Offers Opportunity.
On the extreme other hand is housing.
The enormous potentialities of low-cost
housing as a Greater of jobs-as prime
contributor in this and other ways to
the general welfare-win never be real
ized till the restrictive, cost-inflating
practices in the construction industry,
on the part both of capital and of labor,
are ended.
What will be the prevailing practices
of industry after the war remains to
be seen. Meantime, the utterances of
some of its responsible spokesmen in
dicate a growing realization that its
interests are identical with those of
the country as whole and that these
interests can best be served by low
price policy based on full production.
This from the head of the United
States Chamber of Commerce, Eric A.
Johnston, Is typical of what many are
saying:
"Only the wilfully blind can fail to
see that the old-style capitalism of a
primitive freebooting period is gone for
ever. The capitalism of complete lais-
sez-faire, which thrived on low wages
and maximum profits for minimum
turnover. which rejected collective bar
gaining and fought against justified
regulation Of the competitive process, is
q thing of the past. Those who would
turn back the clock of history in this
respect are as unrealistic in their way
rs the addle-brained paper planners of
our economic salvation.
American economy today is gearing
itself for low profits on great turn
over. 80
American economy cannot reject re-
sponsihiilty for the employment and
well-being of the men and women who
take a part In it-those who supply the
raw materials, those who do the manual
labor, those who do the brain work,
those who manage enterprise. 1t must
accept this responsibility as an intrinsic
part of its function.
"The new capitalism " is shedding
the last traces of its nostalgia memory
of unbridled individualism.'
Manufacturers Views.
The National Association of Manufac-
turers has spoken to the same effect on
prices: "The volume of business of new
investment, of physical production, and
hence of employment, is dependent
upon relationships between prices of
goods and services which promote ex-
change of maximum quantities. =
A condition of balanced price relation
ships conducive to high volume OF ex-
change of goods and services is char
acterized by low prices; that is, prices
too low in relation to existing incomes "
The writer is indebted to DR.. Edwin
G. Nourse of the Brookings Institution
for permission to quote from his forth
coming book, Price-Making in a De-
mocracy," the fruit of a five-year study
of the private-enterprise system from
the standpoint of price and production
Policies. He has written a closely knit
argument for low-price policy as the
road to prosperity.
DR.. Nourse says that such statements
as those quoted from Eric Johnston and
the NAM, and similar statements by
other business groups and individuals,
are excellent as far as they go, but he
raises the pertinent question whether
industry is prepared to go beyond the
principle of low margins per unit of
sales (the low profits on a great turn
over" of Eric Johnston's statement and
apply also the principle that "a low
rate of profit on fully and continuously
employed capital is the means of achiev-
ing maximum total earnings in the long
run to the proprietary interest"
In blunter terms, is industry going to
consult its long-run interest or short
sightedly take advantage of conditions
after the war to try for killing?
He has been told by several informed
persons, DR.. Nourse says, that this is
precisely what "a considerable wing of
business opinion" looks forward to doing
after the war, in the professed belief
that there will not be another such
chance for private profits before private
business is taken over by the State"
Warns of Danger.
DR.. Nourse warns of the danger in
herent in this after the deluge" at
titude-and inherent as well in the mere
fact of business confidence in the future