Evening star., 1946-04-11
Time Limit on OPA
Urged on Congress
Writer Says Basic Principles
Should Be in Final Bill
BY David Laurence


Controversy over whether the OPA
should have an extension of its au-
thority for year has boiled down to
the question of when controls will be
lifted from prices.
The pressure to have all OPA au-
thority end now comes largely from
those who feel there has been an abuse
OF power and that the grant of a fur
ther sanction will lead to greater abuse.
In answer, the defenders of OPA in
sist their sole object is to prevent run
away imitation and the skyrocketing OF
living figures.
Congress is ready to grant an ex-
tension, but there are some basic prin-
ciples which undoubtedly will be writ
ten into the final bill before it becomes
law.
One of these is that when production
catches up with supply there is no
further need for price control.
Simple Fundamentals.
If price control continues long after
supply and demand have been balanced
and surplus is available, then it could
mean desire on the part of bureauc-
racy to hold on to the authority for rea-
sons which have nothing to do with
imitation but which have everything to
do with profit control.
The free competitive system contem-
plates that prices shall be made by the
people and not by the Government. The
people decide to refrain from buying
when prices are too high or they buy
products of lesser price if they think
the quality is adequate for their pur-
poses. Or else the producers try to in
duce larger and larger quantity Of
sales by reducing prices whenever they
can find efficient means of producing
at less cost. These are the simple fun
damentals of American pricing Gus
toms.
The OPA goes on the assumption
that the Government knows Just what
the price shall be and how much profit
shall be permitted. For a long while,
it was vehemently denied that the OPA
exercised any form of profit control, but
1t is apparent now that if costs rise
as the recent increases in wages brought
such rise-the amount of the in
creased cost must come either from the
public in the form of higher prices or
from the profits of the producer. The
OPA, therefore, has much to say about
profit control and is getting to be
competitor of the Treasury Department,
which this year is a 38 per cent partner
in American business-this being the
rate of income taxes on corporations.
Factor of Shortages.
When the OPA cuts down the price,
it reduces the net income on which busi-
ness earns its profits and there is a
correspondingly smaller amount avail
able to the Treasury for taxes. The
saving to the public on price control is
usually advanced as the other side Of
the case. But the inconvenience suf-
fered by the public due to UNDER
production and shortages also are
factors that must be taken into con-
sideration where the price system IS
impaired.
There can be no doubt that many
products are not being produced of as
high quality because price control sub
tracts the profit too substantially. There
Is no doubt also that there is no incen-
tive to quicker production as long as the
incentive to management is cut down,
and quantity production is difficult any
way because of bottlenecks in securing
raw materials or related articles.
Price control is compatible with free
competitive system. Only the after
math of the war justifies continuation
OF certain controls. So long as selected
controls are continued, the problem of
when even these should be lifted comes
finally to the question of when prices
shall be permitted to seek their own
levels. The cost of living not only can
be kept from rising but it can be re-
duced if quantity production is en-
couraged and artificial shortages in
materials or related products needed in
manufacture are not created by the &C
tion OF the governmental machine.
Price controls will be continued in GER
tain categories, but business would be
stimulated considerably if the Con-
gress fatty wrote into the measure the
proviso that as soon as demand catches
up to supply in each category there shall
be no further controls.
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