Evening star., 1948-07-18

Farm equipment, oil well app
added ptnches. SO Ilender an arti.
Gle ss q needle ,ould drive thu
point home II It's price goes up q,
An indirect result of what the
United States Supreme Court-o,
the United States Steel Corp.-did
Confessional Matter
The situation sizzles with legal
issues certain to explode in Con-
gress next year. A drive has
started TO have the new Congress
allow an industrial price practice
which the Supreme Court last April
said was used for monopoly and in
restraint Of trade in the cement in
dustry. A Senate subcommittee Is
all set for an inquiry into possible
effects on consumer prices.
Mixed in the matter are politics
and social theories. So, too, are
conflicting policies and trends such
as small business VS.. big business,
industrial GENERALIZATION or decen-
tralization, East against West, wages
and employment, railroad rates and
routings, and a multitude Of other
considerations that touch the man
in the street no less than the occu-
pant of a corporation office.
The battle centers Immediately
on the recent action of the United
States Steel Corp. and others in
dropping a system whereby Gus
toners at distance and those near
mills paid the same prices for steel.
Steel companies made this possible
largely by absorbing freight charges,
To Use F. 0. B. System
From now on, unless Congress
specifically legalizes the former
method Of computing prices from
so-called base points, steel plants
will use an fob. system. They
will include all freight costs for de-
liveries.
Thus, customers at a distance will
pay more than those located COM
paratively close to the steel mill. Or,
to put 1t another way, producers will
collect comparatively lower prices,
including freight charges, for de-
liveries in adjacent areas, but they
will not be In as good a position to
compete with mills situated nearer
to distant customers.
The court held, six to one, that
the Cement Institute and II major
concentrating companies combined
illegally to employ a multiple basing
point price system as means OF
bringing about uniform prices and
terms. This, the court stated, vio-
lated Federal Trade Commission
statutes against unfair methods OF
competition, and also the Clayton
Act, as amended by the Robinson
Patman Act, ban on price discrimi-
nation.
Impact on Economy
Interpreting this as outlawing the
multiple basing point system-al-
though some commentators doubt
the court decision went that far
the steel companies announced they
had no alternative other than TO
turn to the fob. mill method.
Repercussions, ramifications and
retaliations were Immediately cited
or threatened. 1t Is too early to
say how far and how fast the steel
induStrys move will spread.
Irrespective OF what others may
do-and General Electric, for in
stance, doesn't propose to drop its
base point pricing-the course taken
by the steel companies could affect
vast segments Of the national
economy.
Steel products are raw materials
for almost 40 per cent OF the coun-
try's industry. They represent a
sizable proportion Of the peoples
earning power. Their prosperity Is
linked to great degree with that
Of railroads, coal mines and key
communities in the United States.
Neither side in this fight has a
pushover. Dire predictions of what
will happen to business and the
cost of living as result of the
high courts stand are matched by
angry charges against big Steel"
Critics assert those companies de-
liberately and without justification
used the tribunals ruling as an
excuse to push prices up still higher
and thus contributed to an inf1a-
tionary spiral.
The basing price system is de-
Tended as economically sound, fair
to every one, and an encouragement
to free enterprise. 1t is just as
vigorously attacked as amounting to
collusion to prevent free competi-
ton.
Subject of Long Debate
1t is easy to see why more heat
than light has been produced to
date. Merits Of the basing- point
system have been debated almost
half a century in industry and by
professional economists as well as
in Congress.
And now the system. intricate at
best, is being suddenly replaced by
an even more complex plan. This
will necessarily lead to pricing. mar
keting and selling revisions which
no current expert dares forecast
with finality.
Defenders of the basing- point sys-
tenn fear the worst and blame the
Supreme Court and the Federal
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