Evening star., 1948-07-18

continues with steel in great de.
mand and short supply, plants viii
lose neither production nor earn.
ings. But later, the industry pre-.
diets. this is what may happen un.
der the fob. mill method:
Major dislocations and confusion
will occur In the steel industry and
the general economic picture. Large
investors will be harmed and pros
pective investments will be discour-
aged. Some small plants will be
driven to the wall. Industrial steel
users, by being forced to shop
around. will have to spend more
money and can't count on getting
as much steel.
The steel industry cannot decen-
tralize to any considerable extent
because it must be near raw mate
rials. II anything, steel using man
ufacturers will move toward steel
centers, thus intensifying centrali-
zation, housing problems and other
community conditions.
The whole set up will give a grand
opening for gouging the steel in
dustry as well as the public.
Railroads, particularly the Penn
sylvania, Baltimore s Ohio and New
York Central, will be most severely
affected. The building industry is
bothered not merely by the prospect
OF higher costs in structural steel
and radiators, but by uncertainty
whether other industrial suppliers
will follow the lead of the steel
companies and set up new pricing
patterns.
May Start Hoardins
The new move may launch o
ouying and boarding wave. 1t may
increase warehouse costs. What it
might do to wages, employment and
cost OF living all along the line
Is anybody's guess, and the base
pointers have carloads of gloomy
guesses.
According to foes of the basing-
point system-and all they say it
implies-its doubtful" efficiency
and economy are nulliied by its
use as an instrument of monopoly
Here Is what they say:
1t has retarded the logical" in
dustrial development of the country
as whole. Its abandonment will
be a boon to the industrial win
ming of the West and South, with
out hurting the East.
AS for the East, such produc-
ton sites as the Sparrows Point
Md, plant of the Bethlehem Steel
co. will supply fabricators In Phila :
delphia and nearby cities more
cheaply than has been done from
Pittsburgh.
That is the sort of decentraliza
ton that can eventually result
everywhere If given a fair chance
and 1t will promote competition,
lower prices and steady employ
ment.
The steel industry was losing the
fight for the basing point before
the Supreme Court ruled on the
cement case that had been in courts
and FTC for several years: Since
the war Big Steel" has been in
terested in establishing such far
flung production centers as in the
Utah plant it acquired from the
War Assets Administration.
Justice Black Quoted
The steel industry also has been
withdrawing" from distant GUS
toners. Diversion of freight from
train to truck also has been on the
upturn since the war, and the steel
industry has been active in this.
Going deeper into the issue, op-
ponents Of the basing point system
call attention to the Supreme Court
opinion written by Justice Black.
1t related to alleged practices of
the cement industry but, as viewed
by base point opponents, it ap-
plies in principle to the former steel
system.
Among collective methods used
by the cement industry" Justice
Black wrote, "in such way that
competition in quality, prices and
terms of sale would be nonexistent,
were: Boycotts, discharge of unco-
operative employees, organized re-
sistance to erection of new plants,
selling cement in a recalcitrant price
cutters territory at a price so low
that the recalcitrant was forced to
adhere to the established basing
point. The system worked so
successfully that for many years
prior to the filing of the complaint
all cement buyers throughout the
country, with rare exceptions, had
been unable to purchase cement for
delivery at any locality at lower
price or more favorable terms"
In dissenting, Justice Burton said
the validity of the basing point
pricing system as such had not
finally been decided and was a
question for Congress and not the
courts to answer.
M.noo Dor