Evening star. [volume] (Washington, D.C.) 1854-1972, 1949-06-15

Seen Leading to Monopolistic Evils
To the Editor OF The Star:
The enactment of bill relating to basng
point pricing systems Is. 1909. as rewritten
by Senator Joseph c. OMahoney Of Wyo-
ming. seems practically certain. Yet SUBJ
stantial reasons exist for believing that
such an outcome would be a serious mistake,
If the antitrust policy is to remain funda-
mental in the national economy.
The bill. modified somewhat from It's form
when passed by the Senate on June /. has
been reported favorably to the House jude
larry Committee.
It is of the greatest Importance that the
Congress and the public understand the
character Of the pricing systems and OF the
bill. Little attention was given. in the exam
ination of industry witnesses during the
lengthy hearings. TO the price fixing charac-
ter OF these systems. but such character was
shown by witnesses for the Federal Trade
Commission and for unions and Is implicit
In the record as whole.
All these systems are devices whereby
each member Of an industry makes precisely
the same delivered price at each respective
destination In the country as every other
member makes at such destination. For ex-
ample 1t has been proved that the unit
delivered price of cement often runs iden-
teal to one ten-thousandth OF q cent.
any price concession to hold the highest
nearby net return market. Every one en-
cages in an Alphonse- CASTOR act Of recipro-
city with his competitors" each inviting
all the others to share his home market with
him. on the. implied condition that they
will share theirs with him.
At Expense Of Consumer.
But all this is at the expense Of some
body-the quiet. unorganized. uniformed,
ILL advised, unprotected chap. the consumer.
When all your competitors will automatic
cally use your base price In selling In your
home territory, Ii you should decide TO re-
duce 1t. the urge to reduce 1t reaches the
disappearance point And when. II you
should raise your base price, you know that
every competitor" who wants to sell In
your territory will automatically raise his
to the same figure when selling there the
hesitancy about raising base prices is much
diminished.
staff writer of the New York. Times
has estimated that the number Of basing
point industries is over 900. This includes
nearly If not all the producers of building
materials What this has done to the cost
Of homes can be surmised.
It must be realized that insofar as these
systems prevail, there Lis complete destruc-
ton Of price competition.
What this kind Of thing does In bringing
about boom prices need not be argued What
1t does In retarding the return to the market
Of buyers driven out by high prices Is q
matter Of history. The last depression was
the longest ever experienced In this country.
partly at least because the Blue Eagle"
codes carefully preserved high prices
through these delivered price systems.
Whether the O'Mahoney bill If enacted =
win accomplish all that is intended by its
Sp0nsorx NAV easily he doubted but to
those who have followed the legislative pre-
liminaries. there can be no doubt OF what
their intent is 1t is to permit continuance
OF basing point systems.
Trend Of Court Rulings.
The Federal Trade Commission and the
United States courts had shown tentattye
indications that they might apply. In oastng
point cases. the principles laid down IN sew
eral Supreme Court opinions; specifically
that businessmen must be deemed TO In
tend the natural results Of their acts: and
that when all competitors use identical
delivered prices Mt each market. with mutual
knowledge that they are doing 50. they must
be deemed to have an understanding IN re-
straint OF trade and Ia violation Of Law.
Such an outcome would be sound Law and
common sense But this would never do for
the industries fixing prices and thus con-
trfbuting 10 booms and 70 busts. and happy
over their escape from the American system
Of price competition
The O'Mahoney bill is intended 10 AZ u
no that they can continue. But they must
follow these systems independently. They
may NIL make the same delivered price at
any given time and destination with mutual
knowledge that each other concern Is dosnz
the same. but n they leave no esidentsayy
- &xw&n sa ia