Evening star., 1951-11-29
Order Is Due Tonight
Ending PremiumPrice
On Gray Market Steel
by the Assoeictsd Press

The Government Is ready to
issue tonight price regulation
designed to knock out premium
prices being paid in the gray mar
ket for steel.
In addition. top Office of Price
iStabilization officials said they ex-
Ipect the regulation to put dis
Itribution Of steel back in a normal
pattern. The gray market oper-
Iates outside normal channels.
The order will set maximum
profit margins for distributors of
both domestic and imported steel.
Generally 1t will cover all sales of
steel after it leaves the mills.
Mill prices since last January
have been fixed under a voluntary
pricing agreement between the
Government and the industry.
The mills agreed not to raise
prices without giving the Govern
ment advance notice. Specific
types OF steel were listed.
Brokers Take Markups.
The new order will set a maxi
mum markup all along the line.
OPS officials told newsmen this is
expected to halt operations of
brokers who have obtained steel
and passed it along several times
before it reached the small user.
In each case, they said, each
broker has taken a percentage
markup and such gray market op-
erations have boosted prices as
many as four or five times.
Oficials said the general price
freeze did not help In this respect.
They said brokers obtained high
markups before last January 26
and were able to continue them
without violating the law or gen.
eral freeze regulation.
Forseeing simplified enforce
ment under the order, officials
said violations may be traced
when manufacturers ask price In
creases based on steel costs above
the legal limit. This should show
the source Of the steel. In addi-
ton. such manufacturers might be
denied price increases.
Called "Legalized Robbery"
Price officials also said the new
order will enable steel users to
buy at reasonable prices through
normal channels, rather than
through q series of middle-men
brokers. In this way they will be
able to I'LL allotments granted
them by the National Production
Authority.
The House Small Business
Committee. after q six-month in
vestigation Of the gray market in
steel. said it turned up many in
stances Of what 1t called "legalized
robbery"
The OPS acted last night to
help small manufacturers by pro-
viding q simplified formula for
them to calculate any price in
creases due them under the Cape
hart amendment to the controls
law.
OPS said the formula is in
tended to give small manufac-
turers and sellers of Industrial
services the same average dollar
margin per unit over operating
costs that they had In the six
months before the Korean war.
Await Effect on Prices.
Price Director Michael v. Di-
Sale said its effect on prices could
not be estimated Immediately.
But. he added. increases at the
manufacturers level must ulti-
mately mean increased ceilings to
consumers.
The amendment. named for
Senator Capehart. Republican, of
Indiana. allows manufacturers
and professors to use their pre-
Korean prices and add or sub
tract increases in costs through
last July 26 to arrive at new CELL
ings. OPS formerly had allowed
increases only through last March
Is and did not allow overhead cost
changes.
The new formula permits small
manufacturers to figure their ra-
ito Of total operating cost to total
sales for the first half of 1850 and
1851 to obtain unit production
costs for each period. The differ
ence must be added or subtracted
from pre-Korean prices to obtain
f1nair Yaexu rni1iore