xt7wwp9t2q46_21 https://exploreuk.uky.edu/dips/xt7wwp9t2q46/data/mets.xml https://exploreuk.uky.edu/dips/xt7wwp9t2q46/data/59m61.dao.xml American Liberty League 37 linear feet archival material English University of Kentucky This digital resource may be freely searched and displayed.  Permission must be received for subsequent distribution in print or electronically.  Physical rights are retained by the owning repository.  Copyright is retained in accordance with U. S. copyright laws.  For information about permissions to reproduce or publish, contact the Special Collections Research Center. Jouett Shouse Collection (American Liberty League Pamphlets), No. 24 "Price Control: An Analysis of Experimentation under the NRA, and Recommendations for Future Legislation," April 1, 1935 text No. 24 "Price Control: An Analysis of Experimentation under the NRA, and Recommendations for Future Legislation," April 1, 1935 2013 https://exploreuk.uky.edu/dips/xt7wwp9t2q46/data/59m61/59m61_24/Am_Lib_Lg_24_001/Am_Lib_Lg_24_001.pdf section false xt7wwp9t2q46_21 xt7wwp9t2q46 Pamphlets Available I * *
*
Co ies of the followin am hlets ma
Ee dbtained upgln dapggligatiolii to thi;  
eague’s nationa ea quarters:
Why, The American Liberty League?  
Statement of Principles and Purposes
Progress vs. Change—Speech by Jouett
Shouse
Recovery, Relief and the Constitution-
Speech by Jouett Shouse
American Liberty League-I ts Platform * * *
An_Ana1ysis of the President’s Budget - »
Message  
N. R. A.-Its Past, and Recommenda- U
tions for the Future
Anlalysils f the 2l$4,8€0,00g,0O0 Emergency .
e ie ppropria ion ct _ _
Economic Security—A Study of Pro- A An Analysls Of EXP°r1m€nta'
posed Legislation tion under the N R A, and
Dgng;/gggcghgzsgurseucrecy?——Sz>w<>h by Recommendations for
The Bonus-—An Analysis of Legislative Future L°g‘S1““’“
Proposals
The Constitution Still Stands—Sp·eech
by Jouett Shouse
Iniiation—Possibilities Involved in Exist- 1
ing and Proposed Legislation
The Thirty Hour Week—Dangers In- `AE F 4
herent in Proposed Legislation Y   4’
The Pending Banking Bill— A Proposal •;   u
to Subject the N ation’s Monetary  
Structure to the Exigencies of Politics 45* Y L`?)
The Legislative Situation-—Speech by
Jouett Shouse
The Holding Company Bill—An Analysis »
of Proposed Legislation
"What is the Constitution Between
Friends?"—Speeoh by James M. Beck AMERICAN LIBERTY LEAGUE
p Where Are We Going?-—Speech by James National Haaaaaaytays
W Wadswmh I NATIONAL PRESS BUILDING
WASHINGTON, D. C.
ir
AMERICAN LIBERTY LEAGUE
NATIONAL PRESS BUILDING * *
WASHINGTON, D. C.
Document N0. 24 A
  April, 1935

 10. "Chiselers" and "bootleggers" thrive under
Price Control a system of controlled prices making enforcement
impossible.
* Constitutional Principles
P1‘i<>€ i"1X111g, _W11€’¤n€~1‘ bY_ e¤v¤r¤m<=¤1 br by Regulation of manufacture and production by
combinations within industries, causes the most the Federal government is renuenanh to eur een_
1*1010115 i11fi8»t1011, bQ0nnS€·g0‘V€Ynm€nb‘b?{€d Pmbbs stitutional principles. Control of prices as well
¤·1`€ _b0¤nd te be lngb nnbngb bb Susmlb the m" as of conditions of employment is ordinarily
€H`101€11’¤i While Ewing EXOGSSWB Ybbbrdls bb the outside the scope of authority of the Congress.
6111016ni- Tn€§’ dnnbmy bbb lnbbnbwb bbl mV"m' Whatever may be said of its control of interstate
’01011, €11@€1”P1'1S€i PI`0gI`€SS· _TbbY Prbbbbb the commerce certainly no one believes that the Con-
inggn1`dr inn Wnnbnr and bbb lnbbmbbbbbti Wbbsb gress can either directly or indirectly assume any
€11€1`g1€S 9»1`€ devoted bb lnnnnbalnlng b}gbm` bmbbs authority whatever over business conducted en-
ibl11‘011g}1 1110110P0l1€S» instead Of nbbmnlng lbwbr i tirely within the confines of a single state. The
prices through- reduced cOStS_. HODGSIG 00II1l?€b1' power te fix prices through Federal government
tion 031111011 €X1Si> _1111d€1‘ n reame of Hxed Pubns? agencies has been denied in decisions in the
11% 02111 Only PIQBVBJI In an nbmbsbbbrb bf_fI"?€dbm· . Federal District Courts which are awaiting a
Whether prices are definitely fixed or1nd1rectly * nna] adjudication in the Sunrerne Ceurr ef the
influenced, their control has been proved_by the United Sraree
experience of the National Recovery Admmistra- The American neenle have eheerruhy acqui-
ti011 to _b€ b0’0h f1{t11<-> and lnlnmbnn Even lf esced in measures of control in times of war. In
hclpilll 111 1116 Snlnnlnn nf an Immbdlalib Problem an emergency they will accept measures which
0011f1‘011’¤111g 3 P&1l>1¤ul9·1` industry, Prine nbnbrbl overstep constitutional bounds. Experience of
011 the whole l1§*·S i»€11dQd to }`€'08·I`€l I`€n0V€YY· the past year and a half, however, has demon-
Recent §XP€1'1111€n’w·’¤10n Winn Pmnnbbnbrbl and strated that conditions were not improved by
the cXp€1‘1€110€ of 0'6h€1‘ nnblnns Pnlnb bb these price control methods or other interference by
COI1Cll1S1OI`lSZ government
1. Controlled prices mean higher prices. An early decision on the constitutionality of
2. With the possible exception of agricultural the National Industrial Recovery Act is highly
I products higher prices are likely to be harmful desirable. The apparent disposition of the admin-
rather than beneficial. istration to avoid a final ruling by the Supreme
3. Higher prices mean reduced consumption, Court of the United States during its present
a curtailment of production and an increase in term may serve to deprive citizens of their con-
unemployment. stitutional rights. If liberties of citizens have
4. Prosperity of an industry is most certain been infringed upon in violation of the Constitu-
if prices can be lowered and volume of produc- tion, they are entitled to such protection as may
tion increased. T be afforded by a decision of our highest court.
5. Industries with the greatest flexibility in The policy of delay places the government in
prices provide the most regular employment. the position of attempting to enforce a law
6. Controlled prices build up monopoly and which according to decisions in several District
prevent the competition necessary to the protec- Courts is invalid.
tion of the consumer and the small producer. Extension of the present statute beyond its
7. Fixed prices encourage inefficiency in busi- . expiration date, June 16, 1935, should be on a
ness. i basis to permit pending litigation to go forward
8. Interference with freedom of management ' to a final determination.
through fixing of prices tends to destroy indi- _ _
vidual initiative and to fasten the blight of bu- ECOIIOHIIG Pl3.1‘11‘11I1g
reaucratic control upon in ustry.   . .
9. An increase in price in one industry causes NTiw Friend mwagd P‘Z“’° lmntrol .m the
higher prices in related iririeeiriee. . *1*21*m €°°V€1`Y $lm1mS’°mi1¤¤» Palncvlafly
~ in 1ts early months, illustrates an unavoidable
2
i 3

 purchasing power. This industry, besides hav-
result when economic planning is undertaken ing its costsincreased under the National Re-
by government. Economic planning has little eovery Adngnnrstratron, has been burdened by
chance of success unless many factors, including the _P1`0C€SS111g taX imposed on cotton by the
prjgegj arg Subjggt, to (30nf,I·()]_ N0 half-way AgI‘1Cllli»l.1I'3.l Adj11Sl'iI1'1€I1t AClI1'1lI1lStI`8»iilOIl 8.S p3»I`l`»
measures are possible. Regulation of one factor of its effort to increase the purchasing power of
requires control of another. If it be assumed agfloultufe- _ _ _
that the first control is essential, the second is _ The ootto11 toXt1le 111Cl11St1‘Y, 1n o1‘de1‘_to ab§o1‘b
gquguy S0_ 1I1CI`€3.S€Cl· costs, ll‘&S b€€I1 fO1`C€Cl to TQISB pI`1C€S.
In the light of policies adopted by the National These prlces, maintained with the aid of pro-
Recovery Administration at its inception, the d¤ot1o11 oo11t1`ol doV1o€S, have been So hi-gb as »
request by many industries for approval of price ` to discourage consumption of domestic goods land
control schemes was natural. Costs of manu- to o11oo111o»go tho sale 111 tl11S oot111t1`Y of fo1`o1g11·
facture and distribution were increased by 111ade goods- 111 the flfet two _1nonthS of 1935
reason of code provisions relating to wages, hours 1111Po1`tS of Jobooooo ootto11_toXt1loS amounted 111
and conditions of employment. The higher » Yardage to o totol t111°oo t1111€S to gtoot 9-S the
costs could not be absorbed by an already de- total of tho o11t11`o Yoo? 1934- 31XtY Po1‘_oo11t_o1
pressed indusf,I~y_   maintenance Of the l}h€‘ HOI`II]3ll EXpOI`l`i bUS1II€§S of l)h€ .AII`l€I`1C&H IH-
higher prices was made doubly difficult by cut- V dttetty hoo gone to fo1`o1$11_ oo111Pot1to1S· The
throat competition already existing. In these ’ eloemg of mule W1t11 e Sh1tt111g of thousands of
circumstances some increase in prices was neces- employees to the rehef rolls 1S thtootoood-
sary to keep industry on its feet, but from the
standpoint of the national economic situation the Government Statistics
control of prices was a mistaken policy from the _ _ _
beginning and was doomed to ultimate failure. What has been tekleg Pleee m the flomeetle
cotton textille mdustgy 1S shown by statistics ap-
· · pearing in t e Marc 15 issue of The Blue Eagle,
Fauaclous Theomcs the official publication of the National Recovery
Fundamentally the blame for injurious con- Administration. During 1934 the spread-work
sequences of price control attaches to- policies of features of the code kept the number of employees
the National Recovery Administration. The in- at a level substantially equal to that of 1929 de-
crease of costs was part of a program for hasten- spite a 22 per cent decrease in cotton consump-
ing recovery by expanding purchasing power. tion. The work week ranged from 40 to 50 hours
Through higher wages, shorter hours and in- prior to the National Recovery Administration.
creased employment, partly provided by specific Under the code it has averaged about 35 hours,
requirements of codes and partly induced dropping to 30 during the summer of 1934 when
through a strengthening of labor’s bargaining there was a curtailment of activity because of
powers, the intention was to place new purchas- the large stock of goods on hand. Earnings under
ing ability in the hands of industrial employees, the code increased to about 37 cents per hour in
The theory was fallacious. The actual effect was 1934 from about 22 cents in 1933 and 33 cents
to increase unit costs of industry. The higher 111 1929- Wageo paid amounted to 10.4 cents per
prices thus made necessary nullified any ad- pound of cotton consumed in 1934 as compared
vantage accruing from larger wages. For those with 7.5 cents in 1933. The industry processed
failing to receive greater earnings, the higher 125 pounds of cotton per worker employed in
prices meant lessened purchasing power. A re- 1934 as against 150 pounds prior to the adoption
duction in consumption was the result. Industry, j of a code. While the industry’s costs were ris-
instead of benefiting from an increase in pur- ` 1113, tho 8-111oU11t of cotton used declined to 2,-
('jha,Sing power SuppOSQd {QQ a,QQQ[f]pa,ny larger p   pounds in   from  
total payrolls, found it diiiicult to avoid a cur- pounds 111 1933-
tailment of production and a reduction in the l _ The t1g111`oS With 1`ooboot to the cotton textile
number ef employees, 1nduStI‘Y eInphaSiZe the effect of increased costs
The cotton textile industry offers a striking duo to tho National ReooVe1‘Y Adrninistra— `
example of the effects of attempts to increase 5
4

 tion. The cotton textile situation proves the dif- Such conditions the next Ste demanded b
ficultel ef evereemiaa .nt&l°uri"1 economic fpI`°€S¤ bureaucracy will be complete ri)ationalization. y
glféglqlgelggggrélq §g;¤;Sr>etlt1ea» m any regulation ef In the inevitable ramifications of price con-
eede eltevieieaa which are ieteaded te. feels- laIeli1us(tIr§§nt}slmI1f§el;.€tiidnls1h(i;;Vbldtvgdeiiedloerhlmlbldiz
tate experimentatmn with fallacious theories and has make it impossible to advance the price Of
i which in the process have led to price control Om Without mmm u I0 Ortionatel th tl of
measures are iaiurieue ia effect- others A hi her iiefitir ai)raw mateiii it
Economic recovery requires that industry Hected all th? Wap down th. I- ,0 th ii {sgi;
slglall got be unciuly handicapped as to costs so product y B me 0 6 ms 8
t at t ere may e no occasion to resort to price · ' - · . . .
control. Reduction in costs with accompanying inA1;1;§Sfg€?§{%a£g1dp§gci;il (5 f gommgdxlesi meladé
reduction of prices will make possible greater digger,} in rice C mr 1 C mmodl IES Ingo Ve
consumption which will lead to more production, Sum tim grtic 101 gf' gleans Birigse com
wider employment and profits justifying higher P ’ p u ar Y 1 C Gaper Su S 1 mes are
Wa GS obtainable. The adverse effect upon an industry
g ‘ ' brought within the range of influence of prices of
Control Retards Recovery another industry may be very great.
Viewed broadly, price controls under codes ’ Effect }1POn_Agr1cu1tur€
have aggravated and pyelenged the depyesgielm Low pI'1C€S of 1D.dU.SlZ·I’1B»l pI`OClUCl3S 8iI'€ Cl€‘SlI'&blG
They have prevented the free   Of eompeti- fI`OII1   Sl}8.HdpO1Dt» of &gI'lCl1ll’iU1‘G 3S well ES
tion which is best calculated to keep prices at ef ether gr0uP_s· The treml teward hlgller Prlees
1 the proper poinfh Competition preeervee the under the National Recovery Administration has
rights Of   purchasing public and in the Iong I1llll1H€Cl IH part the ].3»I`g€I° lDCOH].€ obtained for
run in the interest, ef Se1]eI·S_ the farmer through the subsidies of the Agricul-
Leon Henderson, Director of the Research and turel Adlustment Admlnlstretlelr All example is
Planning Division ofthe National Recovery Ad- the mereaaed eharse fer eiaaias levied against
mioieiretioo, iii e. statement at price control the farmer beeauee ef hishereeetsimpeeed under
hearings in January asserted that the impression e eede- Thehlgher eharses eat llee~VllY mte the
that industries with the greatest stability of price mereaeed Prlee reeewed bY the lermer fer his
have contributed most to employment and re- eettea-_ _
covery is erroneous. Actual statistics show, Pellelee Whlell Premete e larger volume of in-
according to Mr. Henderson, that (1) industries dllstrlel Predrletleh emil Sreeter employment 0011-
i   records Of the greatest, price declines tribute to an 1II1pI‘0V€d Inahketr for farm products.
during the depression maintained employ- At tlle ead ef 1934 Prlees ef farm Pretluets
ment best, that (2) after 18 months of experi- Were sllghtly e»beVe the'Dre·Wer level. Prices
mentation industries with the best reemployment ef mdustrlel Preeluets which the farmer must
records are those whose prices are below the buy were 26_ Per eeat abeve the Pre·Wer level.
average and that (3) industries with the smallest The Purehesmg Pewer ef farm Preduets Wes 80
price advances during these 18 months have the Per eerlt ef Pre·Wer- The farmer Would have
largest, gains in emp10yment_ gI`€3»l»ly 1I1CI'€8iS€Cl   pl,lI'Cl'l3.S€S of f3.I`ID. lII1pl€—
It has proved jmpeeelble te egntygl prieeg ments and household furnishings if prices had
without also regulating many other items asso- been held Oh er lower basis.
ciated with prices. Mr. Henderson has listed 37 Beth elitrlght Prlee llxlrlg erld mere moderate
such items, including guarantees, discounts, Prlee eimtrel eehemes under the National Re-
premiums, rebates, standards, trade-in gllgw- ° covery Adm1n1strat1on have retarded the recov-
ances and methods of shipment. Production ery ef egrleultm`e·
control ordinarily accompanies price control. _
There grows up a bureaucratic control_ which 4 Enforcement Dlmeulf
me·l§es_ lmlsesslllle the exerelse ef lrldlvlduel _ Just as is true with many other factors enter-
1mt1e·t1Ve- If melustry falls te preeper under 1ng1nto economic planning, enforcement of price
6 7

 cont1{ol is exceedinglyd diilicultéh Ghiseleirstgnd Kinds gf Pyioe Control
boot e ers in an in us r rive an e1r
eeavaiie make it impossibTo ree those who eb- ’ Pimees ’¤h<->f720 Cgdee and S¤1¤1>1eme¤f?» tee?
serve price regulations to get the full benefit. In ooo oio igmo doTTP och TTTTTTTTPoTP,PTT‘%o Togo o F L
numerous cases where some measure of price .T‘ ogy h og og TSA (go PDToV1oTo,0Ti·q o; PTToo .X
control has been attempted enforcement has Eg dylt ot, o of uf oT1 Too WT (iu zlgglulrgég
completely broken down. _ tho Coodo‘ToA1o,3] o.to‘P omggollloyé. Ti R coe
The compliance machinery, however efficient, Ag .o o P oT1 Y oih o do ioood looov TY
cannot act quickly enough. By the time an in- mmlolmooéoo. TS io homoo. o oo o‘To hog
vestigation is made the transactions have been ‘;moT§LoT;;iYh glo? Wlég TTEPTPQUTT; Psgixog org?
long completed. The only action that can then o so or ,1o o   d Ioogéob oodm th P 8
be taken is criminal prosecution which usually is ooT1;};_)g pls PTo 1,1 o · HP b 1 oo oo t ofo $6
not desirable and rarely successful. PTS T idioms ogomo oo. mg fo oW.oooHH P In
In the case of a manufacturer who sold below ;g5oS d oTo oTo1.P1T;oV£STooo oT Pmofol. og t
cost an investigation was in progress from May _ oo oo To VY To T .o.oPoP Pmoo mg oyoom
- · · ls there 1S a waitin eriod before revised
to October, 1934. Finally it was decided that the PT?Vn1 b ff ,0. gIP 184 f th d
manufacturer was probably justified in his cost Pglooo ooomo o. oio TVo·1 to h o b ooo too og.
calculation which differed from that forming the E o Wamnee PoTi1oR Togo o TEE oo ,0 ooo S oyo
basis Of the complaint {M y the Nationa ecovery minis ra 1on._
Accounting problems in connection with the To oo? ooooo Ehgre oTo PToV;o1ooo1ToT umfoml
determination of costs are very complex. There aceeugens Igloo ol o OT oooo ogmu oo. . f
is lacking an adequate statistical and factual Ie Vo .oo oi T oTo oTo olP.oo1.o PToV1oioooh OT
background upon which to base uniform ac- Poomg Pomoo OT PT1ooo> W 1}o.1E¥VoTo* o .o;o
Counting Systems- ;n§;eb2re]S€;l1lep£la1giisms by w 1C asing pom s
EVHS °T P*i°° o°““'°T aeii’e§$ieiTE?T§f§ §i£?eih§EZei§F’f§et€3$e ‘Z1I}§°
There nan been an increasing Yecngnmnn of templated in more than three-fourths of the
the evils of price control under the National Re- eooiee Approval of piioe control devioee gppggrg
COVEYY AdnnnlSn`9»tl0n· AS lnng nge as S€P· to have been granted on an indiscriminate basis
tember 30, 1934, the President in a radio speech iii tho ggyly days of the Neiioiiel Reooveyy Ad-
admitted the need of a review of policies. ministration. The rigidity of prices provided by
The Pfeeidenn Said: the codes first adopted made it seem doubly
"Thgrg may bg u eerioue question as to the desirable in later codes to insure maintenance of
wisdom of many of those devices to control produc- prices at 2. level above the increased cOsts. In
l°T°n» 0* T0. prevent denmlctive Price Qntnne which more recent months the trend has been definitely
.‘£22§ee§TSé‘3€$$ee2£%?“éf2i§°§§ee*§iiiylE§$2€%ee`§€§§ my fem rigid rece controls as eXpeie¤¤¤ has
prevent that volume of peedeeaee which would d_em¤_¤str¤ied beth the impessibilitr and unde-
make possible lower prices and increased employ- S1I‘3.b1l1lZ·y of mairitaimrlg fixed p1‘1ceS.
ment.”
As the President indicated, many business Flxcd Mlnlmum Places
organizations have believed that devices to con- The coal industry is an outstanding example
trol production and prices were necessary. It of the failure of price fixing. The natural re-
should not be overlooked, however, that the difli- sources industries are so essential to the nation
culty of maintaining adequate prices was greatly that extraordinary measures for their develop-
increased by the higher costs due to policies of ni ment and protection are justified. The bitumin-
the National Recovery Administration. { ous coal industry was in a chaotic condition. It
An adequate modification of policies under . was believed that the fixing of minimum prices
which the National Recovery Administration   would stabilize production and prevent further i
has operated requires not only elimination of ` impairment of capital and at the same time
price control but also the avoidance of other i11SU1‘e adequate wages to the miners. Beth the
action which gives incentive to price control. producers and the mine workers joined in ap-
8 9

 proval of price fixing. Nevertheless, enforcement questions occasion administrative difhculties.
has proved impossible. The conditions enumerated by the National Re-
The code governing production of bituminous ' covery Administration as a test for an inquiry
coal is one of twelve in which the administrative to determine the existence of an emergency are
officials are given power to fix minimum prices at impairment of employment or wage scales, par-
any time without the declaration of an emer- ticularly high mortality of enterprises, especially
gency. The code dealing with wholesale coal is small enterprises, and panic in an industry or
another of the twelve. The Retail Solid Fuel other special conditions thought to require
Code, under which there also has been a collapse stabilization by means of minimum prices.
in efforts to control prices, is one of a different Under the Retail Solid Fuel Code more than
group of codes in which minimum prices may be 150 emergencies have been declared and mini-
established upon the declaration of an emer- rgium prices fixed; In many instances there has
gency. een a comp ete reakdown in enforcement. The
The Bituminous Coal Code declares the selling entire membership of the Code Authority re-
of coal under a fair market price to be an un- signed in protest against policies of the National
fair competitive practice. Regional marketing is Recovery Administration.
agencies are established to determine minimum Another of the natural resources industries,
prices which must be approved by the presi— lumber, experimented with price Hxing with a
dential member of the Code Authority and may _ resulting collapse. An emergency was declared
be reviewed by the National Recovery Admin- J and minimum lprlices lflixed. The violations be-
istration. came so genera t at t e minimum rices finall
Hearings before the National Recovery Ad- were suspended by the National Rliacovery Ad};
ministration disclosed widespread violations of ministration for an indefinite period.
the fixed price schedules. Many producers were Evidence offered at hearings before the Na-
reported to be selling more than half their pro- tional Recovery Administration showed that
duction under contracts made before adoption of compliance with the fixed prices broke down first
the Code and at prices lower than the established in the northwest, the lowest cost region, next in
Code prices. High prices encouraged the opening the south and last in the north central and north-
of small, high-cost mines, operators of which eastern regions. It was indicated that the gen-
ignored all provisions of the Code. eral average of cost-protection prices was too
In the hearings it was stated by a spokesman high for the movement of lumber in large
for the Wholesale Coal Code Authority that quantities and that it was not possible to deter-
price control was binding only upon those who mine proper prices for the thousands of items in
were willing to cooperate, that it was destructive all of the regions and divisions of the industry.
to those who conformed to it and profitable to It was furthe-r stated that the high prices en-
those who evaded it. couraged the opening of some new productive
Emergency Price Fixing t units 1n the industry. 4
Many important industries are in the list of Destructive Price Cutting
203 codes and supplements in which authority is _ _ _ _ _ _
. given to fix minimum prices upon the declaration _ Cedes 00¤l·a1P1¤g P1`0h1b1i·1011S against deetfue-
of an emergency. Besides retail solid fuel, the tive PYIOB QUWIQS am found Chleflyi ameng the
industries in which emergencies have been de- ma-¤¤fa<>l¤U1"1¤g 1¤d¤S’¤1°}·€§· Many of the feed
clared and minimum prices established include ¢0d€·S have such a p1’0V1S1011; In meet of the 122
i` lumber and timber products, both retail and cedes m tbl? EFOUP ”¤h9Y€ 1$ merely a general
wholesale tobacco, certain classes of cast iron , Statement Wltlfwut qualliieatlens Or explanation
pipe, tires and several others. as t0 1tS meaning and enforcement. Some of the
Under the codes permitting em·ergency price y e0CleS p1‘0h1b1t"w1lfully destructive price cutting"
iixing it is necessary to determine what con- amd Setup a P1’00€d¤1"€ fe? a hearing by the Cede
stitutes an emergency in any given industry and · Autheflty and f01‘ appeals te the National Re-
also to calculate the “l0west reasonable cost" G0V€1’y A§lm}H1St1‘at}011.
which is the basis for minimum prices. Both There is little evidence to indicate whether 0;-
10 11

 not prohibitions against destructive price cutting
heve been generehy effective- It 1S nO1?_ eeey te represent nearly 60 per cent of the total. No
dehne destructive Price cutting- Mee, in rnenY other price system has been so general in use.
of the codes prohibitions against destructive » The extent to Which epcn nricc. ming ccneyci-
Price euttme ere cOnP1ed with ether Prrce cOn‘ tutes price iixing is a subject of controversy.
11`O1 deV1ceS· Undoubteidly, the tendency is toward lie. uniform
  Selling Belew Geee 1)v1di111ingTp1er11o§ i$’S?e§`ég1§1e?{eZih"§$ie1eee1ie?e§`iZ
In the 420 codes which contain prohibitions . e11ee11Ve 1115111 W1111.e11e11. 11 pe11O11· The e11epe11"
against selling below cost, definitions as to what i S1O11 ef W6*11’111g 116116116 111 1811 ef 1116 295.661166
Constitutes eeete Vary greetitn which provided for them hae been indicative of
Nearly all of the codes which prohibit selling 61 1161111 OWOY 1111111 11g111 p11ee OO1111111 111111 here
below cost also provide for cost finding. How- 111e111e_1’11e eYe1e111.1eee O111ee11O11eb1e‘ . .
ever, until recently the Recovery Administration .Q11e11 1111ee 111111g hee been 11e11e11e1e’1 1O` 111'
had approved only 39 cost formulae and systems A d11’111“r11 1111111e111ee 1111111111 We1e e11111ee1 1O` e111'
eut ei the 507 eeueS and Supplements that een_ . throat competition. It has been especially useful
tain provisions for the establishment of such sys- 1111111 1116 e1e11e111O1111 ef 1111 1111111e1’1y 111 111O1ee1’111g
tems. Nearly 250 of the_ Code Authorities have 1%i7#ii1;£i11iiei§15S11i§12;1S6SIii1(;i;1Ii1ii11;1Ig1§(g1€;gef1;11:i§1;’;d1;1[lO$11iie)ii
n€1.§dc<1>11d)i1de111t(dCe1;1s1e111t1i61h1egl1>11’en’tehe Consumers’   the eeeeheeiee eeneewee eceee here eeee herm-
Advisory Board at hearings before the National 1111· Ae 111 ether P11ee °°1111`°1 11e111eee> .111616
i Recovery Administration the provisions against WO11111 he 1cSS O6116*61O11,1O 1166 O11,611 111166 111111g 11
Seiiing below eeSt tend tewaru high, rigid and there were no undue increases 1n costs because
fixed prices. A considerable part of the increase ef eO11ee‘ . . . .
in construction costs has been attributed to- pro- h&;11i;1§Ii`1;1;1i$逧i} i1i1i1i;1i1§’S i_1g1(;1i1£7€311ie; girgcgoihgihig
visions of this character. , _ '
Mark-up provisions applying to retail stores 1116111- In 11, $1111151 ef 11111 O11611111gS, 111 1116 P1O'
have furnished a method of shifting to the public 11111611161111 D_1V1S11111 ef 1116 1116116111Y 11 Wes S11OW11
increased costs due to codes. The independent 11161 W11116 1116111111111 11111166 116161 111161611 1111 1'WO
druggist has reason to favor the rule under the 01 1111116 111111161`S 111 37 1161 116111* ef 1111666 11111111g a
Retail Drug Code which prohibits sales below 1116'OO116 11611611 11`O111 ·1?1i“1lc1`Y 1*.1933* 1c 111e
manufacturer’s list price in dozen lots. At the c11c1111V1? 11*11c ef 1111116S 111 1111111S1116S 11OW 11S111g
same time there is ground for the contention of OP1111 P1`1116 111111g> 1116 1161661116gO 111616111161 1111 ee
the chain stores, which are better able to exist July 1, 1934, jumped to 64. Subsequently, by
Witheut priee eentreh that the System permitS reason of an executive order effect1ve June 29, —
the manufaeturer to fix prieeS_ 1934, permitting vendors to grant discounts to
Whiie net previding ter eutright price fixing governmental purchasers up to 15 per cent from
many of the schemes to prevent selling below 111cd Pr1ccS> 1*1111 P61`116111ag6 111111111611 111 511 FO1
cost are susceptible to use for this purposel rndnS1rreS fnghdngiiniigggrtviniinrcievgrléngmlthiei Ee;
cen ages o 1 . -
gn Price Filin ders uoting identical prices were 40 for the pre-
OP_ _ g _ code eneriod, 38 during the code period up to the
The OPen Price hhng eYSrern» which Wee issuance of the executive order and 50 thereafter.
adopted voluntarily by many industries long be-
fore the enactment of the National Industrial Re- ·
covery Act, has been very widely used under Productlon Control
cOdeS· Under thie eYS1cern PrrceS» dleccnnhei re· 1 Schemes for the control of production have
betee, e11OWe·nceS end terrne end penditiene ef , been used to maintain stable prices and particu-
Sele ere filed Wrhh ce Oede An1chOr1hY· The in· larly to pas.s on to the public the higher costs
formation is available to other members of the i nndcy ggdggc Sncn ccncnicc not Only may ccn-
induetry end te ite euetdmere- The 416 cedee tribute to excessive prices but eiee teiiti to intei-
end SnPP1ernenhS which PrOV1de fer Price filing fere with the exercise of individual judgment and
12  
13

 I
I
Mm lhm.175 .<=¤d<·>S P¤>Vi.d<·=. fm: mS*>r¤·i¤*>¤ I %Zii’Qn°trei§? §'£§Féii§i§eSrieE$riegZZiili°Sefgfggd
dpen preddeedem eldeer by e l1m1e*¤1¤¤ On em" I ·in fabricating the raw materials found that the
rene Peredueelen er en mereeeee m preddeeive I monopolistic high prices increased their costs
cepem y' . . .   and decreased their sales, and they combined
In eeme meeeneee the epeeeelee ef P"°d“°l“’° I into associations Associations of this kind
machinery is limited by Specifying the number I entered into price agreements with the result
of heme le mey be used er the number ef ehlfee I that new enterprises and extensions were dis-
of workers that may be employed. Production I eeura ed
leentgoldof tg? type is found in the Cotltlon Tex- e '
1e o e. e purpose is to assist in t e main- j
tenance of prices at a fair competitive level and 5 Modern Eff°1"¤S
to lessen the pressure of cut-throat competition. · In mere recent tlmee efleree have been made
To eeme exeeee the hmieeeiee upee preddeeien I to control prices. One of the best known is the
has tended ee leeeeeee eeeee . . § attempt of the Brazilian government to set the
Other hmleeelene eu current preddeelen m` i world market price for coffee Besides resulting
clude prehibieiene and limiie#i¤¤S en Work in I in failure it has imposed a severe strain upon the
homes, elimination of schemes to speed up em-   naaneee el Brazil
pleyee P"°d“°d°“» and eyeeeme ef ddeeee and   Another recentiattempt to control prices was
eHeemenee‘ I_ the British rubber plan. Exports from British
_ _ _ territories were controlled, and prices were kept
Price Control 11'1 History l at a high level from 1925 to 1927. The effect
. . . . . . . “ was a stimulation of new planting and a greater
The hteeemee. ef Vemede elvlhzeedede reeerd I use of reclaimed rubber. The demand for rubber
men}, pmee exmg Veeiedree all of Whleh eel' I declined and there was a sharp drop in prices.
lapsed Gi them ewe Welghe . I Only recently the French government has de-
le Chme as emily as the Fdeh Century B' C· cided to terminate its unsuccessful experiment
aa elebereee system of priee reguleiiee ended in I with wheat price fixing. Large surpluses of wheat
failure in spite of careful and detailed police have aeeumulaled The prlee ef bread has risen,
supervision of almost every commercial trans- thereby areuelne `ehe aneaaenlem ef the urban
action. Examples of economic dictatorship are e ulatlen The mllllna, business nee become die-
fednd in the hieeeriee of Egypt and Greeee The iirganized ·The condition of agriculture has been
Ediee ef the Remee Eleperee Dieeleeiem in the aggravated instead of benefited. The French
Feureh Ceeeuey A' D' le as example ef e' Very policy has disturbed the world wheat market.
comprehensive scheme of price fixing. Based on
the theory that normal, proper and reasonable * * * * * _
prices could be established for all things, sched- In the light of the experience of the National
ules covering many hundreds of articles were Recovery Administration and of other nations,
formulated. Severe pena.lties for violations were I price fixing or anything that tends toward it
included in this compilation of dictated prices. should be resolutely avoided. By such a course
' However, even this scheme did not prevent the recovery wi