APPENDIX VI.-INDUSTRIAL MOBILIZATION PLAN, 1933, PRICE CONTROL COMMITTEE

The great bulk of the business and popular opinion in the United States favors the principle that individuals should not be permitted to reap undue profits at the expense of the people and the Government during times of a national emergency. Any effort looking to the curtailment of excess profits must include some means of controlling or regulating the prices at which commodities and services may be sold. Stable prices are also essential to the success of the industrial effort. No business can be conducted satisfactorily if it cannot ascertain its own costs and prices with reasonable accuracy in advance. The War Policies Commission in its majority report published in Public Document 264, Seventy-second Congress, first session, makes the following recommendation:

That the Congress should empower the President, in the event of war, to institute a program under which prices may be stabilized and thereafter adjusted at such levels as will minimize inflation and will secure to the Government the use of any private property needed in the prosecution of the war without affording the owner thereof profit due to the war. It should be clearly stated that such a program will not be placed in operation until Congress specifically directs it as a necessary measure in the conduct of the war.

SECTION B.-AUTHORITY

To establish the price control committee and to exercise the functions outlined herein requires legislative authority and executive action. Drafts of a proposed bill and of a Presidential proclamation to put into effect the provisions of the bill are contained in appendix VIII.

SECTION C.-ORGANIZATION

1. Price control committee.

This committee should be quasi-judicial in character and in no sense should it become an operative or an administrative agency. It is empowered to call for information and testimony from governmental and civilian institutions in order that the factors of supply and demand may be given proper consideration in its deliberations. Its decisions and policies are to be administered through and enforced by appropriate executive agencies as hereinafter indicated.

The initial membership of the committee should be as follows:

a. The chairman in whom, under the direction of the President, is vested the power of decision for the committee. The chairman is a member of the Advisory Defense Council.

b. The chief of the price control division, office of the Administrator of War Industry.

c. The chief of the price control division, office of the Assistant Secretary of War.

d. One representative each from the Navy, War Trade Administration, Federal Trade Commission, United States Tariff Commission, Interstate Commerce Commission, Departments of Treasury, Agriculture, and Commerce, and the Labor Administration.

2. Other agencies involved.

Those agencies which are concerned either directly or indirectly in the compilation of data, furnishing of testimony, administration, enforcement, or other activity concerning price control are as follows: a. The price control sections of the several executive departments and independent Government agencies.

b. The control divisions in the Administration of War Industries. c. The war service committees.

d. The Administration of War Labor.
e. The national service corporations.
f. The Federal Trade Commission.
g. The United States Tariff Commission.
The Department of Agriculture.

i. The Interstate Commerce Commission.
j. The Administration of Public Relations.
k. Department of Commerce.

1. Treasury Department.

m. The War Trade Administration.

SECTION D.-METHODS, PROCEDURE, AND GENERAL POLICIES

1. Measures to be adopted.

a. The time for the initiation of control measures is left to the discretion of the committee as are also the scope and nature of the control which is to be applied to particular commodities or groups of commodities.

Whether early action is to be limited to a selected class of necessaries and essential war material or is to be extended to include the entire price structure is dependent upon conditions which exist at the time and upon the extent to which it can be shown that the action taken is reasonably necessary for the national defense and the successful prosecution of the war.

Early action is essential where the known requirements of the Government for any commodity are so large as to make a scarcity of the item or an unwarranted rise in its price or the prices of related commodities a certainty. Such conditions necessitate

(1) Immediate licensing of importers and exporters.

(2) Control over the supply and distribution of critical and strategic raw materials and basic commodities either by license, by governmental monopoly or as otherwise provided in the procurement plans for such materials.

b. The committee in its discretion may prescribe

(1) Maximum, minimum, or absolute prices.

(2) Margins of profits to producers and dealers.

(3) Differentials based either on primary markets or upon zones or districts.

(4) Different prices for different localities or for different uses in the same locality.

2. General policies.

The following general policies should govern the action to be taken: a. Prices, when established, should apply alike to governmental and to civilian purchases. They should remain in force until changed by the committee.

b. In general all prices should be considered as maximum. Minimum prices should be prescribed only when such action is necessary to stimulate production to a point higher than has been brought about by current conditions, or as a special aid to producers of a certain commodity.

c. Uniform per unit prices, slightly above the "bulk line" of cost, should be prescribed for basic commodities and raw materials, except where it is manifestly to the national interest to prescribe a graded scale of prices based on differences of cost. A graded scale of prices, if carried out in full detail, is practically a "cost plus" system and gives an incentive to wasteful and inefficient management. Moreover, this method involves laborious investigations, is difficult to apply, and provides opportunities for fraud and evasion. The single price policy, allowing differentials for quality, transportation, and margins between producers and dealers, makes less of a departure from normal business conditions and is less complex in its administration. d. The prices of certain classes of manufactured goods and of certain groups of commodities, such as toodstuffs, are subject to great variance and rapid fluctuations due to a variety in grades and quality and to peculiar conditions which obtain in their production and distribution in different localities. The establishment of prices under such conditions presents administrative difficulties of extreme complexity. Margins of profits may be prescribed for those engaged in the production and distribution of such commodities.

3. Basis for determination of prices.

In the determination of prices, the committee should be guided by the fact that just compensation must be allowed. With this in view it may base its decisions as to prices and/or profits on whichever of the following it deems to be most desirable in each case:

a. Profits earned by the industry or the commercial activity concerned over a pre-war period to be specified by the committee.