UNIVERSITY OF OKLAHOMA BULLETIN GOVERNMENT PRICE CONTROL Issued Semi-Monthly By THE UNIVERSITY OF OKLAHOMA Norman, Oklahoma NEW SERIES NO. 204 EXTENSION NO. JULY 15, 1920 59 3^ FOREWORD (iuvtrnnient price-control is an exceedingly difficult problem. 1 1 might be plausibly argued that only traind economists should attempt to discuss it. But it affects the life of all the people so greatly and so vitally that e\en the unletterd masses will not be content to let others decide. One of the greatest problems of de- mocracy arises from the fact that the masses of the people must often decide questions about which they are inadequately informd. It were to the last degree absurd to claim any infallibility for popular decisions. We have simply learnd that the masses, with all their ignorance and follies, are better to be trusted than the one-sided decisions of selfish classes, oligarchies, or autocrats. The hope of democracy, then, lies in our efforts to render the oj)inions of the masses of the people more intelligent, just, and wise. It might easily be argued that the subi^ct of government price-control is too difficult even for the economists. But it is a question which the people will and must discuss anyway. Both educational policy and patriotism require that we do all that can I)e done to make their discussion enlightend, candid, fair, com- petent. This is the aim of this bulletin. Least of all is its pur- pose to advocate any view or policy whatever. Quotations are made from holders of all views so far as limited space permits, and the chief opinions are represented as far as possible. As often urged before in these debate bulletins, the aim of the debater should not lie merely to win a decision but to learn the utmost about the question and reach the sanest conclusions ; and especially to avoid becoming a partizan for either side of a question, at least until all the facts and arguments for the other side are fully known and duly considered. University of Oklahoma J. W. Scroggs Sept. 1920. Department of Public Discussion and Debate SOME SUGGESTED TOPICS The Need for Price-Control Lessons from the History of Price-Control justice and Expediency of Price-Control Difficulties of Government Price-Control Competition and Fair Prices Working of the Laws of Supply and Demand Effects of Monopoly and Combination on Prices Importance of Prices in Human Life Bulls and Bears as Price-Makers Catching the Profiteer 'Cxr^D UNIVERSITY OF OKLAHOMA BULLETIN QUESTION Sliall the policy of Government Price-Control W adopted in tlie United States Facts and Ar"uments on Both Sides J. W. Scruggs, Editor EXTENSION DIVISION DEPARTMENT OF PUBLIC DISCUSSION AND DEBATE PRICE CONTROL Dr. T. B. Robb, University of Oklahoma I. GENERAL CONSIDERATIONS Price Control. Prices may be controld both directly and indirectly. They ma}^ be fixt by legal enactment; or by a board or commission, created by law, to eflfect the same purpose. Such a board or commission, might not have any legal power to fix prices and yet deliberateh' exercise great control over prices by crystalizing public sentiment behind their recommendations. During the war, the Fuel Administration had no legal power to fix prices. The only control the Food Administration had over prices was through its licensing power, while the legal position of the Price-Fixing Committee of the War Industries Board was. according to Professor Taussig, a member, "highly uncertain." yet all of these agencies directly controld prices. But it is possibe to control prices, to a certain extent at least, in a more indirect way. If the price of wheat is fixt, this action will certainly control somewhat the price of flour and thus the price of bread. If the price of cattle were fixt, it would affect the price of hides and this would affect the price of shoes, and the price of shoes helps materially to determine the cost of living, and the cost of living is probably the most potent factor which determines wages. Thus, the fixing of the price of things like wheat and meat indirectly exercises some control over many other things. Difficulties of the Question. The students will soon dis- cover that price control is one of the most subtle and elusive subjects with which economic science has to deal. This fact should be borne in mind in discussing the question. The factors which determine prices are so numerous and complicated and unseen that few people are able to visualize the process and see just how prices are determind. For this reason, the debater should be ex- tremely cautious about taking some one fact or group of facts, which he happens to see, and then jump to the conclusion that these things determine prices. He will also run against many anom.alous and apparently contradictory facts, but these he must be prepared to expect. 4 THE UNIVERSITY OF OKLAHOMA II. MARKET MACHINERY Meaning of Price Control. The first essential in the dis- cussion of the question is to s^ct something concrete and definite out of the phrase "price control". We know that goods, as a rule, travel a long journey in their passage from the producer to the consumer. It is also well known that at each station of this journey goods sell at a different price. Consequently, when we talk of "price control", what prices do we mean? Before this question can be answered, we must take a look at the machinery of the market. By market machinery is meant that process liirough which goods pass on their way from the producer to the tinal consumers. This process differs somewhat for different classes of goods, l)ut the marketing of food products is typical of the general situation. Professor Weld, in his admirable book (in the marketing of farm products, gives the following descriptifdividcd among separate plants. In the steel industry, for example, one plant makes nothing but pig iron, another makes pig iron into crude steel ; another rolls the steel into bars ; another takes the bars and makes structural forms, or machinery. In the worsted industry, the tendency is towards a greater sub-division of tasks among separate plants. Marketing Machinery Should Reduce Prices. "It is difficult to understand why tliis division of labor or specialization argu- ment should not ai)ply to the marketing part of production as well as the manufacturing part. Tkose who have really made a first hand intensive study of the wholesale produce trade realize that there are certain necessary functions to be pcrformd and that these functions are much more ditificult and complex than is com- monly supposed. Each successive middleman specializes on one GOVERNiMENT PRICE CONTROL 5 particular set of functions. For example, in New York City, a large part of the butter reaching that city passes thru the hands of two different middlemen before reaching the retail stores. The first is a whole-sale receiver who receives l)Utter in large quantities and in great variety from a large number of country creameries. He sends out solicitors to get m touch with the creameries, and he often finances them by allowing them to draw drafts on day of shipment. He provides a store or ware- house with adequate refrigeration, assembles the miscellaneous shipments from different parts of the country, weighs them, and makes returns to shippers and sorts them out roughly, according to quality. These functions of the receiver form a business in themselves. He sells in lots of from twenty to fifty or more tubs to jobbers, who, in turn, send salesmen to the thousands of retail stores, delicatessens, restaurants, hotels, etc., and delivers one tul) at a time from day to day as the needs of the retail out- lets demand. Conclusions to Draw. The purpose of this rather lengthy quotation is to .show the following: (1) that the marketing pro- cess is a part of production, and (2) that the various steps in this process, namely the transportation coi.ipanies, whole- salers, retailers, etc., are simply a case of the division of labor, (3) that the division of labor, as we know it in manufacturing, has been a great boon to society, for it has greatly increast the productivity of labor and thereby reduced prices to the con- suming public. The conclusion is that the presumption is in favor of this market machinery, for the specialization it .shows indi- cates high productivity of labor and hence lower orices to con- sumers. This is not saying that the present market machinery is perfect. It may be that the specialization has been overdone. But this phase of the subject has no relation to the question of price control ; and is consequently beyond the purview of this article. We pass now to a consideration of what this marketing process costs the consumer. III. THE COSTS OF MARKETING Where Prices Can Be Controld. We have seen that food products in a general way pass through the hands of country shippers, transportation companies wholesale dealers, and retail stores. Food products sell for a different price at each of these •^.taf^es. It is evident that price control will have to control the price at some or all of these given points. Let us consider how much of the consumer's dollar is consumed at each of these points. Citrus Fruit. G. H. Powell, in an address before the West- ern Fruit Jobbers' Association, in April, 1915, gave the following figures for fruit: "Taking the thirty re])resentative citrus markets, including 6 THE UNIVERSITY OF OKLAHOMA 5,483 rei)orts extending over the year 1914, the f the huge number oi units wliich they handle. In Abnormal Periods. But in a period of shortage of sup- plies and rapidly mounting prices, speculators do a thriving I)usi- ness because of fluctuations. By buying up supplies and holding them out i>f the market, the .shortage is accentuated, and this fictitiun-- "-ItMrtriije is a vtr}' potent factor in furtlier boosting GOVERNMENT PRICE CONTROL 13 prices. But extreme caution must be exercised at this point. If we admit that buying up supplies and holding them out of the market will boost prices, we ought to be consistent, to admit that later when these goods are thrown on to the market, as of course they must, the effect would be to depress the prices. Consquently our best authorities on speculation refuse to get excited regard- ing the effect of speculators on prices, for, to be a speculator, you must both buy and sell and, while the buying may tend to raise prices, the selling must tend to depress them. You can't lift yourself by your bootstraps, for, as you lift yourself up, so also do you pull yourself down. When This Won't Hold. But this condition can hardly be said to hold in war time, especially in the case of certain arti- cles of which the government is the principal buyer. When the government is hysterically buying up most of the available supply of a given commodity at any price, in its effort to arm itself at the quickest possible moment, the ordinary formulae of supply and demand, as Professor Taussig says, are no longer applicable, and there is no such thing as a determinate equilibrium price. In such a case, speculation and hoarding are certainly vicious, for since there is hardly such a thing as supply and demand coming into equilibrium, the speculator when he buys up, does not have a countervailng effect on the other side of the market when he sells. Not only was this the condition during the war, Init in the case of certain articles it will a!s(i probably last sometime into the future, in such a chaotic condition has Jthe world been left. When this condition ol;lains, there is little effective argument against government price regulation. The War as a Millionaire Maker. We see the statement almost daily of the number of millionaires which the war has made. This statement is intended as prima facie evidence of pro- fiteering and, therefore, justification for price control. The trouble w-ith this statement is the fact that it does not take into consideration the currency inflation caused by the war. An ex- treme example will show the trouble. During the Revolutionary war, continental currency depreciated to such an extent that it is said that barbers papered their shops with it. If a man bad a million dollars worth of this currency, he was a millionaire! We have given figures to show the inflation of the currency since the beginning of the war. The only significance of money is its alnlity tu command articks whicii we desire. War finance has so knockt the purchasing power out of the dollar that it is douittful if a dollar today will command on the average, more 14 THE UNIVERSITY OF OKLAHOMA than 4U cents would in 1914. Consequently, we say lliat, if a man had a yearly salary of $1,000.00 in 1914, he ought to have at least $2,000.00 now to be in the same relative position. In the same way, if a manufacturer in 1914 had a legitimate income of $400,- 000.00 a year, can we say that he is profiteering, if he gets $1,000.- 000.00 now? There is an old adage to the effect that when money comes in the door, reason flies out the window and if we want to know whether the war made millionaires, we must compare the purchasing power of his income with that of 1914, for it is the 1914 conception of a millionaire that is projected into the present. The way to test this matter would Ijc to consult price index numbers to measure the inflation of the dollar. If prices have doubled on the average, then we should take the Federal Income tax statistics, and compare the number who are getting a year- ly income of $1,0C0C00.00 or m.ore. at present, with the number who got $500,0G0.C0 or more, in 1914. VI. OTHER ARGUMENTS FOR PRICE CONTROL Price Control and Monopoly. Where free competition ex- ists, the law of supply and demand is an effective protection to the public. But, under a condition of monopoly or a tendency to monopoly, governmental control is imperative and so far the most effective control has been some species of price regulation. Let us consider the prevalence of monopoly and what program the government must adopt in order to grapple with the problem. Law of Decreasing Cost. In the realm of what is com- monly called "big business" there is an irresistible tendency to monopoly. This irresistible tendency to mouopoly is due to capi- talistic industry resulting in the law of decreasing cost of produc- tion. Industry is called "capitalistic" when a huge initial invest- ment of capital is necessary before productioil can begin and it is this large initial investment of capital that results in the law (•)f decreasing cost of production. In explaining this situation, the writer v.'ill make use of a few of his paragraphs in a recent University of Oklahoma Inilletin on Government Ownership. "The modern shoe factory is a gt)od example of the law of decreasing cost. Shoes are now made in large .'ictorios where there is very expensive specialized machinery operated by highly skilled labor. If this factory could sell but one shoe a year, it is evident that this shce w-nild have to bear the total expenses of the \vheile factory. Under such conditions, shoes would be .so expensive that even m.illionaires could scarcely afford to wear them. Eut this factory could make ten thousand shoes in a year with little more cost than is necessary to make one if it could onlv find a n':arl;(t for llum. In such an event, shoes would be GOVERNMENT PRICE CONTROL 15 made much cheaper, because the overhead costs of the factory are divided among ten thousand shoes instead of beiiig borne by one. In the same way, if the firm could sell a million shoos a year, it could produce each shoe at a lower cost. In short, thv more shoes the factory can find a market for, the cheaper it can make each successive shoe, for the overhead charges representing the cost of the large initial investment of capital are divided among an ever increasing number of shoes.'' Why It Tends To Monopoly. Competition among firms working under this law is an unstable competition for as the cost of production always has a tendency to fall with every change in cost, the plane of competition must change. Every firm is ever .straining to enlarge its market, for as its market widens, its out- !)ut can increase and with each increase in output, its cost of pro- duction decreases. Any decrease in cost of production gives the firm a relative advantage over its competitors and further streng- thens its position in shoving them out of the market. This is what is known as "cut-throat" competition. It is competition not primarily for the purpose, of reducing the cost to the con- sumer, but competiton for the purpose of freezing out a com- petitor in order to get his business. How It Results. The tendency of this condition is to monopoly. Monopoly comes from this situation in one of two ways. If one competitor is stronger than the other, its larger market makes it possible to produce cheaper than its competitors and consequently it can go into their market, undersell them, and gradually kill them off. As this process continues, the strength of the surviving concern increases with accelerated rapidity and soon it controls the whole field. This is the way the Standard Oil Company rose to power. If the competing concerns are of nearly equal strength, as they compete for each other's markets, the cutthroat competition reduces the strength of all. No one is able to freeze out his competitor, but they all see that the policy they are pursuing is commercial suicide. The inevitable result of this is that, after a period of futile struggles, they bury the hatchet and combine, thus eliminating competition. In part, this was the condition immediately preceding the formation of the United States Steel Corporation. The essential thing to remember is that there can l)e no such thing as stable competition among concerns working under the law of decreasing cost, and that "cutthroat" competition, which is another name for this unstable competition, has a strong tendency to reduce monopoly. This is the key to the explanation of the marvelous rise of the "trust" and "big busi- ness" movement of the last thirty years. 16 THE UNIVERSITY OF OKLAHOMA Wc must rcmtmhcr tliat we are just in tlie initial stages of tliis movement to m.onopoly. Concentration in business has made alarming strides in the last fifty years, hut as yet only a few in- dustries have expanded to such an extent as to control the prin- cipal part of the production of the whole country. But with the rapid progress made in the last fifty years, wliat will he the re- sult when we give tlie tendency three or four centuries in which 1(1 work itself out? So far, our anti-trust legislation has heen fdundtd on the theory of enforced competition, but our best students of the question realize that at l)est these efforts are only jialliatives and that little has heen done toward the solution of the monopoly prol)lem. Price Control and the Regulation of Monopoly. Price con- trol seems tile only remedy lor monopoly. We realize that there should be only one street car system in a city, so the city recog- nizes that it should be a monopoly ; freely permits it, and con- trols it by regulating the rate which is charged the public. The railroads are a natural monopoly and Congress regulates rates. The same an lie said of telephone companies in cities, water. gas, and electric companies. If ten or a dozen of these companies should all attemipt to operate in the same city, the waste in the duplication of equipment would be appalling. Consequently, we recognize the monopoly in highly capitalistic industry seems to l)e carry :r!g us irresistilily to price control. VII. OBJECTIONS TO PRICE CONTROL A. Price Control Means Governmental Distribution of Wealth Price contr(_>l in the rtnal analysis means public control of the distribution of wealth. The industrial world is so nicely adjusted and the inter-relations are so delicate that when an adjustment is made in one place, a corresponding adjustment will often have to take place thruoi't the whole system. If llie government controls the price oi tlie necessities of life, it will have a profound influence of the cost of living and the cost of living is one of the most important single factors which determine wages. If the government controls the prices of wages, that means the control of profits. If the price of farm products is controld, that will control il:e price of land. Tluis wt- have the government control- ing tb.e price of land, ruils, wages, and profits, or, in other words, be'ng the determining factor in the distribution of wealth. Let lliere i;e no misunderstanding. We are not saying that this would be necessarily undesirable. On this point, people differ. All wc are saving is that, instead of lieing determined liy com])etition, GOVERNMENT PRICE CONTROL 17 tluy would lie controld at least in large measure by government fiat. This is a view of the matter that the ordinary man never dreams of when he talks price control, but as President Hadley says : "Legislation is essentially a matter of remote consequences", and when we talk of price control by the government, we must 1(11 ik tlicsc "remote consequences" squarely in the face. B. POLITICAL EFFECTS One of the most insuperable obstacles to successful price con- ifdl would be the political efifects of such a policy. The United States is now an im.mense country, the constituent parts of which have radically different interests. Some one or the other of lliese different interests control the governm.ent at different times, and, if w^e are to judge by what has been done in the past, prices would be controld in the interest of the section of the country that, for the time being, dominated the government. In the first place, we have the producer arrayd against the consumer ; thtn there are the manufacturing interests against the agricul- tural interests, and v/ithin the agricultural group, the cotton plant- er of the south has little in common with the wheat and corn and live stock producer of the west when it comes to price control. How It Has Workt In the Past. Let us see how this thing has workt in the past. When New England, New York, Pennsylvania, etc., were in the saddle, they voted heavy protect- ive tariff for themselves, and let the south and the west largely pay the bill. In 1894, when the shoe was on the other foot, the south and the west voted an income tax on the east and made the exemption so high that the tax would operate chiefly in the east, where the higher incomes existed. More recently the cotton plant- er was eminently satisfied when the price of the farmer's wheat was lowerd from nearly $4.00 to $2.00 a bushel, in the interest of winning the war. and keeping down the cost of living, while the price of his oun crops was permitted to soar from eight to thirty- live cents per pound, (^n the other hand, if the wheat farmer b.ad tlie doing of it, no one doubts that he would have $5.00 wheat, and ten cent cotton. This Obstacle Insuperable. Against this contention, it may be aruued that prices will be controld in such a way that all sec- tions of the country will he equaly benefited. That is. wheat and corn ard meat will be regulated in price, but so also will the price ut this procedure accomplishes nothing, for everyone knows tliat where competition reigns, market prices now are determind by marginal costs. Under norm.al conditions the i;Overnment v.ould be doing nothing but putting its stamp i-^i approval on pre- 20 THE UNIVERSITY OF OKLAHOMA !?(.iit market prices. The Only Other Method. The only other method that ha. been suggested would he that in which the government houglu the supply of each producer, paying each one his cost of produc- tion. The government would then set a price to the buying public wliich would be something like the average of the various prices It has paid the dififerent producers. This plan has only been suggested, for it takes no great stretch of the imagination to know what would happen should the government pay one farmer who happens to have a low cost of production because of his efficiency, say $1.00 a bushel for his wheat, and then pay $1.50 to his indolent and inefficient neighbor whose shiftlessness caused him to have a high cost of production. Apply this proposal to the iron and steel business, coal mining, etc., and any one can see the consequences. Price fixing, therefore, is somewnat like the problem of abolition of property. It is extremely easy to ex- patiate at length upon the subject, but wlien it comes to a concrete program to accomplish the result, it is a difficult matter to present ■fmc that cannot be riddld. D. THE GOVERNMENT AS A DISTRIBUTOR OF GOODS The fourtii difficulty in connection with price control is the fact that it would throw the whole onus and responsibility of dis- tributing goods, both in time and place, upon the government. Professor L. D. H. Weld, probably the foremost authority on the marketing of farm products, states this problem as follows: "Frotri the first, the government has not realized sufficiently the function that it must assume l)y taking away the speculative and price making functions of mercliants. Thru speculative competition the market price becomes adjusted, so that tlie supply of the commodity is automatically distributed geograpiiically, so that each section of the country, each city, and each store gets the supply that it requires. It also automatically distributes the availalile supply over a period of time, so that it lasts until a new supply can be obtained. "If the government deprives merchants of performing these two important functions, the government must parcel the supply out to each community in accordance to its needs, and it must regulate the out flow from week to week, so that the supply will last until the next crops arc availaljle." It is doubtful if the student approaching this question for the first time will realize the full significance of the statement just quoted from Professor Weld. .A.ny one wishing to develop this argument is advised to consult first some standard work on the economic function of si)cculatioii, for only by realizing the |)art GOVERNMENT PRICE CONTROL 21 played by speculation in modern industry will he sense the full significance of the point made. E. PRICE CONTROL AND THE RESTRICTION OF OUTPUT One of the difficult problems to be met under a price control regime would he that of maintaining output. If prices are fixt a little bit too low, it will certainly have the efifect of driving the marginal producers out of business. The result of this will be that production will be curtaild, which in turn must force up prices. On the other hand, all producers may be dissatisfied with the price named l)y the government and decide to curtail their production to such a point that the decreast supply will raise prices to a point wiiich they consider remunerative. We may have rcacht the point where the government can tell a man that, if he wishes to produce, he must sell his product at a given figure, but we certainly have not rcacht the point where the gov- ernment can name a price, proclaim martial law and compel production at that figure. LTndoubtedly, this is a very serious proposition. This factor did not operate to any very great ex- tent during the war, for altho there was dissatisfaction with many of the prices named, patriotism and social pressure causd dissatisfied firms to maintain their production. But. in some lines, even this pressure was not sufficient, and according to Pro- fessor Blackley, the price of raw sugar, negotiated by Mr. Hoover, resulted in a 14 per cent decrease in acreage of sugar ])eets in this country. F. PUBLIC OPINION NECESSARY FOR PRICE CONTROL Public opinion is necessary to successful price control. If we will stop for a minute to consider why the policy of price con- trol, during the war, was as successful as it was. we .shall see more vividly how difficult it would be in time of peace. Price control, during the war, was consciously used as a means of win- ning the war. The war fever ran high. Certain persons were conscripted to carry a gun ; others of technical ability were calld upon to do that which they could do best. It was almost liter- ally true that everyone was conscripted to do that for which he was most fitted. One of the most important things was to main- tain the morale — especially the morale back home, for, if the home folks stood firm, there was little to fear about the army. One of the most important things in maintaining the morale in 12 THE I'NIVERSITY OF OKLAHOMA the civilian population was keeping down the cost ot living. Price control was therefore, a war measure and was on the same footing as the draft law. The result was that those whose duty it was io i)roduce acquiest to the command to produce at a reasonable profit, the same as did the drafted men. The producer who tried to evade price controling regulations was placed on the same footing as the slacker who attempted to evade the draft law. It was this great social pressure that made successful price control in war time a comparatively easy matter. It is for this reason tliat ir.uch of the war experience with price control will not apply wlien we come to a condition of peace. VIII. CONCLUSIONS The student should understand that, in presenting these ob- jections to price control, we have stated them as forcibly as possible. Many of them are tendencies that would take a great deal of time to work out. Many of them would work with full force only when all or, at least, a large proportion of prices are controld by the government. As long as only a few prices were controld, the machinery of the competitive market would continue to determine prices, and the prices of regub'"?d commodities would still have a close relation to this standard. It would only be where all prices are controld that the government would be in danger of losing touch with the norm as determind liy the equilib- rium of supply and demand. Where the government exercises only a minor influence or where it touches only a few commodi- ties, we must be cautious about i)ressing these objections too far. CONTROL BY LAW OF SUPPLY AND DEMAND AND COMPETITION Dr. Chas. H. Van Hise, Late President of the University of Wisconsin Prices Before the War. Under the condition of abundant raw and manufactured products, the prices of commodities in this country before the war were not high, although in many cases they were higher than perhaps was justified because of combinations and coopera- tion, to be later mentioned. For control of prices the United States was dependent upon the so-called law of supply and demand in connection with com- petition. If tile supply of any article was somewhat short, the GOVERNMENT PRICE CONTROL 23 ' price did not become unduly cnhanct, l)ecause in most cases substitutes could be found. Thus, if there were a shortage of one of the fruits, while the price might rise, it was not necessary for everyone who had been accustomd to use this fruit to have it. Other fruits would be used as substitutes, and thus the in- crease of prices was kept within reasonable bounds. From the foundation of the Nation, it has been the accepted theory that if competition could be kept free, the law of supply and demand would adequately control prices and quality. How- ever, long before the war the inadequacy of the law of supply and demand and unregulated competition to control prices had been recognized. As a result of rapid and cheap transportation and instantaneous communication, there came the period of con- centration of industry under which the modern great corpora- tion arose. With concentration, cheap transportation, and swift communication, it liecame easy for the different organizations, producing the same articles to unite or to cooperate and thus control the market. This they did- These concentrated or- ganizations, whether a single corporation or cooperating cor- porations, are popularly called trusts. The Antitrust Laws In consequence of the facts presented, the Sherman anti- trust law was passed by Congress in 1890. By the statement of this act, every contract and combination in the form of trust or otherwise in restraint of trade or commerce v.^as declard to be illegal, as was also monopoly. The enactment of the natior.al antitrust law was followd shortly by the enactment of antitrust laws in almost every State in the Union. For a number of years after the Sherman Act was passed, actions under the law by the Attorney General of the United States were few ; but in recent years, and especially in the past decade, numerous actions have been brought to dissolve com- binations and to prevent cooperation. Perhaps the most famous cases which have been decided affirmatively were those of Northern Securities Co., the Standard Oil Co., and the Ameri- can Tobacco Co. Two great cases which are still pending are the United States Steel Corporation and the International Har- vester Co. Prosecution under the Sherman law rests with the Attorney General. It is natural that action should have been brought bv him in those instances in which offenders were most con- 24 THE UNIVERSITY OF OKLAHOMA spicuous and most unpopular. Altogether some hundreds of ac- tions have been brought, and a number of the ofifenders have been found guilty and their organizations have been compeld to dissolve. In some of the States, also, actions have been brought for the dissolution of combinations and contracts in restraint of trade. Cooperation To Control The Market. Notwithstanding the national law, which has been on the statute books for 27 years, and notwithstanding the State statutes, many of which have been on tiie statute books for 20 >ears or more, cooperation exists throughout tlic United States tor every important standard article. This is true from the country crossroads to the great metropolis. At the country cross roads the two or three grocers charge the same prices for sugar or flour. In almost every city there are daily or weekly agreements by the dealers in regard to prices to be charged for standard articles that day or that week. For many articles boards of trade gauge the market and fix the prices. In the great city there may be scores of dealers in anthracite; in the little town two. In each case the price will be the same from each dealer in a given community. Precisely the same thing IS true for ice. the antithesis of anthracite; and so on for everv standard article. Destruction of Commodities to Hold up Prices The cooperation and control of the market to keep up prices has in many cases even gone so far as to lead to the destruction of perishable goods. There is scarcely an important city of the country in which at some season of the year perishable vege- tables, such as melons, squash, lettuce, beets, cabbage etc have not been allowd to go into the dump rather than to the' market and thus lower prices. Prices have also been held up by keeping out of the market a vast quantity of the product l<.r the tune being. This is illustrated by the coffee of Brazil Often the sale of a less quantity -of a commodity at a high price gives a larger total than the sale of a larger quantity at a lower Vo\T Ju P""''P'^ '' ^^^" illustrated by the potato crop of Ult. The crop was short not only in the two chief producing states. Wisconsin and Maine, but generally. The smaller pro- duction realized a larger amount to many farmers for their half crop than for the full crop the previous year. GOVERNMENT PRICE CONTROL 25 Cooperation General It therefore may be said without fear of contradiction, that in the matter of prices there is cooperation between concerns of the same class for every standard article for all or a large part of the United States. This is inevitable under modern con- ditions, because it is so much more profitable to cooperate than it is to compete. Rapid transportation gives a steady flow of goods to any community. Telephone communication is in- stantaneous. The same class of dealers will all have standard articles, for which they will charge like prices. These state- ments, made many times in public addresses thruout the United States, have never been challenged. The arrangements for cooperation are not written out in documents and signed, as formerly was the situation; but they are no less effective in their binding force, and instead of being sporadic, as was early the situation, they are almost universal. Further Legislation to Control the Trusts Because of- the general dissatisfaction thruout the country with the existing situation, Congress in 1914 passed the law creating the Federal Trade Commission, and a supplementary antitrust act known as the Clayton Act. Before 1914, there existed the Bureau of Corporations, with authority to investigate into the practices of the various cor- porations and to report to the Attorney General violations of the antitrust law. These powers went over to the Federal Trade Commission. Also, unfair methods of competition in commerce were declared to be unlawful, and the Federal Trade Commission was empowerd to prevent the use of such unfair methods. Tiie Clayton antitrust law also introduced a new principle in regula- tion, that practises and combination were prohibited which re- sulted in substantial lessening of competition. It thus appears that antecedent to the war, while there was an abundance o'; natural resources and while there was an abun- dance of commodities for all, there was deep-seated dissatisfac- tion with prices, and the first steps had been made to regulate industry thru the antitrust laws and thru the Federal Trade Com- mission. Inadequacy of the Antitrust Legislation By one group of people, including a numi)er of political economists, it was held that, while the Federal Trade Commission had been l)eneficial in preventing unfair practices and by its watch- 26 THE UNIVERSITY OF OKLAHOMA fulness had made Cdiispicuous violations of tlic antitrust law less common, the legislation of Congress did not afford a permanent solution to the prohlcm of control of prices and quality. They held that it has been proved that the laws of supply and demand and competition cannot he depended upon adequately to control prices. They cited as evidence of this position the universal cooperation in the control of the market for all standard articles throughout the country. This group of men said, that since the law of supply and demand had wholly failed to intro- duce real competition, the same principle should he applied to standard articles that has been so successfully applied to the pub- lic utilities. Before there was regulation of the railroads the owners re- garded their btisiness as private and resented any interference on the part of the public. Under these circumstances there were alternating high and low prices. One day there would be cut- throat competition, during which both passenger and freight ser- vice wotild be performd at much below cost, and then the com- panies would get together again and fix such prices as the market would bear. Indeed, the fundamental principle as regards freight and passenger rates was to exact what the market would bear. In many cases the prices fixt were so high as not to comply with the law of maximum return which would have l)een given iiy lower rates because of the larger quantity which would have been handld. In addition to excess charges the uncertainty and variability of rates was seriously detrimental to business be- cause the charges could not be forecast. Finally there were ex- tensive uses of unfair practices, such as discrimination in rates between shippers and in various other ways. The indefensiliU methods included reliates and even drawbacks. The Control of the Public Utilities It is not the purpose here to narrate the long contest and slow progress in securing control of the public utilities thru the inter-state and State commissions. To settle firmly the prin- ciple of control of the jjublic utilities thru the commerce com- missions required some 25 years of severe and frequently bitter contest. The principle of contrt)! of iniblic utilities through commis- sions is new recognized as wise, both by the public and the owners of the public utilities ; neither would go back to the chaotic condition under which the railroads were operated in ac- cordance with the lav/s of supply and demand and competition. GOVERNMENT PRICE CONTROL 27 It is nov/ settled .that, so far as the public utilities are con- cerned, rates must l)e fair, that they must be stable, and that there must be reasonable service. Changes in the rates either up or down must have the approval of the appropriate commission. Wliile the commission itself does not directly fix freight rates, ;i proposed increase in the rates must be approved by the appro- priate commission as necessary under the circumstances to give a fair return. Also, if it is proposed that the rates be reduced, the approval of the commission is likewise necessary. This pro- vision has been found to be very important, for not infrequently by small utilities companies, rates have been placed so low as not to provide for depreciation, and liankruptcy was certain in the future. The pu1)lic may be injured just as much by allowing a pub- lic utility to depreciate in its efficiency as it is by too high a rate. The utilities statutes contradict the theory that the laws of sup- ply and demand and competition are adequate to control rates, altho this may not have been recognized by the legislatures making the laws. The Pure-Food Laws During the past decade the pulilic has generally recognized the complete failure of the laws of supply and demand and com- petition to produce quality for foods, drinks, and drugs. During the first decade of this century the pure-food and drug laws were passt by Congress for interstate commerce and by nearly every State of the Union, the majority of the States acting be- tween 1903 and 1910, and the United States in 1906. Not only were these laws passt, but an agency was created, both for the United States and in each of the States, whose duty it was to see that the laws were complied with. Scarcely a decade after the passage of these laws it seeins to us most extraordinary that we should ever have been willing to be deceivd by false brands, to use adulterated medicines, and to eat poor and frequently liarmful food bearing the name of wholesome products. It now seems amazing to us that the meat packers opposed most bitterly the public inspection of meats. Before that time diseasd, un- sanitary, and poisonous meats had been sold in large quantities. Common Feature of Utilities and Pure-Food Laws The essential common feature of both the public-utilities and the pure-food laws is that an agency is created which may be calld a commission, or one of several other names, whose duty it is to give its entire time to the protection of the pulilic upon 1 28 THE UNIVERSITY OF OKLAHOMA its (nvn initiative. The agency in a given case may ]ic a single: man or several mtn. \ ISefore the public-utilities and pure-food laws were passt a wrongd individual had redress in the courts; Imt in most cases the loss of the individual was small, and only in exceptional cases was this redress a practicable one. The revolutionary feature of control lliru administrative agencies is that the individual is protected thru the continuous activity of piJjlic officials, one of the primary duties of whom is to see tliat the laws are obeyd. Desirable to Extend the Principle of Regulation The great gains resulting from the pu1>lic-utilities and pure- food laws led a group of men to propose that the same principles be applied to all standard commodities. They took the position that the production, distribution, and sale of necessary standard articles are vested with a public interest just as are public utili- ties. They held that there is no essential difiference between the United States Steel Corporation and the Pennsylvania and New York Central Railroads, except that the operation of the one has been declared to be vested with a pul)lic interest and the others have not been so declard. Can anyone doubt, when a single great corporation owns sub- stantially half of the vast iron-ore deposits of the country and a large proportion of the coking coals necessary to produce iron l)roducts, and manufactures half of the iron and steel of the United States, that the operation of such corporation is not vested with a public interest? It took the liuilding of the world to produce the deposits of iron ore and the coal beds. They cannot increase. They are natural resources, limited in quantity, available to mankind. Can anyone seriously hold that the manner of their exploita- tion and the prices that siiall lie chargd for them in the raw state and in manufactured form arc not matters of public inter- est ? The Federal Trade Commission Believing these principles, it was proposed long in advance oi the creation of the Federal Trade Commission that there be created Federal and State Commissions that should have sub- stantially the .same powers for the standard products as the pub- lic utilities commissions have in regard to utilities. It was held that for a standard article, such as steel rails, sugar, flour, or meat, it is just as advantageous to have the price fair, reason- GOVERNMENT PRICE CONTROL 29 al)le, and stable as it is for the i)ul)lic utilities ; and it was held that these advantages could only be secured, when cooperation to control the market everywhere exists throughout the United States, by regulation through administrative agencies. The Orthodox Economic Position Held by Great Majority The above views have not been generally accepted by the public at large, by State legislatures, nor by Congress. Indeed, in a number of cases in which certain privileges were given in the direction of cooperation by legislative authority with certain powers concerning regulation, there was attacht to the law the statement that it was not to lx> interpreted as repealing or modify- ing the antitrust laws. Radical Nature of Government by Commission Jt is perhaps not surprising that the public is slow to extend government by administrative agencies. This extension of gov- ernmental powers is the most revolutionary which has been in- troduced in the United States system since the adoption of the Constitution. Under the Constitution it was the theory that exe- cutive, legislative and judicial powers were to be separate and in- dependent. The administrative commission has general authority to make rates fair, to make service reasonable, and to make rules in regard to particular matters, which are in fact legislative func- tions. The commission makes inquiries in regard to violations of the law, which function is judicial. The commission administers the laws under which it is operating continuously, which function is executive. Thus the commission is an expert body combining legislative, executive, and judicial ftmctions. The people are suspicious of radical changes in the form of tlie government and are suspicious of experts, who necessarily compose the commissions, and therefore, for these reasons, have lieen slow to create commissions having power over industry and commerce. Public Has Faith in Supply and Demand and Competition Another rcasoti why the pulilic has been hesitant to accept the principles of cooperation and regulation is that the people still have faith in the law of supply and dernand and in compe- tition. They believe that if competition could be enforced through the antitrust laws, the law of supply and demand would work so as to result in fair prices. Since this has been the faith of centuries, indeed has almost the sanctity of religion, it is not surprising that the conclusion that under modern conditions it is 30 THE UNIVERSITY OF OKLAHOMA utttrly inadequate to protect the public is not readily accepted. Even after a quarter of a century of trial of the Federal and State antitrust acts, legislatures are still sharpening the teeth of these laws, hoping that in that way they will prevent conrol of the market through cooperation and secure fair prices to the pul)lic. Little Gain From Dissolution of Trusts When the Nortliern Securities, Standard Oil, American Tobacco, and other lesser organizations, were dissolvd under the antitrust law, the public expected that their hopes for results would be achievd. However, after the dissolution of these and other companies, there was no decrease in prices. Indeed, in many cases the value of the stocks of the dissolved companies increast greatly in amount shortly after dissolution, and div- idends went on as l)efore. In two instances the Federal Trade Commission lias investi- gated the matter of prices — tobacco and gasoline. In neither case was there any decrease in price as a result of the dissolution. On the contrary, it was the rapidly advancing price of gaso- line after the dissolution of the Standard Oil Co.. wliicli led to the investigation by the Federal Trade Commission. So far as the pul)lic is concernd* the important thing is the reduction of prices. If great corporations are dissolvd and the pul)lic does not secure commodities at lower prices, it is difficult to see wherein the pul)lic gains. Supply and Demand and Competition Very Important in making the aliovc statements, it is not meant to imjiiy that supply and demand are useless as regulators of price, or that competition is not valuable. It is only meant to imply that they are inadequate. If the quantity of diamonds could be in- creased by tenfold, diamonds would be lower in price. The same is true in regard to ostrich feathers and sealskin coats. The rarity of the article makes the price very high. But the law of supply and demand is not limited to luxuries. We know that, in tlie case of perishable articles, especially illustrated by vegetal)les, the prices vary greatly, being high at the opening of the season and low later ; that is, unless artificial methods are used to keep the product out of the market. Also, supply and demand have a most important influence in the control of prices for standard commodities, such as cereals, textils, steel, and fuels, as will be shown l)y later discussion. While unquestionably tlie laws of supi)ly and demand and GOVERNMENT PRICE CONTROL 31 ■competition are potent forces, they have hect)me relatively less potent with rapid transportation and instantaneous communica- tion, so that while possibly roughly adequate in the past, tlicy are no longer adequate to control prices. Summary In summary, it may be said that before the world war. the public l)elievd in the adequacy of the law of supply and demand combined with competition ; and therefore the laws that have been enacted have been for the purpose of eliminating unfair practices and compelling competition, so that the law of supply and demand would' produce the largest effect. A smaller group held that supply and demand and competi- tion are inadequate, and they proposed the extension of the prin- ciple of regulation applied to the public utilities to all standard articles, in which experience has shown that the market may l>e controld thru cooperation. The Causes of Mounting Prices Tile fundamental cause of the mounting prices is that whicii has already been explaind, an unusual and extraordinary de- mand for all essential commodities. However, this has lieen only one factor in the process. When it was once appreciated that there was a relative shortage of the essential commodities, the home purchasers, in- stead of buying ordinary amounts, purchased in advance of their needs. Thus the family, instead of buying flour by the sack, bought a number of barrels, or, in some cases, l)ought flour for years ahead. The same is true in regard to sugar. Similarly during the spring and summer of 1917, when it was appreciated that there was a shortage of coal, many manufacturers were try- ing to protect their businesses by accumulating reserves to carry them through the winter. The same was true of those who de- sired coal for heat. The consequence was that the demands of purchasers were far beyond what would have been necessary to. meet actual needs hafl the ordinary procedure been followd. This frenzy of excessive l)uying has greatly aggravated tlic situ- ation. Another most important cause of the enhancing prices was that a time when there is great demand is especially advantage- ous for speculators to accumulate great stores of goods of various kinds and hold them for advances in prices. T{.-:s was done on a great scale thrunut the country for every essential commodity. u 32 THE 1:NIYERSITY OF OKLAHOMA Finally, wiicn ihe conditions are as above, it is especially easy for those in a given line of business at a particular locality to co- operate to push prices upward and thus greatly i.ncrease the pro- fits of their liusiness. Tliis also was done on a vast scale for many commodities. Based ui)on the first factor, the second, lliird. and fourth factors have come in, each with reinforcing power, to accelerate prices. The tendencies above described, once started, are cumu- lative, and tiie enhancement of prices goes on with increasing velocity. Tlie prices of foods are advanct ; the employees must have higher pay because of the increast cost of food; the raw materials for manufactured articles are advanct ; the manu- facturer charges a higher price for his articles because he must pay more for his labor and an increast price for his raw mater- ials. At each stage the advance of prices is mace more than sufficient to cover the additional cost. The cycle thus completed is begun again with food, and the circle once more gone around. The second cycle completed, the conditions are right for a third cycle, and so on indefinitely, with the result that prices have l)een and still are rising beyond all reason, like a spiral ascend- ing to the sk}-. Failure of Law of Supply and Demand and Competition The facts which have been presented show that the law of supply and demand and competition adequately to control prices have broken down, for the simple reason that for every staple commodity the demand is greater than the supply. In normal years before the war, as we have seen, the potential capacity of the United States for almost every essential commodity was greater than the home demand. The agricultural lands were de- velopt so as t(,) produce a large surplus, all that could I)c mar- keted at home and abroad at a reasonable price. The coal mines were so developt that they could produce many million tons more than the market demanded. Steel and iron mills similarly were developt so as to meet not only the ordinary demand, but to res- pond quickly to exceptional demands. Under these circumstances the prices, if not adequately controld, had been largely controld by supply and demand, except where there had l)een cooperation of purchasers or manipulators, or both, to control the market. The Excess Demand. The situation was wholly changed l)y the world war. For every important commodity the demand! exceeds the supply. For the staple foods tlie demand is greaterj than any possilile supply. For coal the demand exceeds the GOVERNMENT PRICE CONTROL 3.? capacity tor- delivery. Fdr siitl ilu- (kniainl is tar hcyoiul ilic capacity <>t" all mills. It is not pussihlc to give average percenta^^'es of vlie extent M_ which the demand exceeds the supply; but it rs sate to say that ilie percentage upon the average would not l)e large, jirobably not more than 20 per cent, and for scarcely any connnodity more than v^O or 40 per cent. However, this moderate excess demand of. say, 20 per cent, taken in connection with buying in advance of needs, of forstall- ing by speculators and combinations to control the market, has been sufikient to increase the prices of many essential commodi- ties by ICO, 200, .^0!) and even 4(X) per cent, and for certain articles .greater amounts. Enormous Excess Profits UnJtr the v. aiditions dcscrilied in the foregoing page-, nievitable that the profits of' the great corporations dealing in tlu essential commodities should be excessive. There 4)as been no- .; comparable to the profits of the present war in the history civilization. In the United States, the most exploitive - pro- ring of the days of the Civil War was trivial as corapard \. ;rii the enromous sums which have been obtaind during the pre- sent war by the great corporations dealing in the essential com- iiieant the amount by which the profits lie war times exceed those of normal times before the war. Cereals. There are no avai!able*iigures showing the amount he excess iirufus for those producing and handling the cereals ■ li the war period as compard with the conditions before the war. To obtain accurate figures in this matter is exceedingly difficult Iiecause the profits arc di.stributed among the producers of grain, dealers, millers, jobbers, and retailers. ' Mr. Herbert Hoover, in a statement betore the Senate Committee on Agricul- ture. June 19, 1917, stated that "in the last five months on the item of flour alone $25,000,000 ha? been extracted from the Amer- ican consumer in excess of the normal profits of manufacturers and distributers." If this statement is correct, the total excess profits made upon the grains during the last year must amount to more tlian $1,000,000,000 and may have reacht $2,000,000,000. Meats. According to figures presented by one of the Treas- cxperts to the Finance Committee of the .Senate, the excess l)rofits of 1916. as compard with 1914. and tlie excess profits of 'hi' t((ur biL; paclsinir ci Niinanie-; nf niirayii vvcr>' :is fii1]ii\vs- 34 THP: I'NIVKRSTTY OF OKLAHOMA CorpDration 1914 1916 Gain -- Armour & Co. if 7,509,908 $20,100,000 $12,590,092 Swift & Co 9,450,000 20,465,000 11,015,000 Morris & Co. 2,205,672 3,832,213 1,626,541 Wilson & Co. *1,511,528 4,913,873 3.402,345 Total 20,677,108 49,311,086 28,633,978 * 15 months It should lie understood, however, that the excess profits of $28,633,978 are not exclusively from meats, for the reason that these packing companies are engaged in allied industries and an unknown portion of them are from other sources than meat. Metals. In regard to the excess profits in metals, Senator Sinmions, on August 10, 1917, presented to the Senate figures compiled by J. P. Morgan & Co. showing the excess profits for 1916 as compard with 1914 of some of the larger metal manu- factories, as follows : United States Steel Corporation $207,945,000 Bethlehem Steel Co. 53,715,000 Anaconda Copper Mining Co. 39,087,000 General Electric Co. 6,523,000 American Smelting & Refining Co. 11,158,000 Total for the five corporations $318,428,000 Petroleum. In regard to the excess profits of petroleum, tliose for 1916 are stated on the same authority to l)e, for the Standard Oil Co., of New York, $20,425,000. Manufactured Commodities. The excess profits of mani'- factured products other than the metals have been similarly large. From the same authority the excess profits of the Du Pont Pow- der Co. for 1916 are placed at $76,581,000 for the Corn Product.s Co. at $3,798,000. and for the United States Rubber Co. at $4,537,000. Forty-eight Corporations: It is also stated that the excess l)rofits of 48 corporations, which include the above-mentioned with others, for 1916 as compard with 1914 amounted to $659,- 858,490. Wood. The Federal Trade Commission, in a letter dated June 13, 1917, to the President of the Senate, recommended gov- ernmental control of the production of print and book paper. The letter stated that if in 1917 the same tonnage is produced as in 1916, at the price prevailing in June, the 1917 output wouhi \ GOVERNMENT PRICE CONTROL 35 cost $105,C00,CCO, whereas the cost of this amount in 191() was $70,000,GOO. It said further that at least 50 per cent of this in- crease of $30,CCO,000 would be excess profits over those of 1916. It was also stated that for the second half of 1916 the prices for print and book paper were from 65 to 84 per cent higher than in 1915. The average profits of 41 of the book-making paper mills for 1916 were 100 per cent more than for the previous year. Conclusion Regarding Excess Profits The foregoing facts show that war conditions have been taken advantage of by corporations generally throughout the United States to exact excessive profits. Indeed, in many cases the de- mands for commodities have been so pressing and the enhanct prices so great as to make the exactions amount to extortion. When prices for essentials are increast two, three, or four fold and result in profits Iieyond the dreams of any imagination before the war, it cannot be said that the appeal of President Wilson, on patriotic grounds, to men in lousiness and industry not to practice profiteering, has led to any substantial results. Nor can it reasonably be expected that such an appeal would have been successful. When all lines of business are following the .same practise, it cannot be expected that one corporation or one busi- ness man would depart from the practises of the others. Further Attempts to Control by Indictment As before the war, there have been attempts to prevent co- operation, and thus control prices and profits through prosecu- tion under the Sherman Act Thus on May 24, 1917. by the Federal grand jury at Boston, 88 dealers were indicted for violat- ing the antitrust law to control the entire crop of onions to en- hance the prices of that product. On June 2, the Federal grand jury at Chicago, brought indictments against 25 individuals and firms acting on the Chicago Butter and Egg Board, who were charged with manipulating the markets to increase the price of eggs. In New York it was announct June 19 that 51 coal oper- ators and 102 corporations were put on trial before the United States district court for violating the Sherman Antitrust Act by combining to increase and fix the price of certain coals. Other indictments have been made along the same line. Some of the prosecutions, notably that relating to coal, have l)een abandond ; others have been continued. However, whether the prosecutions arc fcv,- or many, are abandond or continued, they have Ijeen utterly futile to prevent general cooperation to .so . . J : . _ .\ 1 \ ■ E RS 1 r \' OF O K L A n O \\ .\ control the market and thus enhance prices i. ,i all t -seiitial commodities. The failure in these respects has been just as com- plete as was failure along similar lines before the world war. The facts presented in the foregoing pages demonstrate bej-ond itoubt that we cannot rely upon the laws of supplj- and demand ;uul competiticm to meet the situation under war conditions. The onh- possible way in which prices and profits can be reduced to reasonable amounts is by , governmental exertion. Therefore the extraordinary measures presented beloAV to meet the situa- tion have been adopted. These measures are so great a develoi)- ment as almost to amijunt to a revolution in the fhethods of public control '" •.■-"•'ii'~r''"i ;,vl"'"-'- -i-Tl .-...•>-.. vf"-^-'^. THE CONTINUATION OF REGULATION AFTER THE WAR The general answer must be made tlun proved beneficial to the public they should l;c cuntinued, and so far as they have not been beneficial they shoidd not be coiitituKil The difficulty will be in indicating those measures wbii normal conditions will be beneficial and detrimental. In this matter, however, there are certain general considera- tions which should have weight. It is certain that, following the war, combination aliroad will be general. Already Germanj' is ccijnsidering buying and selling nationally; and whether or not .she decides to do this as a direct governmental activity, there is no question that ihe buying and selling by Germany uf any commodity will be done if not through a single organization at least through such a limited number of organizations that they will cooperate perfectly in their production, buying and selling. Furthermore, it is highly prol)able that this cooperation will extend even beyond Germany and will include her allies. Under these circiunstanccs it is certain that any attempt to meet Ger- many in world trade under the individualistic method of law of supply and demand and competition cannot but fail. If we do not meet Germany's competition l)y national organization as efficient as her own, we may as well at once concede that Germany will yain world ilominancc for those trades and industries for which slie lias adequate resources. .\lso not only during the war but for a consideral)le period after the war, the demand for food and other essentials may be greater than the possible supply. As we have seen, the food prochicton of Germany, France, and Italy has declined alavminglv (JOVERXMENT PRICE CONTROL 37 iluriiiL; the war because of lack ot fertilizers .uul insufficient labor. Their 'herds will have been greatly diminisht. These icndcncies will continue thruout the war so that their agricul- utral production and herds will- become even smaller. It is pro- bable that for a long- time, possibly for several years, we may have an insufficient surplus to meet the legitimate needs of the Allies: indi'td it is little short uf (-(.'rlain ib:ii tliis will be tnu- for a nuni- 1 commodities .^ball we revert Im uii. ici\\ i--i ^ui'[;i\ .lim ui.in.uni auu i:iMii|iv- lition, and allow goods to be exported abroad in imlimited quan- tities, so that our t)wn prici ' still higher levels, and im iu-eferencc be given abroad: I do not know the answer others will make; but, for myself, it seems clear that the essential necessities of t'ne Allies must not only be met during the war, but for a sufficent time after the war so that their agriculture and industries may be rehabi- btaaci! : especially as such rehabilitation in northern France is largely neces.sary because of odious and tmnecessary destruction of property on a vast scale by Germany and heavy drafts upon the financial resotirces of those couiitries unwarranted by inter- national war. This war probably will cost hundreds of thousands, and it may cost millions of our men. It will require many billions of our treasure which will put a heavy burden upon succeeding generations. The dreadful costs of the war we must bear. Should we not therefore gain everything possible from the ex= |)eriences of the war? The vast savings due to more scientific prodtiction and distrri^ution, if continued after the war, will in large measure, indeed, they may completely, carry not only the interest load imposed upon us, but even a certain amount each year toward the liquidation of the principal. Without being able to demonstrate it. I believe it probable that if, following the war. wise governmental regtilation is continued not merely for the pub- lic utilities but for every essential commodity, the savings to the people will I)c sufficient to meet the money cost of the war. No- thing can compensate for the losses in men. FINDING THE PROFITEERS Albert W. Atwood in the Saturday Evening Post More Loose Talk Than Facts Tbe hardest thing which common sense has to contend with in thi-; world is lon-;(> talk, \agne charges, epithet*^ rathf-r 38 THE UNIVERSITY OF OKLAHOMA than specifications — in short, too much lip. Millions of silly people jump at conclusions, express their minds in talk before they have any minds to express, and praise or condemn — chiefly the latter — out of hand. Talk is the universal curse. To one person who has actually traced or even tried to trace the costs and prices of commodities thru from producer to consumer to see whether too much is being charged, millions have shouted and accused and denounct. We are at once confronted with the absurdity of what has been calld "circular reasoning" before it is possible even to start the search for profiteers. There are those who say that prices have risen because wages have risen, and that wages have gone up because prices have gone up. Thomas Nast's most famous cartoon. The Tweed Ring, showed a dozen men .standing in a circle, each pointing a finger at his neighbor on one side and remarking, "he did it". Nor have cartoonists of the present day faild to show shrewdly many persons standing in a circle, each accusing his neighbor of being a profiteer. But the wage earner has no trouble in getting back at the manufacturer and pointing to the fact that in many cases wages lag behind profits and prices by at least sixmonths or a year. Hard prest, the manufacturer accuses the public of being ex- travagant, but the public laughs when it sees the enormous dividends the manufacturer is paying. Prest a little harder, the manufacturer, says the producer of raw materials is to blame, and even accuses the largest manufacturers, or so-calld trusts, of being the culprits. These largest manufacturers have very little trouble in proving that they sell goods more cheaply than the smaller ones. Every one of course takes a whack at the middleman, the jobber and speculator, and especially does the farmer go for them. But even these much despized persons have their in- nings. They have no difficulty in showing that what they take out as toll is the merest fraction of the cost, and that the mar- gin between wholesale and retail has if anything tended to fall instead of rise in a period of rising prices. Even the speculator is able to prove that in the long run he cannot artificially mark up prices unless other causes are about to produce a rise. Nor does the much-abused middleman — whether he be jobber, or the greatest middleman of all, the retailer — have much trouble in showing that without him both the farmer and consumer would be utterly helpless or else would have to perform his GOVERNMENT PRICE CONTROL 39 functions with the added expense involvd. The processes of distribution are often wasteful, but they have to be effected. Not so Simple as it Seems It all seems very confusing and baffling. No wonder flip- pant people say that profiteering usually is what the other fel- low charges. But is not this definition more than flippant? For it is a deeply seated trait in human nature to take for granted that we are entitld to an increase in wages or salary, rent or profits whenever conditions permit. Each of us wants more, no matter whether we render services or not. But we are very particular that the other fellow should give full value for the money he receives. Everybody is eager to take advantage of rising prices, but feels aggrievd if any body else snatches the advantage awa3^ If is were not so serious, if most people were not openly rebellious at what they consider extortion, this passing of the buck would have its humorous aspect. The president of a great maunfacturing company recently accused the retailers in one of his mill towns of being profiteers. He threatened to open a cost-price store backt by the enormous resources of his com- pany to bring down the cost of living. In other words he is- sued an ultimatum to the merchants of the city, his object being to "stop this business of the industrial cat chasing its tail." All the increast wages which his workers got, he said, were at once absorbd by the merchants. When this executive visited the town to confer with the merchants great crowds of his own employees, who had hooted him a few years before during a strike, surrounded his auto- mobile and shouted their applause. But when he met the mer- chants they askt for an immediate show-down of the names of the profiteers, and presented figures to prove that prices were no higher there than in neighboring towns. Moreover they in- timated that the best way to bring down the cost of living was to begin at the source or f ountainhead ; and they askt about the profits of the company itself. People living in glass houses, it was suggested, should not throw stones. An important religious and educational organization which comes in close contact with wage earners recently receivd a complaint from the general manager of a large corporation in a New Jersey city. He explaind that since 1917 he had in- creast wages twice a year; that he had recently raisd wages 4(1 THE LLNMVKRSIT^' OF OKLAHOMA aL;ain, hut was waited upon hy a committee of workmen vvlio said that the corner grocery had raisd prices, tlie landlord had increast rents, and tliat they were al)sorbing the increase in wages so that the workers were getting no benefit. This gen- eral manager said he had studied the situation for a good many years and blamed the merchants for deliberately raising the l)rice of goods when they learnd thru the public jiress of the raise in wages accorded the workers. "At our request" said a representative of tlie organization," the United Bureau of Labor ^Statistics made an investigation with three exijcrts in that NeAv Jersey city. They carefully in- vestigated tlic rise in prices and tried to discover some relation i)etween the advance in wages and that in prices. The result shuwd, however, that prices in that city were no different from those in surrounding New^ Jerse.v and New York towns, and that tlie raise in waues came after rather than before the rai-e in prices." Easy to Blame Local attorneys are hot after the profiteer, food administra- tors and ever}- manner of civic and consumers' organization are doing their iitmost to hunt him down. In addition to all thi> many cities have special commissions which have no function except to investi gate the cost of living. There is no dout as tc> the impopularitA' of the profiteer. • Everybody is against him, not so much because they can locate and punish him as because it is human nature to love to have a scapegoat. The man who liits his thumb with a hammer finds far more satisfaction in blaming his wife than he docs in finding fault with the hammer ft is natural impulse to feel that someone has abused and i?ougd us. Xo amount of education will persuade people that not only profiteering but even the almost countless instances o' laigc and reasonable profits wdiich so characterize the present period of prosperity are the result rather than the cause of high prices. This is a point on which practically every authority, whose opinion is entitld to any respect, agrees.* History reinforces it But it is the same old case as the thumb and the hammei". Yon cannot blame the force of gravity with any satisfaction to your- self, but w-e all enjoy finding fault with other people. We no longer burn our neighbors as witches, but wc are able still to call them names. When sugar went to 25c a pound it wa^ much more natural for a woman to sav. as I heard one remark GOVERN MEXr PRICE CONTROL 41 ■'This is a free country for skunks", than for her really to under- stand the sugar situation. "This talk of profiteering"', said a scientist who had licen investigating fires caused by spontaneous combustion, "reminds me of my friend who was riding in a trolley car which came to a sudden stop. He ask the motorman the cause of the delay, and after tinkering around a long time the motorman with relievd look on his face said, 'I guess the volts have got into the motor". That's the way with most peo- ple who are puzzld by the high cost of living. They are ignorant of its real and complicated causes, and some one shouts, 'profiteering'. They all exclaim, 'Why, of course, that's it' and feel much relievd and satisfied"'. Busy Prosecutors When profiteers have been caught they have been so small and insignificant that no one could discover how their opera- tions had had more than little if any bearing on the situation. Consider sugar. Its high price has irritated the public more per- haps than that of any other commodity. Every district attorney in the country has been trying to run down hoaders of and pro- fiteers in sugar. The results have been practically nothing. According to the statement of a former food administrator who is now chairman of the fair-price committee in one of the largest cities of the country, five weeks of investigation by a corps of secret-service men faild to uncover a single profiteer in sugar. Finally when a few paltry speculators were discoverd all the newspaper reporters were calld in, but the sensation had evaporated into thin air as far as headlines were concernd. Perhaps the big culprits have escaped detection and punish- ment. They are better able to eniploy expensive counsel to de- fend them. I was told by a member of a firm of sugar brokers who had had an altercation with the local fair-price committee that the head of the firm would spend a million dollars in fight- ing the committee if the case were taken into court. Later, however, this same firm was publicily exonerated by the com- mittee, and in fact praisd for its conduct. r.ut iho ample means do help protect the guilty as a rule it is difficult to see how any amount of wealth could protect the culpable objects ven anger. But how about the merchant? Have his expenses re- maind stationary? An old German butcher at Christmas time said that he remembered when he bought turkeys wholesale at ten cents a pound and sold them at fourteen. "Nobody kickt then. Now I buy at fifty-five cents and sell at sixty-two, and my customers call me a profiteer." Of course what we see going on universally is a very simple thing, an efYort on the part of everj'body to pass on to his customer the increast cost of what he himself has to pay. In other words everyone is trying to' escape the penalty of the war and the decreast purchasing power of the dollar which has followd it. The war was a great calamity. It is supposed to have cost fully $340,000,000,000. It resulted in the destruction of property, a scarcity of goods and lal)or, the demoralization of the markets am! \hv laws of trade, and a vicious inflation of credit and currency. In all probability' this nice little bill will have to be paid for, but those who are able to raise their wages or profits cnuf are simply passing the buck to someone else. It is iiot so much a reprehensible thing, ethically considered. as it is a frantic cft'ort to postpone the dreaded day of reckon- ing. One of the chief reasons for the high price of shoes, clotl' ing. and the like is the almost universal and for the most part COVERNMENT PRICE CONTROL 45 amazingly succcSvsful effort of dealers to get into the lucky class and keep from having their pockets pickt by the next great sweep in prices, which they fear will be downward. Or, to be more technical, I refer, of course, to the widespread practise of all the dealers involvd of selling goods on the basis of what it will probably cost to replace them rather than what it cost to buy them. The public has no conception, nor can any language of mine convey an idea, of how serious a factor this custom has been in pushing up prices. The practise has be- come far more general than ever of selling goods not on a basis of a fair profit added to the actual cost but on a basis of the probable or feard cost of replacing them. In other words almost every dealer in goods has lieen playing safe with a double margin. .Vs one merchandise manager says: "If a thing costs $2 todaj' and is going to cost $3 next spring the retailer is apt to price the goods which he now has in stock on the basis of a cost of $2.50 or even $3. He will tell you that the market price will come down and he must mark his goods somewhere near their replacement value, and he must make greater profits now to take care of the losses he may swallow in case the market goes back from $3 to $2. Now tlie retailer figures that way, the jobber figures that way, the manufacturer figures that way on his raw material and even liis labor, and the producer of cotton figures that way. You can see that everybody is carrjang his goods as tho he were riding for a fall, and where he has been doing that for the last two and possibly three years he has been making a lot of money and getting more than normal profits on a great deal of his merchandize." Uncertainties of the Future Dealers are afraid that prices have gone so high that the public may soon rebel and refuse to buy anything except food. Of course the wave has a crest somewhere. Prices cannot rise forever without a smash-up or a panic of some sort in which many dealers in goods would go on the rocks. To protect themselves against this possible slump later on they have been stretching their profits to an extent which were it not for this fear would be beyond all reason. The astonishing feature of ihe situation is brought out strikingly in the following state- ment from a textile manufacturer: "Conditions under which we are all (Uiini; business aie uiii- lalizing, full of uncertainties, and everybody is looking for the day when the top will have been reacht and when the slide will begin. This is, of course, a natural business instinct. This feeling of uncertainty started with the first advances, and the 46 THE UNIVERSITY OF OKLAHOMA general policy has been for everybody to take all the profits they could get, clean up, and be ready for the drop. However this has been going on for about six seasons, and prices are still going up, with everybody taking the additional profit each season." It is not literally true, of course, that all goods are being sold on this basis. Many of the larger and stronger concerns are able to sell at least part of their merchandise at prices proportionate to their original cost. Nor are business men by any means agreed that it is wholly proper to mark all their stock up to the replacement costs to that they fear for the future. ... A certain very large steel company is reputed to have kept the price of a product $3.75 tho the smaller com- panies were selling at $4.50. Meanwhile jobbers were said to be buying from the big company and loudly praising its modera- tion and public spirit while at the same time selling to retailers as if the cost had been $4.50 to them. A furniture manufacturer, after describing in detail the reasons why prices of furniture have risen, remarkt with point and accuracy: "Yet the demand still keeps up, and remember that it is not cheap furniture but expensive furniture. For my part I can hardly understand such an excessive demand at the pres- ent prices except that with everything else advancing in price nine people out of ten have made money and for four or five years during the war they did economize and consequently now feel able and can buy." Another bad feature of a scarcity or seller's market is that prices which consumers pay of necessity lag behind producers' prices. Even when hides have fallen in price and cattle on the hoof bring the farmer less than before we must from the very nature of the case continue to pay high prices for shoes and beefsteak. Call the packers, manufacturers and all the rest of them buccaneers if you will, but that does not alter the fact that it takes from six months to a year to work thru from raw materials to finisht goods. Therefore the high prices of many raw materials of last summer will not be and cannot be fully reflected in prices to the consumer immediately. The Crushing Burden of Taxes One of the chief reasons why the older standards of profit- making have been abandond is the effort of business men to pass on to others the enormous burden of taxation incident to the war. Many authorities even contend that the present excess- profits tax is the keystone of the arch of high prices. It was GOVERNMENT PRICE CONTROL 47 the evident intention of Congress to make the stockholders of rich corporations bear his tax. But for the most part the corporations — and everyone else in business for that matter, includingall the small dealers and retailers — have been suc- cessful in passing the tax on in the form of higher prices for what they have to sell. Congress and the public generally had the idea that an excess-prolit tax was in some way a device to check profits. But in reality it has enlarged them. Taxes have always been and probably always will be considered an ex- pense of doing business, just like interest charges on borrowd capital or fire insurance. . . . Each member of the distribu- tive chain from the producer of raw material to the retailer^ — and there may be a dozen of them — feels obliged to make ample allowance to cover the tax. In this case it is not the man who is to blame, it is the tax. But the allowance for the tax grows as it is passt on. It becomes like the snowball rolling down hill. It is one of the most vicious links in that endless chain of the high cost of living. In one study of the effect of the tax on prices it is estimated that one to fifty excess-profits taxes are included in everv article sold. KEEPING DOWN FOOD COSTS By Harry C. Douglas Former Editor of the "Sydney Times" Stale cunlrol of food and necessities need not be the deli- cate and diiticult problem that friends of the old, happy-go-lucky, laissez-faire school would have the public ])elieve. Many apolo- gists for unrtstricted individualism postulate that our whole social order would totter upon its foundations if a few callous speculators in food and fuel, with all the instincts of ravenous wolves eyeing a defenseless fiock of sheep, were to have their unnatural greed curbd in the interests of the greater public at large. It may be argued that the wolves are well able to look after their own predatory hides in any case ; it may be asserted that the only safe procedure is to legislate against, and not for, them; leaving aside theories, there remains the timorously art- vanct suggestion that perhaps any adoption of national— or state — control of the necessities of life savors too mucli of the Utopian, the socialistic, the impractical. To this there is one certain answer : "It has been done. It is lieing done now — and ii works." 48 THE L:NlVERSirV OF OKLAHOMA Must Kiiropuan nations luivc put food and otluT commoditii.s under government control, their action was dic'ated by a set of ahnornial circumstances. But Australia lia? lackld the same pro- lilem under conditions very nearly a])pr()xiniating those in the L'nited States. When tlie \v;ir l)roke out, a group of .\uslralian si)eculators got very l)usy . indeed. Tlicy tliought lliey saw a spleridiil op,])ortunity to send the prices of food ;ind necessities slvy-rocketing to unheard of heiglus. So they started in to corner supplies, firm in the Ijelief tiiat if they could n..u "hold up" then- own people, at least England would he glad to pay their extor- tionate prices. Their case looked a pretty- sound one — to them. There did not seem to 1)e a tiaw in it. But they had over lookt one thing — the lal)or government. The lal)or government had not overlookt anytliing, not even the fcjod speculators. The laiwr governuKut had had a very wary weather eye focust upiju the speculators from the Ijcginning. .\nd so the cards were stackt ;igainst the food gamblers, the long-suffering wheat pool nun. who only found out whtTi it was too late. .\t tliat the speculators had workt with great efficiency and despatcli. They had lost no lime. As soon as the dogs of war were unleasht, up soard the price of wheat — thirty cent.s a bushel. Soon tlie vicious circle was completed. The flour manufac- turers l:ooste(l tile price of tlieir product. The n-iaster bakers playd ducks and drakes with the public's l)rea(* supply. The grocers, faithfully tagging along behind the bigger men, joind in the orgie of price boosting. The situation was much as it was in New York last fall and early winter, when the cost of fuel, the cost of milk, the cost of groceries — in fact, the cost of everything people had to have — I)egan the upward climb fhat ended by thoroly ar(jusing the public to tlie need for i)rotecti\e, i)rohibitive legis- lation. Less than a month after the price-boosting sharks got busy. the labor government of New South Wales got a little busier. It pland, drew up, passt and put on the statute books its reply. .\nd that reply was a law authorizing the appointment by the <;overn(ir of the Slate of a Necessary Commodities C(Mitrol ("onunission. in wliich was vested practically unlimited powers to li.x the niaximum i)rices to be chargd for nearly everything ex- cejU limousines, steam yachts and Turkish carpets. "Necessary commodities" was given a wide interpretation, the term being lield to include all fuel, gas, whether supplied to householders or manufacturers — all articles of feiod and drink, and the ingre- GOVERNMENT PRICE CONTROL 49 (licnts used in making such articles, and, rtnally any article which, after investigation, the commission might persuade the- govern- ment to add to the list. A daily bulletin lixt the maximum jirices tor necessities within the act. It was recognized that some .speculators, bolder i - more de- fiant than the rank and file, might go ahead and charge their own prices despite the fixt dead lines; that others might retaliate hy withholding the supplies they had accumulated. The labor government provided against these contingencies liy ordering a penalty for such evasions of the strict letter of the law. Any offenders- faced a fine of almost $500 for each offense, a year in jail^-or botli. The commission was erapowerd to enter forcibly any premises of suspected persons. The scheme workt like a charm. The folhjwins mices ruled the day l)eforc the first price-fixing governmental Ijulletin was issued; wheat, $1,26 per bushel; flour, $56.01 per ton; bread, on the point of l)eing boosted from seven to nine cents for a 2-pound loaf. After the bulletin was issued the prices were: wheat, $1 per busiicl : fitnu". $46.37 per ton: bread, orderd to remain at seven cents. In New South Wales, after the appointment of the commis- sion, butter fluctuated in price between 35 and 40 cents a pound. In the neighboring State of Victoria — which is the only state in Australia that has not a labor legislature, and which had no food control conmiission — -Ijutter was around 60 cents a pound. The New South Wales Government went even farther in its determination to enforce obedience from recalcitrant speculators. A group of the biggest operators in the state had 400,000 bushels of wheat stored on the water-front ready for instant shipment to London. The Governor issued an order in which the specula- tors were named, and which gave the state power to seize the wlioJe consignment. Directly after this drastic action the whea', speculators threw up the sponge ; some 3,000,000 bushels of wheat, held for huge profits; were put on the market at the legally fixt price of one dollar a bushel. That lircike the back of price- boosting. No one wanted to "sit in" such a losing game. To cap the climax, tlie government enterd upon a scheme of state bakeries. Practical socialism has gone a long way indeed in New South Wales. The state owns and operates a fleet of trawlers, which bring plentiful supplies of fish into Syndey some three times a week. Furthermore, the state owns and operates a chain of fish stores in whicli are marketed tlie catches of the government 50 THE UNIVERSITY OF OKLAHOMA trawlers. Prices chargd, of course, are just enough to cover oper- ating expenses. An inexhaustible quantity of wholesome, palatable food is thus assured the people at all times of the year. Drouths on the sheep and cattle "stations" need worry the general public only in a ge neral way. The troubles of butchers are their own affair. "We'll make every day Friday if we have to", one man said to me. So well is the scheme working out that the minister responsible for it recently informd the government that a fur- ther $500,000 would have to be spent to buy more trawlers. A unique innovation— even for Australia — was the establish- ment lately in New South Wales of a Fair Rents Courts, to which all tenants who believe they are being mulcted by grasping landlords may take their tales of woe. At the opening of the court, D. R. Hall, State Attorney-General, said. "The experiment which begins today will be vvatcht with tht keenest interest, not alone in this state, but thruout Australia, and, indeed, the older countries of the world. Students of social problems, not less than rack-rented tenants, will interest them- selves in the history of this court." In the very first case tried in the court it was laid down by the presiding judge that a return of six per cent upon his invest- ment was all that the landlord had a right to expect. Railways, street car and telephone systems, and otlur jtublic utilities are publicly ownd. The number of private franchises for public services in Australia is an ever diminishing quantity. The state of Queenland has gone into the brewing and hotel business ; at least, it probably has by now — the scheme was well on its way to realization when I left Australia a few months ago. The pub- lic do not get service at remarkably cheap rates-not because muni- cipal and state ownership has provd a failure, Imt because the cost of labor is so high. There is no doubt, Iiowever, that the public are servd more cheaply liy their o\\ p. government than I)y tlic old private companies. WHEN WILL PRICES DROP? From the Brooklyn Eagle? When people refuse nr are unal>Ie to buy at high prices. — A. lUirlon Hepburn. When pul)lic curtails purchase and consumption of things they can do without. — .A. R. I'.rskine, i)resident Studebaker cor- poration. When buyers refuse to pay unreasonable prices. — (ieorge F. GOVERNMENT PRICE CONTROL 51 Johnson, president Endicott-Johnson corporation. When we increase production, stop speculation and reduce consumption. — Earl D. Babst, president American Sugar Refining company. When manufacturers reduce prices when production costs permit. — E. H. Endicott, president Endicott-Johnson corporation. When we increase our production and the efficiency of our labor. — Wm. M. Wood, president American Woolen company. When everyone works harder and possiltly longer hours, — J. Ogden Armour, president Armour & Co. When people give a fair day's work for their very large pay. — James H. Post, president National Sugar Refining company. PRICE FIXING IN OTHER DAYS The following are not the words of a present day news- paper, nor of a Washington publicist attacking the cold storage plants or the beef trust, but are drawn from an edict of the Emperor Diocletian, used in 301 A. D. "For if the raging avarice, without regard for mankind, in- creases and develops by leaps and bounds, inasmuch as there is only seen a mad desire without control to pay no heed to the needs of the many, it seems good to us, who are the fathers of the people, that justice intervene to settle matters impartially. Who is of so hardened a heart and so untoucht by a feeling for humanity that he can be unaware that in the sale of wares which are exchanged in the market an exorbitant tendency in prices has spread to such an extent that the unbridld desire of plunder- ing is held in check neither by abundance nor by seasons of plenty? It is our pleasure, therefore, that those prices which the subjoind written summary specifies be held in observance thru- out all our domain, that all may know that license to go above the same has been cut ofT. It is our pleasure that if any man shall have boldly come into conflict with this formal statute he shall put his life in peril." So Diocletian fixt the price of wheat 33.6 cents a bushel, of beef 4.9 cents a pound, of pork at 7.2) cents, of butter at 9.8 cents. Coincidentally he fixt the wages of unskild labor at 15 cents a day and of skild artisans at 30 cents. To secure the 6 bushels of wheat a person consumes in a year, it was necessary for a laborer to work thirteen days of twelve hours, whereas now the laborer can buy six bushels of wheat with the wages, at $3 per day, of four and one-half days of eight hours. During the Civil war, wheat, tho no prices were fixt, was about $1.50 per bushel, rice 8 1-2 cents a pound, sugar 14 1-2 cents, coal $8 a ton, but meats, butter, eggs, potatoes were much 5i THE UNIVERSITY OF OKLAHOMA luwcr than now. W^ages were $1.00 to $1.25 a day for men, $8.00 a nioiilh for house workers. How our grandfathers suc- ceeded in makint; ihcir wages meet the then i^rices seems a mir- acle, now. In France, in Ckrmany. in England price-fixing under the most terrific penalities has heen tried and has invariably faild. When the level fixt was low, gardeners refused to produce and scarcity was intensified. When the level fixt was high, production was so stimulated that soon surplus outran demand. Actual prices fell to non-remunerative levels and there was a great depression of the agricultural industry, and, thru it, to all other industries. In 1793 France passt "The Law Maximum" and the guillotine was used on i)rofitcers, but revolutionary democracy was no more able in control prices than was an all-powerful Roman emperor. JAIL THE PROFITEERS By Sen. Arthur Capper From Speech in the U. S. Senate After reading a telegram from the National Wool Growers' association as to the prices the producers are receiving from wool, Senator Capper said ; Mr. President, this statement is of more than ordinary in- terest when considerd in connection with the latest official report of the national conference board, which brings the startling in- formation that from July 1, 1914, to November, 1919, cost of clothing has increast 135 per cent, tho food stuffs incrcast only 92 per cent, fuel 48 per cent and rent 38 per cent. Menace to Business .\nxiety concerning the continuous advance in prices is re- ported general in American business circles by the Federal Re- serve Board's recent review of business conditions. It may well be. The prevaling high prices are rcferd to in that report as an unquestionable menace.' This report virtually admits that ex- cessive profit taking is beginning to menace business itself, to kill demand. Just now tile CDimtry condennis labe>r in unsparing terms for its exactions, but llu evidence is overwhelming that the cause of the expensive' cost of living is not labor wholly, but profits. It is true that labf)r demands all it can get that it may live. l>ut liig GOVERNMENT PRICE CONTROL 53 liusiutss. lo-a great extcnl. keeps on getting and the helpless con- Miincr i)ays. After tlie labor is paid, profits mount to unheard of heights. Public Being Sand-Bagd Can We (h)uhl lliat the general public is l)eing sand-bagd wIkuwc know such facts as these: The net profits of the American Woolen Company, after federal taxes had been deduct- ed, were ?2.77S,600 in 1914; $7,160,295, in 1915: $8,210,761. in 1916; $15,664,985, in 1917, and $12,324,084. in 1918. All on an in- vested capital of 22 million dollars. The earnings on its common eing i'.eighd. Ti> this . ii. .rmc oi- '-iH'cnlaiix-e margin tlie mills and id'- 54 THE UNIVERSITY OF OKLAHOMA bers add a margin of profit more than ample to meet all contin- gencies. Therefore is it any wonder that sheeting now costs nearly as much a yard as silk used to? Where Shoe Money Goes A 50 per cent increase in the price of shoes by next summer is predicted by the president of the National Shoe Travelers. The day this prediction appeard another extra dividend was de- clard by the Central Leather company. The common stock of this company was rated at $58 a year ago. It is now quoted around $105 and a large issue of new stock has recently been added. While the people contemplate going barefooted the leather trust walks on velvet made thicker. A year ago it was the war demand for leather that made shoes high. Now it seems to be the peace demand for velvet. At a time when shoe manufacturers have issued announce- ments of still higher prices for shoes, the report of one of the great leather corporations shows profits earnd of 52 per cent on the stock. The stock of most of such corporations originally did not represent strictly, dollar for dollar, the money invested, but a good part of the stock represented earning power. A great deal, or most of the so-called water in security issues stands for what the organizers believd the concern would earn at a fair dividend rate. But 52 per cent is not a fair rate of return on such watered capitalization. As long as unrestricted prices of stocks are in Wall Street we must be prepared to pay robbery prices. A year ago the stock of the Crucible Steel company was quoted at $52. Today it is quoted at $209, and has recently been as high as $261. Before this country enterd the war the Cruci- ble Steel company never earnd a dividend on its waterd stock. The quotation shows what the best opinion is of its earning power. Enormous Profit in Steel Mr. President, while we were sending the boys to France, eating war bread and conducting all kinds of drives to win the war, the United States Steel corporation made $1,300,000,000 net profit. The price of steel common stock, worthless at the be- ginning, soard to values of unbelief. We have 4 million homeless people in he United States as a result of the melon cutting in lumber. There has been and is shameless profit in that industry, yet weekly advances of $2 to $5 a thousand arc not uncommon. GOVERNMENT PRICE CONTROL 55 Regarding Price of Lath Relative td proiits in lumber, a reliable Kansas lumber deal- er writes me : "Ten months ago the wholesale price of the best grade of lath was $5.30. We are selling lath to trade today at $10 a thousand, altho by the inclosed new price list showing lath at wholesale, lath is now quoted to us at $17.25 and $18.25 a thou- sand f. o. b. this place." "I begin to think the only way out is for the public to stop buying. I would much sooner lock up and lay off for six months than continue business under present conditions. So I think it is up to the government to advise the people to stop buying. The 1)ig five don't get all the hogs to slaughter." Here is an increase of nearly 250 per cent in 10 months on tlie war price of a staple commodity. In shameless and reck- less greed the knnber barons now lead the procession. Mr. President, the market price of the farmers' livestock has declined nearly 50 per cent, liringing many farmers to the verge i)f l)ankruptcy, but the high prices the consumers pay for meat arc virtually unchanged. This is particularly true of pork, of which we have a surplus of more than 1 1-2 billion pounds pro- duced last year, besides large quantities in storage. Profiteering in Coal Also The Fuel .\dministration restricted the advance in wages asked for by the striking bituminous coal miners to 14 per cent liecause at that per cent the consumer would not have to be fur- ther taxt for his coal. Nothwithstanding this estimate, carefully based on facts, Chicago coal dealers and perhaps others have since advanct the retail price of coal 60 cents or more a ton. I have a telegram today from Leavenworth, Kan., that the public is being compeld to pay the 14 per cent increase. The income tax returns prove the mine operators get excessive profits. During the recent strike it was shown that miners' wages in thesoft coal field were not excessive. But very little or no information what- ever was disclosed in regard to the actual profits of the operators, which still are known only to themselves and the bookkeepers. Mr. President, all the quotations I have referd to conspire to prove that it is profiteering in manufacturing by the great industrial corporations that has sand-bagd the public, rather than by merchants who deal directly with the consumer. It goes be- hind the retail i)rice. No doubt there is price gouging by some (if tile retailers, Ijut it is the price of goods when they leave the lactory to which the administration's best attention should be first directed. 56 rilE ITNIVERSITY OF OKLAHOMA Gougers Are Getting Bolder ..'I'liosc ;-;igantic corporations have l)cconu' dnink witii un- ruiiscionaljle profits extorted from a too compliant public. "The outstandini^ Tact is that there is nowhere the slightest indication of anj- change in the strategy of the great trusts, com- l)ines and industrial corporations in fattening their profits. A thief has only to steal half as much property these days to com- mit grand larceny, liut it seems a profiteer corjjoration may take all it can get from the i)eople and then make tiiem pay its war taxes besides. "ProsLCUtion of 179 profiteers in 1 stirring among the people at this continuous and widespread phindering. Washington must soon show it has the nerve to deal with these wreckers or must itself reckon with the people. Our government must prove to them its adequacy to govern, must prove worthy of its stewardship, or lose their confidence and rtsjiecl. "1 earnest!} urge as a remed}- to meet this emergency an active prosecution of profiteers, followd l)y their imprisonment, •■'■;d a law requiring every manufacturer to attach to every artic- he produces the exact price he receives for it. I am confi- dent nothing else will so quickly reduce and stabilize prices and rei^.^re lousiness and industry to a safe and sane basis. "Unless we make a real eflfort to control this orgy of greed shall continue to drift toward the rocks and no one can forc- what lookt for or unlookt for disaster mav occur." WHAT HAPPENS IN THE DARK Marketing Costs — Some Necessary, Others Useless Waste From the Country Gentleman It may not be exactly proper to speak of the gap between ■ 'ilucer and consumer as "dai»V." but the means by which a dollar bushel of potatoes is miraculously changed into a three- 'lollar bushel,' and a seven-cent quart of milk becomes over- -ht an eighteen-cent (piart, are of such consuming interest as lo suggest the desirability of a little more light on the interven- ing proc-esses. Recent high prices for iood products have provoked much >c talk a1)out marketing and marketing co.sts, and practicalh ry person who comes in contact with foods, beginning with ' producer and going straight down through l)uyer, shipper, iran.sporter, broker, commission man, jobber, retailer and includ- ing the consumer, has been charged with undue extravagance and waste in running up the final price. Now the fact of the matter is tluit, percentagely speaking, marketfhg and di.stribution costs are but little higher than they !e in 1914. Certain factors of cost have even been reduced recent vear<. But the further fact is that, taking our market- 58 THE UNIVERSITY OF OKLAHOMA ing and distribution system as a whole, it is so utterly inefficieni and so full of losses anrl wastes of a multitude of different kinds as to merit most of the cutting criticism it receives. The much-talkt-of road between producer and consumer is not a road at all. It is nothing more than an elaborated cow path that wr.nders more or less aimlesly among a maze of natural and artificial obstructions, inherited from the days when roads were not dcsignd to facilitate travel but luerely led past certain strate- gic points. Regarding the marketing of perishable foods, one of the largest wholesale i)roduce dealers outside of New York- City says : "It is simply a case of a number of individuals and com- panies operating independently on a speculative basis, each one trying to outguess the others as to how much he can clean up on a particular deal, whether it be onions, cabbage, potatoes, cantaloupes, oranges or lemons. The most intense kind of com- petition prevails in both the selling and buying ends, so that prices are forced up at loading stations and profits often reduced to losses after goods arrive to be sold. In other words, the tremendously important business of distributing perisable foods adequate to supply the wants of large cities is practically nothing more than a gambler's game, in which the players stand up to the taljle and play the red, the black or the blue. If they are lucky they win, and if unlucky they lose, and in between the con- sumer pays the fiddler." Piling Up the Burden This well-known dealer cites, specific instances of jumps in prices of cabbage of twenty to thirty dollars a ton overnight, potatoes fifty to seventy-five cents a hundred pounds, and many other similar wild fluctuations. He continues : "The reason for this is that the majority of car-lot jobbers, having all guesst the same thing at the same time, brought in a superabundance of these products. The market would not absorb this quantity, weather conditions became unfavorable, perhaps, causing the goods to deteriorate, and everyone made strenuous efforts to unload, taking heavy losses. In alwut another week this situation had changed, the market had cleaned up, and be- cause no one had nerve to go back again and play the same lead, there was not sufficient cabbage, potatoes or onions rolling into the city to supply the needs of the market, and immediately the jobbers ran the prices up, claiming the law of supply and demand forced them to do it. These variations are not chargeable to the law of supply and demand, l)ut to the anarchy and chaos of individual competition." The illustration cited shows merely one stjurce of loss and useless expense in but one step in the marketing procss. Losses start right back nn the farm and in the orchard through poor GOVERNMENT PRICE CONTROL 59 liarvesting methods, careless handling, improper packing, lack of grading, and exposure to the sun or frost during transporta- ti(Mi, thru improper loading, use of unclean and unsuit'ed cars, lack of ventilation in cars, failure to ice at proper intervals, de- lays in transit, delays and damages in switching, and rough handling at the terminal market, thru lack of unloading facilities, antiquated storage and warehouse facilities, scattered freight yards, losses by theft and breakage during cartage, and congestion of the market district ; at the wholesale market the selling losses already suggested enter in, and at the retail mar- ket all the many inefficiencies and surplus services which taken together with wholesaling costs eat up approximately forty-six per cent of the selling price — all these pile up the bulging burden which the consumer must bear and the producer share. The mere matter of getting foods from the city railroad terminal to the consumer takes up nearly half the money paid for foods. Distribution in New York City on all foods amount- ed to forty-six per cent of the gross retail price, according to tlie Osborn legislative investigation made in 1912. Half the con- sumer's dollar never even gets out of town ! But suppose we take a look at the other end of the market- ing route. What do you suppose it costs to get a carload of potatoes from the wholesaler's warehouse in the producing region to the terminal market in the consuming center? Here is a report submitted by a large Wisconsin wholesale shipper who liuys, stores and ships large quantities of potatoes each season. His figures will not, of course, apply to all sec- tions or to all seasons. Moreover, some of the allowances may 1)e higlier than there is any real need for, but in the main they will indicate fairly accurately wliere some of the liigh market- ing costs come in. THE COST OF MARKETING A CARLOAD OF POTATOES 1919-20 (AVERAGE CAPACITY, 700 BUSHELS) Per cwt. Cents Labor of grading, sacking, loading 11.9 Cost of 280 sacks, tags, twine 15.33 Cost of lining, paper, shavings, and so on 4.76 Man to fire car to destination 4.76 00 THE LINlVERSrJN OF OKLAHOMA KiR'l used in transit . - Stove to heat car, average 3 trips 71 Leased car rental and tariff 2.3X Rejections and adjustments 4.70 Shrinkage on stock in warehouse .3.57 Interest on investment in stored stock ^_ .. 1.19 Insurance, 1)iiilding and equipment - 18 Insurance on stock in warehouse - 24 Interest on investment in warehouses and equipment 2. J. Liabilitj- insurance 1 J Upkci.]! on buildings; fuel, light, power Lqiki^ii -n operating equipment . ■• Sell: phone, telegraph, and so on^.-. 3.57 Exciiangi.- and interest on drafts ' V War tax 1 - _ Tiilai - fil Freight extra Rather, a formidable handicap on ihc consumer's Jolki. . fore the- crop gets fairly started to market, and with the t; mendous bump awaiting it at the other end of the line it is littii. wonder that there is nothing mucli left when the dollar finally gets back to the farmer. But there'are a few other little charges yet, so in its full foi - llie record of the joy ride of a one-dollar bushel of potatoes on its waj' to IxTonic a tlirce-dollar l)iislic1 would l-x^k somewhat as folbiws : •i'lll'. J( )\ RIU!. K ) MAKKJ'.l L'er liu. Price received by producer $1.00-. Local buyer's profit .05 .Shipping expense to near-by wholesale shipper i' Expenses of wholi-ale sliijiper fas per Wisconsin Statement) Total cost of sliiiiper -._ $1,477 .Shipper's profit — variable, average lU 10 Freight from Central Wi.sconsin to Cleveland 198 I'riiker's commission, at Cleveland 0.^ 'riital cost to wholesaler at terminal marktl $1,825 GOVERNMENT PRICE CONTROL .1 Whuk'salcr's (.xpcnscs and profit — variable, avcra.uc fifteen percent on sales ^'' Total cost to retailer $2,141 Retailer's expenses and profit variable. avcra.i?c thirtj^-fiv per cent ^ oi cost - 74' ToUi! consumer S2,S" In times ot rising prices, siieii us me jiresenr, me resr of tlie three dollars is readily acquired by the simple process of marking np the prices of stocks- on hand; in other words, keeping up willi the current market prices regardless of the percentage of profits. This last, however, is a speculative profit and must not be cluirgd in with the marketing costs. Later in the season, or .perhaps on another commodity, losses instead of* profits may accrue thru downward market fluctuations. For instance, apple dealers and speculators of the Northwest lost heavily this past season because of the failure of the market to advance as they had anticipated. The figures on the above outline of potato-marketing costs are typical Init must not be taken as absolute in any particulai case. No two shipments would be handld at exactly the same cost at any particular step in the marketing process, and on a given shipment handld with unusual efficiency thruout the total costs might be materially less. The data here given are developt from Senate investigations on the cost of living in the District of Columbia, from investigations thruout the country conducted by the Federal Trade Commission and the Bureau oi Markets of the Department of Agrictilture, also from price sur- veys of the Department of l-abor, and from statements oblaiml from rei)reseiitarivc dealers and sliipi)ers. The More Perishable Products When we consider the more seasonable and higlily i)erisli- able vegetal jIc and fruit products, such as cabbage, peas, beans, celery, peaches, strawberries and watermelons, we find that marketing costs and losses rnn very much higher than with pota- toes. According to the New York investigating committee above quoted, the average increase in price paid by the consumer for the four vegetal)les named, over the cost deliverd at the New York railroad terminals, averaged 112 per cent and is no doubt higher now. And this figure does not give any consideration .to losses due to delayd arrival, either, since these losses are usually thrown back on tlie shipper. 62 THE UNIVERSITY OF OKLAHOMA A Chicago firm gives an example of a car of perishable pro- duce which arrived in Chicago fourteen days after leaving Knox, Indiana, only seventy-two miles away. A similar example is given in Detroit, where a shipment of fifteen barrels of apples came in after eleven days on the road, from a point fifty miles away, and were completely spoild. But what about the more staple and less perishable products — say, wheat and cattle? How does the consumer's dollar fare with these products? Are tUere unnecessary costs and losses here too? If we consider the farmer's interest in these products entire- ly at an end when they have passt into the hands of the whole- sale distributor as flour or as meat, it may be stated that the mar- keting has been done with a rather high degree of efificiency. These commodities have well-developt channels of trade, organ- ized on an efficient system, and while there are marketing costs that could and should be avoided the total charges are not ex- treme. In 1911 when wheat was selling at country elevators at round ninety cents a liushel, at Kansas City the spread between what the farmer got for a bushel of wheat and the retail sell- ing price to the consumer of the products of that bushel of wheat, including flour and feed, was aliout fifty cents. This in- cluded the miller's manufacturing costs as well as all profits. The average cost of marketing cattle, according to investi- gations made by the Bureau of Markets in 1915, runs somewhat as follows, depending on the distance from market, the qualitj' of the cattle, and various other factors: Per Cent of Re- tail Aleat Price Stockman's marketing expenses 2 to 5 (]ross m.argin to packers 2 to 9 There are, to be sure, considerable margins of cost which could be eliminated even in grain and cattle marketing, l)ut up to this point the charges have not bulkt large. But when we follow these products on until they reach the consumer's table we find such tremendous advances that whatever small savings a I)etter system of marketing the cattle or the wheat might eflfect would be so completely swallowd up as to make ])ractically no difTerence in the price the consumer pays. For instance, when wheat sold at ninety cents in Kansas Citv in 1911, retailers sold l)read at five cents a loaf and this GOVERNMENT PRICE CONTROL 63 bread conlaind wheat for which the farmer had received approx- imately .85 of one cent ! Obviously a saving of ten cents or so a bushel on marketing costs of wheat would have made no per- ceptible decrease on the cost of the loaf of bread to the retailer, and certainly no difference at all to the consumer. Here is what the expert witness — the Bureau of Markets — found out about costs in milk distribution in the Detroit terri- tory in 1915. And while prices have advanct heavily since that time, the percentages of the various factors of cost seem to have remained about the same, therefore will serve our purpose nicely. Per Quart Price paid farmer producer in ten-gallon cans, average 02825 Cost of collecting and handling at country stations 0015 Transporting to Detroit 00425 Total cost of milk f. o. b. Detroit 034 Cost of handling at city plants, including supplies, depre- ciation, and interest on investment, averagfj Oil Cost of distribution, average 012 Total costs to distributor 057 *Profits of handler and distributor 023 Price paid by consumer during June, July and August, 1915 .08 ^Derived by substraction. To-day, of course, these prices and costs would have to be multiplied by 2 or 2.25 right down the line, Ijut the relationships of the various items have riot changed materially. During March of the present year when dealers' prices in Chicago, f. o. b. city terminals, were $3.95 a hundredweight — that is 8 1-2 cents a quart — the retail price to consumers was 15 cents a quart. In New York the equivalent figures were 9.2 cents and 18 cents, and in Birmingham 10.4 cents and 20 cents. Quite a margin, certainly, and suggestive of many elements of waste, but still the evidence of material profiteering is lacking. The New Road From what has been said it is apparent that the producer is justified in demanding a most careful scrutiny of the costs in- volved in getting his goods to market. He cannot be blamed, in fact, for wanting to raise a row now and then because of these seemingly exorbitant marketing costs. It is only natural (.4 THE UNIVKRSITV OF OKLAHOMA that lu' sliould feci Unit lie could do a Ijetter job oi' it liimsell" And vcr\- likely he could, with the proper system. Another tiling that gets under the average prixhicer's liide is the thouglu tluit these higli ])rices, demanded ni ci )nsnniiTs. have the effect of cutting down consumption. There is a whole string of- small and sonu- largr iloii. liiiu^ dial could l)e effected all along the road from the" producer to the consumer, l)ut at best this would ])e ' when repaired merely a patcht up. narrow-gauge trail. What we need is a new road, liuilt with a solid foundation and adapted to a different system of travel. An automobile road rather than an ox-cart road, if you please. Many of the leading thinkers feel that the foundation d" this new road y:{\\ l)e cooi)erative-sclling associations on the arm and cooperative-l)uying associations in tlie city. lUit it will probably be some time before we are alile to ii-^i- this promising new road, and in the meantime it would >eem wise to put in a few bridges and try to take out the worst ■>|iots in our jiresent road. EVILS OF BOTH RISING AND FALLING PRICES Prof. Irving Fisher 1873—1896; 1896—1914 Prices were falling during the first of these two periods. I'cople who had things to sell-^the farmer and the active busi- ness man — complaind that their profits were being cut down or entirely wiped out; for the prices' of their products kept falling while many of the charges they had to meet — interest, rent, and so forth — remained fixl. On the other hand people who had money to lend — the 'bloated bondholder' and the 'dead hand' — estates, foundations, hospitals, endowd churches and universities — were coming 'to own the earth." Their monej' in- comes were fixt. but each dollar would buy more and more every year. Vov the same reason salaried clerks were waxing tat. But from 1896 to the present, with prices risiifg- instead of tailing, the luck changed. The creditor, in his various guises of bondholder, savings-bank depositor, lessor, salaried man and wage earner, became the victim: while the stockholder, the far- mer, the business enterpriser and the l)ull speculator were the winners in the lottery. Tn a word good luck befell the man who took what was left — the so-called profiteer — after paying a GOVERNMENT PRICE CONTROL 65 nearly fixl nuinl)er of dollars — each with a diminisht purchasing power — for his operating expenses, his interest, rent, wages, salary, and so forth. Hence it is that a new class of rich now inhabits the palaces on Fifth Avenue. The 'bloated bondholders' could not keep up the old magnificence under the growing strain of high prices. They have given place to the 'profiteers.' In these two phrases the great untutored public shows a curious intuitive sense for the truth which it cannot comprehend. It knows at least 'who got the money.' It fails to understand the cause of price move- ments but it sees who made money out of them at the expense of others and seeks a remedy against these winners. Shakespere stated an economic truth when he said, 'there is a tide in the afifairs of men which taken at the flood, leads on to fortune.' This tide between 1873 and 1896 carrid the bond- holders on to fortune and made them 'bloated,' while between l896 and to-day it carrid the stockholders on to fortune and made them 'profiteers.' Can You Blame Them? It will do no good, of course, to rail at the lucky winners in the lottery. The public was greatly mistaken in attributing low prices to the 'strangle hold' of wicked bondholders and it is equally mistaken to-day in attributing high prices to the per- sonal turpitude of profiteers. The fault is not theirs. While they have, in a sense, won their neighbors' stakes or pickt their neigh- bors' pockets, they did so without intent to defraud. They have simply played the game. We should stop the game, not blame those who played it. How can we blame a business man — especially one who as ofificer of a corporation acts in the interest of others whose capital he is managing — for getting the best prices he can? W^e cannot expect him to sell below the market. In fact if market conditions cause profits to fall in his lap, he would be recreant in duty to throw them away. What we should aim to do is to make such abnormal market conditions impossible. THE "EXCHANGE" In every market there are two classes of traders, the Bulls and the Bears; the former trying to raise prices and the latter trying to lower them. Each of these have monej' and great interests at stake dependent upon their success. The bulls will 66 THE UNIVERSITY OE OKLAHOMA do all they can to raise prices and the bears will do all they can to lower them. They combine to secure the latest, the com- pletest, the most trustworthy information. They do all that is humanly possible to ascertain all the facts affecting supply and demand and everything that may affect prices. They make a business of this; they become experts at it. The stakes are so great that when their judgment is corr-ect they sometimes make fortunes in a few days, and often lose them again. The knowledge and discernment of those who deal "on 'change" are so great that to the uninitiated it seems like pure gambling. Their actions often seem like those of madmen. The ignorant and inexperienced often try their hands in the gaine and "gtt skind". the "lambs get fleeced", etc. Wealthy men often go into it for the excitement and back both bulls and bears so their gains by one will offset the losses l)y the other. While these are mere incidents thej'^ often monopolize the public attention and observation. But behind them are working the utmost of human intelligence and experience trying to determine prices. While the gambling features are ol)jectiona1)le and some- times deplorable no way has been found to entirely prevent them. The rules ofExchanges ar e usually as strict and stern as it is possible to make them, but interests and prizes are so great that no human rules can entirely control. Of course the element of chance is there in the nature of things; it cannot possibly be eliminated, and to some it will always seem the chief feature. Great buyers often contract a year or more ahead. In the case of a house, a machine, or a ship this would be absolutely necessary; such things require long preparation, and a long time for execution. Suppose a miller is to bid in Dec. on a contract to furnish a train load of flour to be delivered the following May. The price he bids will depend upon the prices of wheat several months ahead. If wheat should go higher than he expects he would lose; if lower he would gain. He cannot afford to risk his own un- aided judgment. Thru a representative he goes "on 'change" and buys a "future" on the amount of wheat he will need to fill the contract. If wheat goes up in May he will gain, if down he will lose. He then bases his contract price on this "future" price. If, tlien, the price of wheat should go higher than the expected price he would lose on the flour but gain on the "future"; if wheat should go lower he would gain on the flour and lose on the "future." In either case he is protected, and can GOVERNMENT PRICE CONTROL 67 do business safely; the wheat exchange enabled him to avoid gambling in making the contract. Suppose it is December in Oklahoma. Wheat has been sown hut there has been no rain since. These facts are well known to the men "on change" in Chicago. For weeks they have been aware that unless there is rain soon in Oklahoma the wheat crop there will be short and the price of wheat next year would be higher in proportion. Some who feel certain that their judg- ment is correct will back it up by offering to buy wheat at $2.00 a bushel, the price they think it will be. Others who think the price will be lower will agree to furnish wheat at that price on July 1, At that date to fulfil their contracts they would have to buy the wheat at whatever might be the market price. The rest of the people who are interested in tlie future price of wheat Icnow that these men are experienced and skillful observers, that they weii'h every circumstance and factor that may affect the price, and so they can make their investments and contracts ac- cordingly. Without some such an agency as a grain exchange modern business would be impossible. Government control could do nothing but harm In- interference. A FEW QUOTATIONS Chas. H. Van Hise: "1 believe it probable that if, following the war, wise governmental regulation is continued not merely for the public utilities but for every essential commodity, the savings to the people will be sufficient to meet the money cost of the war". Lectures on Conservation, p 233. The fixing of the price of soft coal in 1917-8 saved consum- ers about $700,000,000. Review of Reviews; Oct. 17. In 1917 shoe manufactures sold the Government shoes at $4.80 and the same shoes to the public at 9 to 12 dollars. Why? Middlemen's profit. Wis. State Journal, 2-9,-'17. President Wilson: "Recent experience has convinct me that Congress must go farther in authorizing the Government to set the limits to prices. The law of supply and demand has been replaced by the law of unrestraind selfishness." Prices of cotton and woolen goods went up enormously early in the war "because of the Government demand" dealers said. But the soldiers would have been clothed equaly expen- sively at home. Government investigators reported that the greater part of these increases were due simply to the fact that "the war" served as a psychological excuse for profiteering. Wis. State Journal, Dec. 9, '17. Harry B. Hunt: "There was a great shortage of sugar in 68 THE UNIVERSITY OF OKLAHOMA the United States during the war but the price only advanct one or two cents a pound. There has been no such opportunity since the Civil War for large holders of sugar to sky-rocket prices and clean up millions overnight. But Herbert Hoover, food administrator, had blockt the chance for anyone to make a "killing" in sugar. He knew the prices at which sugar moved to the refiner, and to the wholesaler, and to the retailer, and he ruled that any refiner, wholesaler, or retailer who exacted exhorbitant profits should lose his license to do business. As a result, sugar prices remaind steady and millions of dollars that but for his regulation would have dropt into the hands of sugar Shj-locks have remaind in the purses of American housewives. "During the Civil War, without government regulation, sugar went to 35c a pound and there was no world shortage." — (Ladies Home Journal.) "We are demonstrating that the government of a republic, awkward and uncertain as it necessarily is, may, nevertheless, learn how to control industry, even agricultural operations, and other business enterprises for a general end, and with great gain in national efficiency. That this control need not be so vigorous in days of peace as in days of war it is not necessary to argue, but having workt out its possibilities by the crude trial and error method we shall not again permit either big or little business to run amuck, exploit the public, and often destroy itself on the plea that government is by its nature unfit and incompetent to inter- fere in business matters. The functions of government will henceforth be enormous, responsible, and dignified, and we may reasonably expect that the career of the national legislator and of the administrative officer will offer attractions to men of high character and great ability more nearly proportionate to the at- tractions offered by big business and the opportunities of the corporation lawyer." The Independent, Aug. 11, '17. Soft coal is being sold to the state of Indiana for use in the state institutions at $2.95 for slack and $3.50 for lump coal. These figures are most interesting at this time. They show what coal may be sold for and a reasonable profit secured for the producer. They put the stamp of unreasonableness on many prices that have been quoted in other coal states. Private con- sumers, will not be able to secure such low figures because they do not take so much as the state requires and the contracts would not be continuous, as is that of the state. But what shall be said of prices up to $15 per ton for soft coal that have !)een quoted? If coal may be sold at a profit to the state of Indiana for $3.50, what is it but shameless profiteering when con- sumers are facing prices four times that figure? There is no possible justification for some of the coal prices that are being quoted in the market. Unreasonable profits are being sought somewhere along the line from the mine to the consumer. — Ohio State Journal. GOVERXMEXT PRICE COXTROL 69 BRIEFS During the war the minimum price of wheat was fixt by Congress at $2. On account of freight adjustments 26c was ad' ded afterwards. It had been $3.50 but the highest future price on the Chicago market at that time was $2.15. The carrying of soldiers and munitions greatly interfered with the shipment of grain, so wheat was likely to go so low that it would not pay farmers to raise as much as the world needed. The object of the law was to guarantee a fair price to the farmer, and it did not prevent the price from going higher — nothing was said about that in the law. Many farmers unjustly blamed the gov- ernment for lowering the price, but it did no such thing. The price of hogs sometimes drops from 30 to 60 cents in 24 hours. There is no valid reason for this ; the "laws of supply and demand" are not that fickle. It is easy to charge that prices are manipulated.. But the prices in America have been practically the same all over the world, making allowances for locations, etc. How can the whole Avorld get together and "manipulate" prices? During the price-fixing period farmers in Minn, fed wheat to stock and sold their oats and barley for human food, because the prices were so much higher. This is the exact issue: Should prices be made by the un- restraind greed of a few manipulators who wrong both pro- ducer and consumer, or by a Commission representing all the people? Of course the selfish price gamblers and their helpers will protest loudly against any interference; we must expect it. In war times nations must control prices or perish ; the policy is not even debatable then. Most European nations con- tinued -the policy long after the war because conditions re- quired it. Why should a policy universally desirable and nec- essary in war be utterly irrational in time of peace? It must be admitted that price control will be very difficult, for it will have arrayed against it all the ingenuity and the monetary resources of human selfishness and greed which will be employd without restraint or limit in defeating the public good. Price control would face a very complicated and in- tricate condition, but that is no argument against it if it is right. The farmers got an average of $1.44 per bushel for the 1916 crop. Five months later wheat was $3 a bushel. But not a cent of the profit went to the farmer, who had already sold his crop. 7a THE UNIVERSITY OF OKLAHOMA Opponents of price control assert that if the government had not interfered with prices they would have rcmaind lower than they were under government control. Such a claim seems ut- terly groundless in view of the plain facts of histor}^ During the Civil War the governnunt did not interfere in the least with prices and the cost of many necessities went up to ten fold. After the farmers had sold their wheat in 1916 wheat went to over $3.00 a bushel with no interference whatever from the government. Without government restraint sugar would have gone to 30c a pound or more. It is universally admitted both in this country and in Eur- ope that but for food control the Allies would not have won the war. The war against their own unpatriotic profiteers was as difficult and serious as the war against Germany. And yet there are men who fought the Food Administration Act for three months in Congress and did everything they could to prevent its passage. And in the ranks of these opposers of that most important law were many of the very ones who are now op- posing price control. Their action then shows that their judg- ment is worthless ; it was worthless then and it is worthless now. E. H. Gary, head of the U. S. Steel Corporation requested the continuation of Government control of prices of steel, and offered to submit to a reduction in prices in order to get it. They thought that stableization would so increase the volume of business that it would be better than turning things loose and trusting to the laws of supply and demand. This is a large exhibition of the fact that price control is not antagonistic to legitimate business; those v.ho wish to plunder or profiteer object of course, but ordinary, honest business would be far better ofiF with stable markets. Sen. Gronna charged that Hoover had reduced the price of wheat to the farmer one-third without affecting the price to the consumer. There was a joker in the act of Congress: it did not apply to dealers doing a Imsiness of less than $100,000 a year. We are fully committed to the national policy of controling the prices that railroads may charge; no one would seriously propose that we go back to the times before this control was establisht; the policy is universally accepted as just and wise. But why discriminate so against the railroads? Why regulate their prices and permit all other lines of business to go un- restraind? If price regulation is so good in transportation mat- ters it would be good in other matters. GOVERNMENT PRICE CONTROL 71 It has always been claimd that the laws of supplj' and de- mand would control the quality as well the price of articles. Why do we have our Poor Food acts? Simply because as a matter of fact the laws of supplj^ and demand faild to preserve the quality. Why do we have the anti-trust laws, the Sherman Act, the Clayton Act, etc.? To prevent the laws of supply and de- mand being annuld b}^ combinations and monopolies. The fact that such laws were needed shows clearly that the ultimate con- trol of prices could not be left to the tender mercies of mon- opolistic greed; that the laws of supply and demand were insufficient unless assisted bj' law. But are these laws entirely successful? We have long been trying by stringent laws, both state and national, to compel competition in the belief that if we can only keep competition the laws of supply and demand will regulate prices satisfactorily, or at least better then any other means. We dissolvd the Standard Oil Co. but prices of oil kept rising. The conviction is rapidly growing that antitrust legislation is futil; we must go farther. Anti-trust laws are merely indirect efforts to regulate prices; if they fail there is nothing else to do but try more direct efforts. No man has any natural right to do business unless he is fair and honest. The method adopted during the war of licen- sing dealers and manufacturers to do business is the best plan ever tried. If it is provd that they forfeited the right to do busi- ness with their fellow men the licenses in canceld. In that way the public is protected and no one is wrongd in the least. The case of milk is a fair example. If the price goes up the poor cannot get it and their children die, or are so stunted in growth that they can never reach full maturity. High price of milk, then, means wholesale murder of innocent babes and small children. This is a crime which if perpetrated by anything else but prices would arouse the world as nothing ever has in all history. On the other hand, if producing milk is made unprof- itable, its producers will go into other business, and there will be less milk than ever. The City has found it necessary to furnish water; should it also furnish milk? There is not, nor cannot be such a thing as entirely "un- restraind greed," for it is always restraind by economic laws. If the price of a perishable article is made too low the demand for it will be diminisht and the supply on hand will be lost. A 11 THE UNIVERSITY OF OKLAHOMA business may easily be wreckt Iiy making prices too high. High prices always drive away customers on which the prosperity of the business depends. Dealers cannot live by piling up goods on their shelves ; they must sell them. It is notorious that supply and demand are often partly ficti- tious. It is not only actual supply and demand that affects prices but supposed or anticipated conditions are also effective tem- porarily. Markets are flooded with telegrams, reports, rumors so that neither bulls or bears certainly know actual conditions. Much of the irrational fluctuations of markets are due to such methods. In many cases government reports only are trusted, and yet' even thei- may be manipulated, at least to some extent. The negative argue that if supply and demand were let alone they would make prices just right. But when were they ever let alone? The argument is merely academic. The chief need for government price control is to see that supply and demand do control prices instead of greed and cunning. The negative argue that all interferences with the opera- tion of supply and demand are only temporary. This might be more or less true of any individual interference. But when one interference fails it does not require superhuman cunning to re- place it with a dozen others. The main struggle of the market is to convince and deceive ; and the fluctuations of the market sliow that the success of neither is uniform. Belief in a ficti- tious supply and demand often bridge over actual conditions. ]t is notorious how the "lambs" in the market are fleeced, but there is no exact dividing line between the lambs and others. The object of the price-fixing act was to assure " an ade- quate supply and equitable distribution of necessaries, and to prevent scarcity, monopolization, hoarding, and injurious spe- culation." Who could reasonably or justly object to that? The negative say that price-fixing is a failure unless it does everything. That is unreasonable. Every country engaged in the w^ar adopted that policy because the laws of supply and de- mand had faild, and not only that, they had become a positive menace. Price-fixing did more for public good than any other policy ever tried; compared with other policies it was a great success. The opposition to price-fixing constantly assert that Gov- ernment regulation entirely suspends the laws of suppl}'^ and de- mand. This is palpably false. The chief object of government regulation is to insure that those laws function naturally and GOVERNA'IENT PRICE CONTROL 1Z justly. It is assumed that all government regulation is to be arbitrary and unreasonable; that government ofiEicials w^ould all be incompetent or dishonest. On the contrary the facts of supply and demand would furnish officials their chief reasons for their acts, and would never be disregarded except where the public welfare required it. The laws of supply and demand are not effective against combination, monopoly, greed, or cunning. We need a govern- ment commission to see that those laws have opportunity to function normally and effectively, to prevent their being inter- fered with, and to see to it that price changes are proportional to the facts and conditions which cause them. The laws of supply and demand are admittedly relentless and merciless. Should human law stand mute and helpless in the presence of natural law? Should we stand idly by and let a city burn down because the conflagration was proceeding strictly according to chemical laws? That is merely the dis- credited "Lassez Faire" (let alone) doctrine in another form. It is merely an excuse, a cover for selfish greed. It is universally admitted that but for the price-fixing law wheat would have risen to $3.50 and possibly to $5 a bushel. More wheat might have been raised but only the rich could have bought it. It would have bankrupted our Allies to feed their armies ; the suft'ering of the poor would have been beyond endur- ance ; in short, we should have lost the war, for Germany had price control all the time. In 1916 bituminous coal in Pennsylvania was selling at $1.40 a ton. Before the Fuel Administration began, the price had risen to $4.50 while the cost of production had increast only 30c a ton. Vet there were those who howld against government regulation. The wrong doer is always vociferous in his demands to be let alone. He claims that the laws of supply and demand should l)e let alone. He talks as if Supply and Demand was a sort of deity, omnescient and benevolent, and who functiond as an intelli- gent personage in human affairs. The affection of profiteers for the laws of supply and demand is very touching. The laws of supply an demand often work cruelly and dis- astrously and then tlieir action must he restraind and regulated, and only the Government can do it. When the supply of some necessity is short the price rises so that only the rich can buy while the poor suffer want. And if a crisis should come the masses would have been underfed to such an extent that the 74 THE UNIVERSITY OF OKLAHOMA countn- would lack capable defenders. The laws of supply and demand are neither intelligent or benevolent ; they need regulation and restraint as much as any other natural laws. Mr. Hoover prefers to call ])rice-regulation "stableizing prices". The suggestion is a good one. High pr ices are not the only evil charged against unregulated prices. Every variation in prices varies every wage and salary, every inventory, every det or obligation in the nation. Yet nothing is so fickle or ca- pricious as prices. It is notorious that the prices of farm products are low till most of the farmers, especially the poorer ones, have sold their crops. The prices then go up and the middle men make the pro- fit. The diflference in prices is usually out of all proportion to any changes in su])i)!y or demand t)r any services rendered l)y middlemen. One very remarkable thing about retail prices is tliat when wholesale prices go up retail prices respond instantly and abund- antly. But when wholesale prices go down it takes the retail dealers a long, long time to find it out. A government agency is badly heeded to equalize the speed at which price changing information travels. Some talk as tho supply and demand were the only things tliat intiuence prices. There are many other things ; as, fear, ex- pectation, sentiment, taste, fashion, habit, association, riches, seasons, terms, credit, facilities, poverty, foolishness, deception, salesmanship, needs, uncertainty, health, accidents, sickness, etc. Of course many of these affect demand more or less and make it to some extent fictitious. It is admitted that price-fixing is necessary in war on account of the great exigencies. But to millions of the poor the exigency is as great all the time as in war time. Protection from exces- sive prices is a necessity to them at all times. It is argued that government price-fixing is impracticable because some can produce at lower cost than others. If the price fixt leaves a reasonable margin of profit for the high cost producers it legalizes an exhorbitant price for the low cost producers. The objection applies with equal force where prices are not fixt by the government and so has no special weight in this discussion. During the war the object was not only to keep prices from being too high, but to stimulate the utmost production. To do this, high cost production had to be taken care of far more than in peace times. At present high cost GOVERNMENT PRICE CONTROL 75 producers have to meet prices made by their competitors in secret; while under government regulation prices would be made in open court where all parties could be heard. One object of price regulation must always be to increase production. If the price be fixt too low the high cost producers are driven out of business and production would be diminisht so that the price would rise, but too late to save high cost producers. At present the high cost producer has to join a trust or combination for protection. When farmers in North Dakota were selling hides at 7c a pound they were compeld to pay $100 for harness using 80 lbs of hides, costing $5.60. A government designed to serve farmers should have the power to look into such conditions as that and correct them. If we hold down the prices of essentials by law, the prices of non-essentials will soar, and producers will be tempted to produce non-essentials. Why should a farmer sow wheat that brings him $31.64 per acre, when an acre of corn will yield him over $100? If the government fixes the prices on wheat the price of other grains will inevitably go up and the production of wheat will decrease. There can be no law successfully en- forced against a man for paying $2 a bushel for wheat if he wishes to even tho the price is fixt at $1 a bushel. And if men are offered $2 a bushel for wheat a law to make them sell it for less than that cannot be enforced. It is idle to advocate such laws. Supply and demand will rule. The crux of the whole matter is this: do supply and de- mand always make prices? That they normally influence prices is bej'ond debate, but that every price is made by supply an demand is to the last degree improbable. It is well known that they cannot function in price-making unless there is free competition. Where there is combination or monopoly they have but little influence. Nothing is more certain than that coinbinatit)ns, agreements, understandings, etc., are very common if not universal in modern business. They are secret of course and so details are not easily secured, but none but a saphcad would deny their existence. We cannot compel men in businei^s to compete or cut each other's throats however profitable it might lie to the public to have them do so. Competition is undoubtedly greatly modified or limited and so does not have its normal effect on supply and demand. To insist, then, that we should de- liend solely on the laws of supply and demand for the protection Id THE UNIVERSITY OF OKLAHOMA of the public is plainly irrational. There is no law, and no law is possible, to compel anyone to produce a necessary commodity without profit. The more necessary an article is, then, the more necessary it is that it should pay a profit that will produce it in sufficient quantities. Price-fixing, then, must include two contradictory and self- destructive purposes, one to raise the price, and the other to lower the price. The most efficient government that ever ex- isted could not do that, successfully. I-iaising or lowering prices also increases or decreases pro- duction and consumption raises or lowers every salary or wage, appreciates or depreciates every investment or property of every kind, affects seriously the whole life of all the people. It is preposterous to claim that this should be done without the knowledge and consent of a commission representing all the people. We cannot say that the price of coal is merely the pri- vate affair for the mine owner or operator for it vitally affects the lives of all the people, and of the poor especiallj'. The report of the Federal Trade Commission on cand foods shows completely that the leading canners of -almon announce their opening prices late in August every year. Nearly all an- nounce the same i)rices, and many who did not announce a price used those made h\ the majority. These prices are made l)y the producers only ; the consumers are not consulted nor are their interests considerd. The price-making is absolutely one-sided; the public is chargd all it will pay. The price is named that will l)ring the largest proht. A. Mitchell Palmer. Attorney General of the United States, was given tlie jol) of reducing the high cost of living No man ever tried harder to succeed ; for success would have easily made him president of the United States, and deservedly. While he has indicted something like a thousand persons for profiteering, and in spite of courts delays and every obstacle that human ingenuity could place in his way, he has secured several hundred convic- tions, still he has not substantially reduced the cost of living. What does it mean? History informs us that the job he under- took was never performd by any man. It is true that a sensa- tor declared that "the Government could reduce the high cost of living whenever it wisht to", but that was the cheap American partizanship of which we are all so ashamed. The cost of liv- ing is higher in nearly every country in the world than in the U. S. and no one lias succeeded in brinsj;ing it down, anywhere. GOVERNxMENT PRICE CONTROL 11 Roman emperors tried it, endowd with greater power than any modern government, but they faild. We need not say it is im- possible but we must recognize that it is probably the most difficult thing ever attempted by a government, and also that there are reasons for the difficulties. Prices are not a material fact but a mental fact, the indication of a state of mind exprest in material terms ; and so when ex- amind from a material standpoint they often seem irrational and anomalous. It is not actual but expected supply and demand that control prices; it is not actual supply and demand but beliefs concerning them that are chiefly effective. And so market places where prices are made are crowded with reports, guesses, fore- casts, rumors, false alarms ; efforts to create panics vie with efforts to create confidence. The means used to establish prices are ab- surdly and monstrously disproportional to the tremendous inter- ests involved. Some more rational way must be found. It is admitted that prices are easy to raise but hard to lower ; is that due to the laws of supply and demand? There have been cases where 30c a ton has been added to the pay of miners, and about $2.10 a ton added to the price consumers had to pay. It is universally admitted that price-fixing is successful in .war times because the people are patriotic. But do people lose their patriotism entirely when war ceases? A tax on excess profits is the fairest tax that can be devised. But it is impossible without government control of prices. With such control the tax could not be passt on; otherwise it will be. A drummer, speaking of a man who had recently faild in business, said that there must be something lacking about a man who could not make money under business conditions of the last few years. It is claimd that the price-fixing board appointed during the war was a failure and voluntarily resignd. What else could have been expected when six members of it represented capital and only one represented labor? If prices can be regulated so easily, as the affirmative claim, why in the world hasn't it been done long ago? It has been tried often enuf. The trouble is not that government price regu- lation is wrong; it is impossible. It is utterly impossible to get a Price-fixing Board which 78 THE UNIVERSITY OF OKLAHOMA would he equally satisfacton- to lioth bulls and hears. It could not he trusted hy one without heing distrusted hy the other for their interests are diametrically opposed. It is a settled principle in business to sell goods for what they bring. "Charge all the traffic will bear", as the railroads used to say. To many there is no such thing as a fair or honest price. "All you can get" is the only limit. Multitudinous and strenuous efforts are constantly made by manufacturers and dealers to prevent competition, or at least to restrain it as much possible, because competition always tends to lower prices in selling and raise them in buying. Will the negative claim that the prices so made are the result of the free action of the laws of supply and demand? If prices are too high consumers won't pay them, that is demand falls off. This happend in 1919 when the Price Fixing Board fixt the ]n-ices of steel rails and the Railway Administra- tion refused to pay them. What customers are willing to pay must in the end control the price at which goods will sell, and no possible legislation can materially change it. The interests involved in prices and price-making are sc vast and so fundamental to human existence that it is irrational to leave them entirely to chance, to monoplistic combination, or unrcstraind selfishness. Some way must be found to make prices more fair and just or civilization itself must perish. It is no longer a merely academic question but a burning question which must have a satisfactory answer. The opposition to price regulation fully recognize the terrible evils of high prices and of the high cost of living, and all the ter- rible wrongs occasiond by them. They are not debatable. The sole question before us is, What is the remedy? The policy of government price regulation has always aggravated the evil it was intended to remedy. It never has succeeded, so the presump- tion is against it. There is no .escape from these facts. The affirmative would throw overboard the elal:)orate machin- ery of markets which the world has been 400 years in building up and replace it with a commission either of politicians or men selected by them. .Vt present men fix prices only by buying and selling at the prices they make; thus they have a financial inter- est in the correctness of the prices they make. But the members of a commission would have no such financial interest. If an individual acting alone investigated the bearing supply and demand had on prices before he paid them, certainly, there 1 ould be no valid objection. But if the individuals in a com- GOVERNMENT PRICE CONTROL 79 munity instead of inefficiently and incompletely acting alone, com- bine and establish a competent commission and equip it with every possible facility for such investigation, there is a great out- cry against it by the profiteers and their tools and assistants. Makers of automobiles, phonographs, agricultural machinery, and thousands of other articles now fix the price on them and re- fuse to sell to those who will not maintain the prices. Supply and demand has nothing on earth to do with the price. Charge all the traffic will bear, is the only principle applied. No interests are considerd except those of the manufacturers and dealers. Yet the same people vociferously tell us that only Supply and De- mand must control prices. Prices are made in the towns and cities where all the price makers live. Farmers and laborers generally have little or no- thing to say about prices ; they must take what they can get and pay what they are askt. This policy has been carried on so long and so far that ruin is now threatening the farmers and Bolshe- vism the whole world. The arrangement is not fair and never was, as it is Government price-control is by far the most con- servative and just proposal yet made. Why don't some of those who bellow so loudly about prof- iteering furnish a little proof of it? The politicians are des- perately anxious to get such proofs. Many eminent judges have exprest their opinions of profiteers in burning words. All we want is the evidence. If the affirmative would get proof of one case of proiiteering that would convince a jury and bring it into this debate it would count more than all their assertions about it. We repeat it; why don't the affirmative produce evi- dence ? If a man has any right whatever in this world, lie has the right to sell bis property for what it is wortli. And it is worth what it will liring in a free, open market. No law in the world can make a man take a dollar for an article that he is freely ofiferd two dollars for. It would take omniscience and omnipo- tnece to enforce such a law, and we do not have them. To lower the price on what a man has to sell and not lower it on what lie has to l)uy would be a wrong so aggravated that it would subvert society. The government quickly found that they could not fix the price of wheat without also fixing the prices of barley, oats, corn. etc. In order to keep the price of wheat at a fixt figure it was necessary to fix the prices of other crops so that the far- mers would not be tempted to quit raising wheat for something Sa THE UNIVERSITY OF OKLAHOMA more profitable. The same principle holds in manufacturing; if the price of one article is fixt the price of every other article must also be fixt to which the manufacturer might turn if it offered a larger profit. Which is more likely to respect the laws of supply and demand, the boundless greed of men in haste to be rich or a com- mission representing the whole people? The only object of such a commission would be to secure right and justice to all; but the sole object of combines is higher prices than the laws of supply and demand give them. Even if the commission faild it is still the ideal, and that practically never is the aim in pri- vate or corporate business; the sole aim there is profits; they are not in business for their health. All natural laws work hardships sometimes, and economic laws are no exception. But when they work harshly there are often compensations. If drouth destroys half a farmer's wheat crop the supply is reduced and the price will go up, so that he often gets as much or more for his half crop than he received in previous years for an abundant crop. But when government price meddling robs the farmer of part of his profits it is power- less to compensate him even if it tried; and if it succeeded it could do so only by robbing someone else. The simple fact is, the bulls and bears are merely gamblers betting on the prices of grain. The prices they make are dictated entirely by their self interest, and that interest is the narrowest and selfishest that it is possible to conceive of. Tlicy care no- thing whatever for justice; either to the producer or consumer; they care nothing whatever for the public good or even the high- er interests of themselves and their families ; they care for no- thing in the wide world but a profit. And the negative arc try- ing to make us believe that this is all sufficient. It is admitted universally that when supply and demand are well balanct and acting normally we have no better means of de- termining prices. With luxuries the law works perfectly but much less perfectly with necessities of life. If the price of a luxury increases unduly, people will not buy it, the demand de- creases. But if it is a necessity, the people must have it what- ever the price, tho' they may get along with the smallest quantity possible. While they might refuse to buy a luxury which was priced too high, they must have the necessities, whatever the price. The public is very slow to learn their A B C's in matters of taxation. In the nature of the case it is almost impossible to GOVERNMENT PRICE CONTROL 81 tax a merchant so that he and he only will pay it. Taxes are a part of the expenses of doing business and must be paid ex- actly as all other expenses are paid, — by adding them to the cost price, for expenses are clearly a part of the total cost. Then if the merchant wishes to make 20% on the total cost, his customers not only pay his taxes but pay him 20% profit on that expenditure the same as upon any other part -of his invest- ment. Let the issue be clearly seen : The affirmative does not ad- vocate price-control as a substitute for supply and demand. On the contrary it favors government price control in order to en- force the laws of supply and demand which arc now constantly being evaded. It is certain that all kinds of combines and mon- opolies cooperate to manipulate prices. The public must have protection against them, and government price-control is the only protection that has ever been suggested ; it is the only tiling that has a ghost of a show to afford the pul)lic any pro- tection. It is agreed that the fact that the public will pay prices is their justification. This is seldom if ever true. For the neces- sities of life the public must pay whatever is charged: it can not help itself. Then the public can not be well informed as to what prices are justified by supply and demand. This should be determind for them by a commission acting for them which is furnished with every possible facility for securing accurate in- formation. At present the public may feel that it is being robbed, but it has no way to prove it, and no facilities for even investi- gating the matter. Of course no one should be convicted without evidence, but on the other hand the lack of evidence is no proof of innocence. When a jury pronounces a man not guilty, it does not declare him innocent ; it only declares that the evidence was not sufficient to convict . But while no one is legally justified in charging pro- fiteering unless he has legal proofs of it, on the other hand to say that concerns which are making fabulous profits are not profiteering unless specific proofs are forthcoming is outraging common sense. Profits may be great enuf to make profiteering a moral certainty. If profiteers are ever convicted it must be liy evidence which they themselves furnish, or which must be furnisht by their records. Is it strange, tlicn, that prosecutions are difficult and convictions rare? The wonder is that there are any at all. In every court it is not the truth tliat wins the case but the evi- 82 THE UNIVERSITY OF OKLAHOMA dence of it ; no cause can win without evidence. Unless a firm's own books and records show that it has been profiteering it is practically impossible to convict it. Anyone is very unsophisti- cated who supposes tliat books cannot be kept so as to bide things desired to be hidden. The affirmative argue that increast profits are due to in- crcast volume of Inisiness. That looks plausible ; but the fallacy is that the same volume of business now, measured in dollars, would be more than twice what it was five years ago. That is, the same volume of business in the amount of goods handled might seem more than doubled if we compare values in dollars instead of amounts or quantities. It is evidently absurd to say that a business which handled 1,000,000 lbs of beef in both 1914 and 1919 is doing more than twice the Imsiness now and sn is entitled to twice the profits. All business, production and marketing, exist solely for the benefit of the consumer. Many business men go on the assump- tion that customers exist to make business and pay profits to producers and purveyors of merchandise. This pervision is at the bottom of much of our troubles. Business has no right to profits except as they are a recompense for actual services ren- derd to customers and to the public. The common rule of busi- is, "charge all the traffic will bear," "get all you can ;" and yet the public is askt to believe that nothing affects prices 1)ut the laws of supply and demand. It is evident that all the costs of doing business must ulti- mately be paid by the consumers, who are not consulted in any way as to the bills they are expected to pay. The "drummer" system, for example, is enormously expensive. An army of drummers is on the road all the time, living at the best hotels, travelling in sleepers, and paid the largest salaries. They are doutless a convenience to retailers, wholesalers, and jobbers, and they are supjiortcd for that reason. It is not clear that they are equally valuable to the primary classes, producers and con- sumers, who have to pay for them. We marvel at the savagery of the punishments which have l)cen inflicted for violating price law.s, and yet all fn vain. In all history every fixing law in normal times has proved a failure. The multitudinous and infinitely intricate and conflicting char- acter of the factors which enter into price-making make it the most difficult subject in the whole range of human activities. All the time economists have been telling us that making prices by law is entirely beyond th range of human powers. While GOVERNMENT PRICE CONTROL 83 prices are opinions, they are based closely upon facts to which they must conform or speedily lie changed. Prices are essentially an opinion. They are the approximate judgment of many traders as to the facts upon which prices are hased. If the opinions be correct and the prices correspond the results will be the best possible. The basis of price is facts, the facts of supply and demand. A great supply lowers prices, a great demand raises them, the correct price is the equilibrium of the two forces. In market reports, the real price is not that which was bid or that which was askt, but the price that was actually accepted. In this both sides agreed ; that is, there was a balancing of the efifects of demand and supply. In France, during the great /evolution, desperate efforts were made to control prices : tho most drastic laws were passt and the most terrible penalities enforced for their transgression but matters only went from bad to worse. The guillotine took off the heads of thousands in vain ; they could not enforce their laws. And all the while the eternal economic laws went on in imperious defiance of the petty attempts of men to put them aside. Vou had as well talk of putting aside the laws of gravitation as the laws of supply and demand. They may be obscured for a time, but eventually they will assert themselves. During the war the price of wheat was fixt at $2.26 a bushel. Farmers in many parts of the country found that they could make twice as much by raising barley or oats and what could hinder their doing so? They were appeald to to raise wheat for patriotic reasons and on the whole they did so because we were at war. But in peace time no law could have prevented their raising, the crop that was the most profitable, and the supply of wheat would soon fall off. Then how could the price of wheat be kept at $2.26 when there was not enuf to go round and millions were offering a higher price? Before the war, German exporters might sell goods in foren territory at less than cost till they had destroyed competition and captured the market. They were either reimburst by grants from the treasury, or enabld to charge higher prices at home by a tariff on imports. The exporters of other nations could not compete; and while the doctrinaires of other nations were teaching that only the laws of supply and demand could regulate prices, the Germans did it and their commerce grew with un- precedented rapidity. As the world recovers from the war the same policy will be used by other nations. 84 THE UNIVERSITY OF OKLAHOMA Are prices now made by competition? The formation of trusts and combines whose chief business is controlling prices is notorious. Of course those who enter such combinations al- ways deny it, and find plenty of people like the negative in this debate who will repeat their denials and perhaps believe them. The Sherman Act and the Clayton Act were passt by Congress and approved by the President and upheld by the Supreme court; if there are no combinations to manipulate prices what in the world were those acts ever passt for? It must be admitted that almost all economists are opposed to governmental control of prices. lU-informd persons some- times class economists with profiteers and the apologists of greed and oppression. Such persons have little apprehension of the enormous aggregation of facts and thorogoing analysis and com- prehension of them that are necessary to the establishment of an economic theory. The ignorant are prone to assume that every one else is equally so. We cannot answer facts by denunciation. They must be patiently and impartially examind and explaind. Only an economist can answer an economist. It seems to be assumed by the negative that a price-fixing commission is intended to set aside the law of supply and demand. The very converse is the truth. Such a commission must have some reason or ground for its decisions, and which are furnished by the facts of supply and demand. Which are the more likely to enforce the laws of supply and demand, a commission of econ- omists, impartial, capable, and considerate of all interests; or in- dividuals accustomed to charging all the traffic will bear and in- different to all but themselves; and where selfish profiteers com- pel all competitors to do the same or quit business. It must be admitted by every right thinking man that prices should be fair and reasonable. Of course, they should: the contrary is not debatable. It must also be admitted that Supply and Demand do not always give us prices which arc "fair and reasonable." It is only when they are well balanct or adjusted that they produce acceptable results. It is evident, then, that a price fixing commission is always needed: 1st., to decide if prices are fair and reasonable and interfere if they are not; 2nd., To decide if supply and demand are properly functioning and if not to see that they are properly supplemented. Those who participate in the sale of grains, etc. in the great markets have no personal or selfish interests in the prices they make. The market indicates their very best judgment . as to GOVERNMENT PRICE CONTROL 85 what, prices should he. If they are mistaken as to either supply or demand they lose. Their only chance of success is to under- stand thoroly all the causes that aflfect prices, be fully informd as to all the facts, and use their very l)est judgment concerning them. The men who trade in futures represent the very best judgment and knowledge that the human race possesses con- cerning prices. If they can't make right prices, who can? A price-fixing commission would be under tremendous pres- sure to fix prices to suit their own party. When a political party is victorious in an election it is very necessary that pros- perous times should follow. With the best intentions, even, a political commission would be influenced in its decisions 1)y party interest. Prices would come to be an issue in every political campaign which would inevitably become a gigantic gamble. Why any sane man would seriously propose to replace our present marketing machinery with a commision is past explanation. They surely know very little of how prices are made now. It is conceded by the negative and by all that monopoly or combination may entirely set aside the natural laws of supply and demand. It must also be conceded that monopoly and com- bination do actually exist and function in the life of today. But while conceding all this the negative claim that monopoly or com- binations have but little effect on prices. How do they know? And how can they ever find out without a commission duly au- thorized to find out? A commission that can get at all the facts and study their relations thorly and impartially? They object to a commission until after it shall have demonstrated its necessity. Nothing could be clearer than the fact that price-control can only be undertaken by an autocratic government. It is com- pletely and utterly antagonistic to our democratic institutions ; it cannot be enforced and leave men free. If the affirmative want price-control badly enuf let them spend part of their time advo- i:ating the overthrow of our government and crowning a Kaiser over us backt up by a gang of junkers like they had in Germany. But even the German autocracy could not make a success of price-control, because it can't be done. It is a plausible, visionary scheme. It never has workt in all history, and it never can work. The negative harp continually on the sufficiency of the laws of supply and demand to regulate prices. No one ever knows exactly v^hat liie supply or demand really is. The bulls under- estimate the supply and overestimate the demand as much as possible, and the bears do the opposite. Demands arc often 86 THE UNIVERSITY OF OKLAHOMA fictitious. The demand of "shorts" for "cover", the demand of men trying to corner a market have just as much effect on the market as real, valid demand has, and the effects are not as ephemeral as the negative claim. Such things unsettle prices and dealers must keep them at the highest possible notch in order to protect themselves. In arbitrarily fixing prices, the benefit to one is possible only by the wrong done another. During the war the government did not reduce the price of agricultural machinery and other things that he had to buy. President Wilson referd to this in a message, and a great many prices were regulated but it was simply impossible to remedy the wrong done to the farmers. Doutless keeping the price of wheat down was a great blessing to the rest of the world, liut nevertheless it was done at the ex- pense of the farmers ; they were compled to contribute that much to the welfare of the world and have never been given due credit for the sacrifice. Something has to be done. It is costing so much to barely live that m.any are getting no satisfaction out of life: such a condition must be followd by anarchy or Bolshevism ; that is as certain as fate. The negative seem to think all we have to do is to fold our hands and the laws of supply and demand will take care of us. They oppose government regulation of prices but offer nothing else. We m.ay admit that we haven t Tearnt yet how to solve the problem satisfactorily, but we must learn. We can- not let middlemen make fortunes out of the woes of the world's laborers. The negative must either ofi^er a substitute for price- control or acknowledge defeat. Profits must be at least 2 1-2 times as great, measured in dollars, now as in 1914 in order to be equal. This would make a great difference in some of the estimates concerning the great increases in profits since then. Every rise in prices must be fol- lowed by a corresponding fall. Of course merchants make greater profits when they are buying on a rising market. But the time must come whhen they must buy on a falling market, when their profits must l)e small or changed to losses. To get at any fair result we must combine both of these periods. Doutless there are many who try to make their gains as large and their losses as small as possible, and that would happen under any system that could be devised. Demagogs have made a great fuss because of the profits of the steel companies during the war. The demand for steel was so great that the most important thing was to get as much GOVERNMENT PRICE CONTROL 87 produced as possible. Winning the war depended on getting steel for rifles, cannon, ships, trucks, etc. The prices paid had to be fixt so that the high cost plants could operate ; but this gave the low cost plants enormous profits. Will the demagog please tell us how this could have been avoided? We got the steel in unprecedented amounts, the policy was successful. To parade the profits of a low cost steel mills to create the impres- sion that all mills made as much is not honest. Those who are manipulating prices keep up a great howl about the sanctity of the law of supply and demand and the sin and folly of interfering with it, when at the same time they themselves are violating the law and even making it an excuse for profiteering. They have done this until the public has ceast to have any confidence in that pretense. This is unfor- tunate for the making of prices is so infiinitly complicated that there is no better solution of the problem than the unobstructed working of that law. It is so often manipulated and set aside by monopoly or by abnormal conditions that a price fixing com- mission is needed to see that it is properly functions. With the government fixing prices, the chief contentions in every political campaign would the fixing of some price or ])rices. The South would want the highest possible price for cotton; the manufacturing regions the lowest possible price. The manufacturing North East would want the lowest possible price for wheat and the west would the highest possible price; and these conflicting interests are absolutely • irreconcilable; they could never, never be settled finally so they would stay settled. There would be combinations of two or more regions against another; and in the next election a rearrangement. The price fixing proposal is a shortsighted, reckless proposal. The merchant cannot be justly blamed for this for he must make expenses or quit business. It is not real l)usiness unless he is making a profit. But the demagog howls: "What, not tax the rich merchants! We'll double their taxes instead of reducing them!" He does so, and increases the cost of doing business that much. Of course a business must pay its ex- penses before there is any profit and so the merchant's custo- mers pay it. And it is not paid by his wealthy customers only; but equaly as much by struggling laborers, by widows and or- phans. In this way the taxes of the rich are diminisht and the burden laid on the poor. Taxes must increase prices. The middlemen together with their salesman, agents, mana- 88 THE UNIVERSITY OF OKLAHOMA gers, etc., have become a vast economic machinery which in- cludes near!}' half of the population of the country. They pro- duce nothing whatever, their only function is to "facilitate ex- change". Their chief business is serving each other and only indirectly the public. In the last analysis their chief function is selling goods to people who do not want them, at least enuf to buy them without their mediation. People would buy what fhey want anyway without the aid of salesman. Of course salesman may give consumers valuable information about goods, but the trouble is such information is notoriously unreliable. It must be admitted by all intelligent people that prices should be made by the facts, and that the pertinent facts are chiefly, at least, those of supply and demand. The real issue in this debate, then, is what is the best method of ascertaining the facts, a government commission or the wild horde of spe- culators and gamblers who infest the produce markets. That the government commission is superior is shown by the fact that their crop reports are so eagerly sought by all traders on the markets. It is a case where superiority is conceded even by rivals, for the produce exchanges maintain an extensive sys- tem of investigation of everything pertaining to supply and demand. The Federal Trade Commission, with better facilities for in- vestigation that any other investigators, reports hundreds and hun- dreds of cases of combinations to control prices. Hundreds of individuals and firms have been indicted by grand juries, and many have been found guilty by the counts and punisht. We have tried in every way possible to make business men compete, but we have not been successful, and yet the negative tell that they do compete and always have competed, and that there isn't any combination at all, or if there is, it is so insignificant that it has little or no eflfect on prices. How the combines must laugh in their sleeves at the stupid blindness of those who deny that they exist? The negative speak as if the same men were uniformly either bulls or bears. The fact is that the man who is a bull today may be a bear tomorrow. The negative give their case away when they call their prices makers "bulls and bears". We need MEN for that business, and the very best men we can get. No one ever lookt down on the howling hyenas in the Chicago wheat pit without wondering if that is really the best institution that civiliation can devise for making prices that affect the lives of GOVERNMENT PRICE CONTROL .89 almost every human being on the earth. The negative seem to think that the bulls and bears are about equally balanct in num- bers and ability and constitute a most admiral)lc instrumentality for making prices. They tell us that business w^ants to be "let alone". So does the burglar, the swindler, and every other wrong door. The argument is not convincing, even if the negative do repeat it in this debate. The object of price-fixing is not primarily to bene- fit the business men who are chiefly interested in profits; its object is to help the widow struggling to feed her children and the multitudes to whom life is a hard, and sometimes a des- perate struggle for existence. Its object is to see that justice is done, that the poor shall not be starved in order that profi- teers may grow rich. Its object is to protect the producers who under our present system are so often robd of the just fruits of their labors. The mail order houses often oflFer lumber at much lower prices than local yards. When as lumber bill is presented to several yards and their estimates do not differ by a single cent in a total of several hundred dollars it is futil to denj' that there is more or less understanding between them. In a case before the Federal Trade Commission, docket No. 1, it was shown that 116 lumber companies together with a Trade Journal and a firm of detectives, conducted a regular campaign against the mail order houses for selling lower than the prices made by the combine. Which prices were most influenct by the laws of supply and demand, those made by the mail order houses or those made by the combine? Most human progress has been due to our learning how to use and utilize the laws of nature. Those who oppose any "interference" with them do so liecausc they find sucli nonin- ference is profitable to them. To. abandon all control of supply and demand would be like destroying our fire department be- cause it interfered with comubstion. The laws of combustion are infinitely valuable but they must be used, restraind, guided so that they do the will of man instead of destroying him or his property. The displays of electricity in a thunder storm were once considered revelations of the anger of Deity, but now it is one of our most wonderfully useful servants. And it is so with the laws of economics. Laws are too unwieldy for price-making. What would be- come of us if the legislature fixt the price of potatoes and yet 90 ■ THE UNIVERSITY OF OKLAHOMA only met once in two jears? In uncertain times, prices change every day, and we could have no confidence in them unless they did, for we know that the factors on which they are based are constantly changing. Every act of the legislature must be tested by the courts which are usually several years behind their docket. Price-making is far more appropriately an executive than legis- lative function ; but the entire process of making, interpreting, applying, and enforcing prices require all the functions of gov- ernment-legislative, executive, and judicial — for without the due action of all these prices could not be just or right. The negative seem to think that the bulls and bears in the markets have the best possible facilities for learning all the facts concerning supply and demand. Why, then, do they try so hard to get hold of the facts of the government reports before they are issued? Why has the government been compeld to use such drastic means to prevent their leaking out? Simply because the government reports are so much more full, adequate, and re- liable that market manipulators will pay anything to get advance know-ledge of them. But altho the government reports are so much better than those of any other agency, it can make no use of them ; it cannot at present even use them for the benefit of the people. Their chief value is to those who buy and sell. Price regulation never has succeeded and probably never will. Why not trj- remedies which were never known to fail? Increase of production will lower prices. Devoting our energies to that will accomplish something. Diminishing demand never fails to lower prices. Let's do without everything that we can get on without ; let us refuse to pay unreasonable prices v.-her- ever we can do so. Let's reduce the cost of doing buisness. In other countries-England for example — cooperative stores do an enormous business and effect immense savings for their stock- holders and customers. Why can't we do that here? Let's try faithfully the unfailing remedies before we launch into methods v.hich can only end in overthrowing our social system. The U. S. Dept. of Agriculture is an immense concern and has connections reaching out to the smallest and remotest com- munities. It has facilities for ascertaining facts concerning products which are incomparably superior to those of any market in the country, and even to all of them combined. The contention of the affirmative is that we should have a court or commission which would see that prices correspond with the facts as found by the Dept. of Agriculture. When they do the commission would have no occasion to interfere and would not. GOVERNMENT PRICE CONTROL 91 The simple fact that such a commission exists and has power to control to compel honest prices would restrain most of the evils now complaind of without interfering with economic laws. The reports of the Federal Trade Commission give an amaz- ing revelation of the methods used in business to prevent com- petition. It shows that enormous sums of money are spent in trying to establish monopolies and all the time their agents are vociferously denouncing all efforts of the government to establish fair prices. They assure us that the laws of supply and demand will regulate prices just right if the government will let them alone. If business can afford to pay so much to pre- vent the free action of the laws of supply and demand they could sell that much cheaper if such practises were stopt; yet well meaning people cry out against government regulation which is the only possible means of dealing with these evils. Altho the number of business firms is more than double that of 1881 the failures were less in 1919 than in any year sinc« then. They were a little more than one-third of the num- ber of failures in 1914. While some of this decrease may be due to improved business methods, most of it is due to the fact that business is so much more profitable; that is to say, profits are greater. Yet some would have us believe that business^ as a rule is not much more tlian making expenses. It is perfectly evident that the chief burden of the increast cost of living is not falling on those engaged in making profits. Everything shows that they are making more money than ever before. It is im- possible to reconcile this face with the claim that profits are no greater than common. If the government fixes the price of wheat it must also fix the price of flour as it did during the war. But the farmers want the price of wheat to be as high as possible, and the rest of the people want the price of flour to be as low as possible. The two interests are conflicting; absolutely so. If the party in power made the price of wheat low enuf to make flour cheap the farmers would vote them out of office. If thej^ made the price of wheat high enuf to please the farmers it would make flour high and the rest of the people would vote them out of office. The only government that could fix prices is an auto- cratic one that was inedependent; one like the Kaiser's that could boast of "me and gott" and go its way indifferent to appeals of all the rest of the world. The government could not fix the price of flour without 92 THE UNIVERSITY OF OKLAHOMA also fixing the price of wheat from which it is made. If, for example, the government should require flour to be sold at $6 a bbl. when wheat was $2 a bushel the mills would soon be bankrupt, and they would all quit making flour before bank- ruptcy was reacht. It is absurd, then, for the afifirmative to talk of fixing the prices of only a few of the necessities of life. It would be impossible for the government to fix the price of a few necessities without ultimately fixing the prices of every- thing; not only the prices of articles entering into the making of the articles whose prices were fixt, but also the prices of everything whose prices were higher and to which manufacturers might turn, wholly or in part. It is common for ignorant or poorly informd people to de- nounce the food markets as tho they were the cause of most our economic ills. Of course there are bad men who make a wrong use of anything. Patriotism, the church, benevolent or- ganizations have all been used as a cloak for scoundrels. It would be amazing, indeed, if there were not some who could abuse the markets. But the great majority of those engaged in the markets have nothing to gain and much to lose by any wrong doing. The rules of every Board of Trade do everything that human intelligence can suggest to prevent fraudulent deal- ing ; and any one found guilty of such is expeld from the Board and denied all its privileges. It is the purpose of every Board of Trade to keep itself above suspicion. The excuse for price-fixing is that interests combine and form monopolies. Well, then, the remedy is to stop the com- bines and prevent the monopolies. This may be hard to do but it is infinitely easier than fixing prices by law. The chief diffi- culty in preventing combinations is that it requires more gov- ernment oversight of and interference with private business than is possible without completely sacrificing all our individual lib- erties, and making our government more autocratic than Ger- many's was before the war. But even Germany was not able to prevent monopolies; her government never tried to. Mono- polies that "stood in" with the government or with influential oflFicials were undisturbd. There was no attempt, even, to se- cure "equal opportunity" so dear to Americans. The ideal price-making would be where nothing acted but natural laws and actual external facts. The thing we most need to escape is the personal element, — selfishness, self-interests, greed, etc. This our present system is admirably calculated to GOVERNMENT PRICE CONTROL 93 do. Our prices are now made by those to whom low prices are just as profitable as high prices, and whose success depends en- tirely on correctly interpreting the present and rightly anticipat- ing the future. Laws made by men could not escape the per- sonal interests and ambitions of the makers. Even tho prices at times work hardships, we can sulimit to them more contentedly if we know they are made by objective facts, and that no one is exploiting us. We accept prices which are the result of natural causes as we do the weather ; but if we had government con- trol of weather we should have a rebellion every few days. The speculators and gamblers on the produce exchange make all possible use of the laws of supply and demand; why should not the rest of us have an equal right to use them, and to create whatever institution may be needed for the purpose? It is certain that tremendous interests are often arrayed against the normal working of those laws; why then should it be so wrong to work for them and with them? The negative argu- ment is largely special pleading. They argue that economic laws should have been "let alone" during the war when it is as certain as anything could be that if we had done so Germany would have won the war. It is impossible to resist the con- viction that they wish to be "let alone" for their own prof- it instead of the welfare of the public. In fact few of them would deny it. The nucleus of everytown is a middleman who is supposed to minister to the agricultural districts contiguous. But another middleman comes in because he thinks there is "room" for him, and the community has to support two families instead of one. There are few towns where business is not overdone, and busi- ness men are compeld to put up prices to where they can all live, and so consumers must pay for their own exploitation. By means of understandings, cooperation, or combinations prices may be made just as high as the people will pay. The remedy for this is cooperative stores which have been so suc- cessful in England, but which have never been as successful here. The first step in reducing the cost of living is to cut out all unnecessary expenses between producer and consumer, in- stead of trying government price contFol. Every demand for a fixing of prices by the government is in reality a demand for an autocratic government, — the only kind of government that is able to do it. Such a policy is ut- terly imposible under a democracy where the "government" 94 THE UNIVERSITY OF OKLAHOMA is the people themselves or their representatives. The price that suits one part of the people oppresses other portions, and the attempt to fix prices would introduce such strife and contention that no government could possibly survive it. There could be no worse way to fix prices that that. It is hard enuf to preserve the unity and solidaritj'^ of our people as it is; it has always been one of our most difificult problems. It was the difference in the way slavery aiit'ected the vital interests of people in different parts of the country that caused the Civil War. We must minimize the causes of war instead of increasing them. During the last two centuries there was an economic doc- trine known as "laissez faire" (lassay fare) which argues that government should not interfere in economic matters, that natural laws are entirely sufficient without any human aid. Recent studies and investigations have completely discredited the doctrine but still it lingers. At present it is thought of chiefly as an alleged excuse for laziness or indifference. It was popular doctrine two or three centuries ago but it is decidedly out of date at the present time. The first man who carried an umbrella in New England narrowly escaped being mobd for interfering with the working of natural laws; it was thought to be "flying in the face of Providence"; if the creator did not mean that the rain should wet us he would not have made things as he has. This sounds very much like some of the negative argument in this debate. Prices are not, and do not pretend to be rational, just, or propitious. The price of cotton for example, has never contem- plated a living wage for the producers. The chief workers were the negros in the South who were supposed to be incapable of self-defense and willing to live in squalid poverty, and we have got used to expecting a price for cotton which will compel the continuance of such conditions. It is only recently that cotton producers have been able to get together enuf to exert any in- fluence on prices. It is said that a few j-ears ago at a confer- ence of cotton producers it was resolved to reduce the acerage of cotton, and then the delegates went home and put in more cotton than ever because each expected that the others would not, and the scarcity would make prices higher, and they wanted a big crop to take advantage of it. Supply and demand may, themselves, be manipulated. While we say that prices are chiefly dctermind liy supply and demand, many other factors or influences enter in to the making GOVERNMENT PRICE CONTROL 95 of a price. The chief is the cost of production. If the price offerd for an article is considerably more than the cost of pro- duction the supply will increase until it will overbalance the de- mand and the price will fall. On the other hand, if the price ofTerd is less than the cost of production the supply must de- crease and that would inevitably raise the price. It is evident here, however, that the cost production acts only thru supply and demand. But the cost of production does not always con- trol the price. The farmer, for example, must produce crops or starve. He must of course get the cash cost of his crop back or he would not be able to continue at all ; but lie may not get a sufficient remuneration for his labor, and so may produce crops but constantly grow poorer. Fixing prices is clearly outside the normal functions of gov- ernment. Fixing prices by the government means simply that tliey will be fixt by politicians. They cannot possibh' be as well posted as the bulls and bears in the regular markets who spend their lives studying everything pertaining to prices and their changes. The politicians could not do that if they would ; there is too much else for them to study. And besides, they could not be impartial; they would be interested judges deciding a case in which they are interested. But the bulls and bears in the market are absolutely impartial. Prices going down make them iust as much as prices going up ; they are interested only in mak- ing a profit ; and if one man is trying to lower a price another one is trying equally hard to raise it; and the man wins who gets the most facts and interprets them the most correctly. Leg- islators simply cannot do this. The negative compare the laws of supply and demand to the laws of gravitation. There is no comparison possible between them. The laws of gravitation are specific, definite, and work uni- formly under all conditions. But the laws of supply and demand compel nothing. They only afford a psychological excuse. They act altogether by influencing the mind, and the effect they have depends altogether on the condition or state of mind they act on. The same conditions of supply and demand would not afifect any two minds exactly alike. A great market is one of the worst places for panics in the world. The men in the wheat pit in Chicago sing all kinds of songs, get tremendously excited, and act more like lunatics than men who are seriously trying to make prices for the farmers of America. Any one who would say that such a mob is better qualified than a government commission to make correct prices is a — well it wouldn't be polite (o say. 96 THE UNIVERSITY OF OKLAHOMA In every market there are what are calld "bulls" and "bears" ; the bulls try to raise prices and the bears try to pull them down. The bulls do everything in their power to raise prices ; they re- sort to every possible influence ; they make the most of every fact ; they do all that is liumanly possible to make prices higher for it is only liy raising prices that tlicy can make any monej". On the other hand, tiic licars try equally hard to lower prices for that is the way they make their money. These men learn the game thorbly, and play it with almost superhuman shrewd- ness and courage. They maintain agencies all over the country for gathering exact information ; nothing is overlookt ; a rain in Oklahoma will affect the price of wheat in Chicago and Liver- pool. These men become experts and thru them the facts as to supply and demand become efifective. And in the long run their judgment holds with few exceptions. Sometimes they miss it; but wc may be sure that when they do no human intelligence could do any better. It is argued that societ}^ has never yet succeeded in con- trolling prices, except for a very short time. Against this two patent facts stand out mistakable: first, there has never been such a need for it, or a need so wide-spread and threatening; second, we know more about the procesess of business now, and have more facilities for tracing effects to causes. The argu- ment of the negative is the very identical argument we have always had from those who are evploiting the public; — "let us alone". Of course every profiteer will applaud the arguments of the negative. No doubt about that. But how does the nega- tive argument help us? How does it help to strengthen the yielding foundations of civilization? We do not charge that the negative have caused the conditions that confront us, but we must say that they are doing nothing whatever to help those conditions. While Rome is burning they may not be exactly fiddling but they are giving us learnd essays to prove tliat the fire cannot be put out. The sole object of every Board of Trade is to facilitate trade and commerce. They have grown out of human needs and an infinite amount of experimenting ; and the modern Board of Trade represents the very highest achievements of commercial genius and efficiency. If a Trade organization should counten- ance fraudulent dealings of any kind it would inevitably dimin- ish their business. No market organization could posil)ly make as much by permitting fradulent practices as it would by rigidly GOVERNMENT PRICE CONTROL 97 excluding them ; lack of confidence could not possibly facilitate trade. The charter of the first Produce Exchange in the United States states as its purpose : "To provide and regulate a suit- able room or rooms for a Produce Exchange in the city of New York, to inculcate just and equitable principles in trade, to es- tablish and maintain uniformity in commercial usages, to ac- quire, preserve, and disseminate valualile business information, and to adjust controversies and misunderstandings between per- sons engaged in business." The present high cost of living is threatening the very ex- istence of civilization. If it be really true that nothing what- ever can be done then nothing can prevent a headlong plunge Iff civilized society into Bolshevism or worse. We must recog- nize that the situation is absolutely intolerable. We have no choice about it; a way to reduce prices MUST be found. We have price control in war. We must have it then; all nations alike practise it. But the emergency of peace times is becoming equally great. We face a condition, not a theory; a condition which is inexorable, and which cannot be trifled with. In past times great fortunes have always foUowd in the wake of war; where do they come from? There is but one adequate answer; their source is to be found in the higher cost of living. It may be admitted that the processes are obscure and very hard to trace, especially if we begin at the wrong end. When a few get rich at the expense of the many the public has a right to demand that the utmost light be thrown on the means, methods, and sources of acquirement; a price control commission can do it. It is a common practice of manufacturers to guarantee that the prices of their products will not fall. This makes customers buy more freely ; they will not wait for lower prices. If the manufacturer should lower the price of an article, then, he would not only make less but would have to indemnify his cus- tomers who had purchased at higher prices. On the other hand, if the maunfacturcr should raise the price on articles his cus- tomers would immediately raise the price of what they had pre- viously bought, which would be clear profit. The manufacturer, then, who wishes to please his customers is very strongly influ- enct to keep princes up. More than two hundred persons testi- fied before the Federal Trade Commission that this practise was one of the chief reasons why prices kept up. lender such condi- tions the manufacturer would certainly keep prices up just as long 98 THE UNIVERSITY OF OKLAHOMA as possilik'. Witli a little cooperation amon.in manufacturers it would be much easier to boost prices than to lower them. In such a condition, supply and demand have little or no influence on prices. The evidence submitted to the Federal Trade Commission show some of the methods used to establish monopolies and ultimately to raise prices. Immense sums are spent in bribing the employees of competitors to be disloyal to their employers; in bribing employees of possible customers to use their in- fluence with their employers; giving special gifts, discounts, bonuses as bribes to customers to deal exclusively with the bribers ; in fixing retail prices and refusing to sell to retailers who do not maintain the high prices thus dictated ; in main- taining an army of spies who follow the salesman of compe- titors; in cutting the price of a commodity till competition has been destroyed and then raising the price enuf to recoup them- selves for losses in securing the monopoly, thus making their customers pay the cost of their own robbery. Such things have been going on for years and are rapidly growing worse. Honest business men are helpless; they must do what their com- petitors do or quit business. Yet the negative tell us that supply and demand make prices and the government should not inter- fere. Every Produce Exchange has a Committee on Complaints before v»hich are brought all complaints concerning acts which have been injurious to any member. If the person complaind of is found guilty he is censured, suspended or expeld accord- ing to the character of the act complaind of. No where else on earth are the rules of business conduct so rigidly and thoroly enforced. Suppose that on Jan. 1 a milling firm is askt to bid on a shipment of flour to he made on July 1. The price of wheat might change between Jan and July and it is impossible for the miller, to tell at what price he should make in his l)id. Since there is competiti>'n he must approximate very closely. He goes on "Change and finds a number of experts with all possible facilities for judging the probable price on July 1. and makes his bid at the price they have fixt for that date. He may, if he wishes to be still more safe, buy a "future" of the same amount of wheat as that required fol- his bid. This would insure him against any loss, for if the price July 1 should be lower than he expects he would gain on liis bid but lose on his "future"; if the price should be higher he would lose on his bid but gain on GOVERNMENT PRICE CONTROL 99 Ill's "future". By this means 1)usiness men may safely make contracts to lie filled in the future. It is freely admitted by all students of the subject that l^rices of farm products have always been too low. This is ".specially true of wheat and cotton, for example. The opposi- tion to government price regulation insist that this must continue until agricultural labor shall become unrequited toil, — practically slavery — ,and the very foundations of civilization be destroyd. Cotton "can only be raised in the United States at customary prices by condemning millions of negroes and poor whites to poverty and ignorance. The drift to the towns and cities is showing the effects of too low prices on other farm products. It is certain that trade processes or conditions cannot correct this evil; they are constantly making it worse in spite of all efforts to the contrary. At present the rights of pro- ducers are not considered at all in price-making. As long as far- mers will accept a given price it will not rise, and there are al- ways farmers who are compeld to sell for what they can get in order to meet present necessities and obligations. And even those who might combine for self-protection are so isolated that they cannot. Government must interfere or sovietism must replace our present methods of government. If civiliza- tion does not protect the farmer, he must find ways of protect- ing himself. There are but two classes to be considered: the makers and the users; the producers and the consumers. .\t present these two c'asses have little or nothing to say about prices. Between these two classes are hordes of what are calld "middle men" who are supposed to exist because they render some service to the makers and users; they are supposed to be in business for that purpose and they are tolerated for that reason. But middle men tell us that they are not in business for their health, or for alturistic reasons, but solely to make all the profits they can. They exert all possible pressure on the producers to m.ake them sell at a lower price than they ought to; and upon the consumers to make them pay more than they ought to. Here is a field for rational and practicable effort. The chief busi- ness of towns is to act as middlemen, and the towns are growing apace. It is evident that there is too much "spread" between producer and consumer. If half the cost of articles is the cost of selling them, then it is evident that half the cost of living 106 THE UNIVERSITY OF OKLAHOMA is due to the machinery of distribution between the producer and consumer between whom there are two or three classes of middlemen, each of which must not only be supported but must make a profit. It is noticeable, too, that it is among these middlemen that most of the great fortunes are built up. It is evident that the different classes of middlemen are of great value to each other, or at least a verj^ great convenience; but it is not so clear that their services are equally valuable to the producers and consumers. Debaters must note the confusion of meanings of the words "supply" and "demand". Ordinarily "supply" means the avail- able amount on hand; but in connection with markets the mean- ing is not the amount on hand but the amount the owner will sell at a given price. If the price were higher he might sell more; if lower he would sell less, tho the "amount on hand" would be the same in each case. Suppose A has 1,000 bu of wheat to sell for which he asks $2.25 a bushel. B wishes to buy 1,000 bu. and offers $1.75 a bushel. There is neither supply nor demand in the market sense. A decides that he will offer 500 bu at $2 a bu. and hold the rest in hope of a higher price. Suppose also that B decides that he will pay $2 a bu. for 500 bu. in the hope that he will be able to buy the other 500* bu at a lower price. This is calld the balancing of supply and demand. The "supply" in this case is 500 bushels and the "demand" is 500 bu.; the amount on hand or the amount needed has nothing to do with it. Supply and demand is the amount that will be traded at a certain price. Is not price involved in supply and demand? Certainly. The fact that the trade occurd shows that ])oth parties considerd the price satisfactory, or at least suffi- ciently so to make them trade. This price, while not binding on others, is apt to be accepted by them and other trades made at the same price. The market report for the day will say that 500 bu of wheat was sold at $2 a bu. If there were sales at other prices the report will give the highest and lowest. If no sales occurd the report will give the prices "bid" and "askt". These reports go all over the country and from them both buyers and sellers decide what prices are safe. Opponents of government price control argue that there is no profiteering because it is so hard to prove it. In the nature of the case such things are almost impossible of proof, it is hard to get evidence. But that does not disprove. Miss Edith GOVERNMENT PRICE CONTROL 1*1 Johnson quotes in an editorial: "in the last three years the American people have paid in net profits every dollar's worth of stock in coal companies and all corporations in the essential lines of industry and trade." Senator Capper read a statement in the U. S, senate which no one has attempted to deny from the following facts are culled: Increase In Value of Shares or of Surplus Amer. Beet Sugar from $6 a share in 1918 to $15 a share in 1919. Amer. Hide & Leather Co. from 44c a share in 1914 to $15.52 a share in 1919. Pittsburg Tin Plate & Steel Corporation Common Stock 1,500%. Central Leather Co. Surplus from $7,750,000 in 1914 to $31.- 250,G00 in 1919. United States Steel surplus increast $500,000,000 a year f«r last five years. Increase in Profits Amer. Sugar Refiining Co. from $12,000,000 in 1918 to $15.- ©00,000 in 1919. Amer. Fruit Co. in four years, 140%. Central Leather Co. doubled in four years. Standard Milling Co. 100% in last four years. National Enamel & Stamping Co. 326% in last three years. Amer. Hide & Leather Co. 350% since 1914. National Canning Co. 545% since 1914. Burns Bros. Coal, from 23 l-2c a ton in 1916 to 40|c in 191f. United Drug Co. 242% since 1916. American Ice Co. 283% since 1916. Tobacco Products Corporation 1,547% since 1914. Dividends Declared 1919 Continental Oil 200'/; United States Fuel Gas 200*/«- Ohio Fuel Supply 1 100% Nonquit Spinning Co 100% Amoskeag Cotton Mfg. Co 100% International Motors 100% Stutz Motors 100% Nashua Mfg Co 100% 102 THE UNIVERSITY OF OKLAHOMA QUESTIONS TO AID STUDY 1. Are prices always just right, everything considerd? 2. Should prices always he just and reasonahle? 3. When are ihey "just" and "reasonahle?" 4. Are prices independent of the ordinary ohligations of justice and humanity? 5. If a high price produce great suffering among the poor, should it he low- erd? 6. If a low price i)f wheat or cotton cause great loss to farmers should it Ije raisd? 7. If the price of milk goes up is somebody guilty of murder? S. Do prices affect the value of wages? 9. The value of property? 10. Do high prices increase profits? 11. Would that stimulate husiness? 12. W^ould low prices deprive some people of part of their means of living? 13. Should some persons make money out the hard necessities of others? 14. Should a merchant work for nothing? 15. Is it right to luiy everything as cheap as you can and sell for as much as you can? 16. What is a "fair" price? 17. If you can produce at lower cost should you not undersell your customers and take their business? 18. Are you entitled to the benefit of your superior knowledge and skill? 19. What is the right attitude towards customers, — make all you can out of them, or try to serve th.em? 20. If the former, will you keep their trade- 21. If the latter, will you fail in liusiness? 22. Should one earn the profits lu- makes? 23. If a profit is not earnd is it stolen? 24. Shnuld everyone render a full ecpiiva- Icnt for all his profits? 25. Do we know exactly what fixes prices? 26. Should we know if we try to regulate tliem? 27. How does the "supply" of wheat differ from the "availalile amount" of w^heat? 28. Could supply ever he zero when the available amount was very large? 29. How docs "demand" dift'er from "desire" or "need"? 30. Could demand ever be zero when there was great need? 31 What, then, is supply and demand? 32. Would the price at which tlie maximum trade occurs he the correct price? 33. Would it be the fairest that it is possible to get? 34. Can actual supply and demand be determind without a free market? 40. Should the government keep markets free and untrammeld? 41. Is there any sulistitute for markets? 42. Why was the mar- ket place so important in ancient cities? 43. Is it necessary for the actual goods to be present in the market if there are sufi- cient guarantys as the amount and ([uality? 44. What are "Inills" and "bears" in the markets? 45. What are "longs" and "shorts"? 46. What is a "corner"? 47. Suppose A buys 1,000 I)u -of wheat from T> to be deliverd 6 mimths from now, at $2 a busliel ; GOVERNMENT PRICE CONTROL 103 ami that wlun that time comes wheat was selling at $2.25 a bushel, how would each of them be affected? 48. Would A try to raise the price or lower it? 49. Would he be a "bull" or "bear"? 50. Suppose that at the same time, A sold 1,000 bu of wheat to C at $2. a bu to be deliverd six months later, when the price was $2.25, would he be a bull or a bear in that transaction? 51. Under such conditions would men test market conditions thoroly? 52. Would they learn everything that affects prices? 53. Under what conditions would bulls change to bears? Must those who trade in the market keep well posted, or merely trust to luck? 54. Must a trader lose unless his predictions are cor- rect? 55. Would the members of a government commission gain or lose according to the correctness of their predictions? 56. Should a man make prices for others which he does not risk himself? 57. Is supply and demand the only thing that affects prices? 58. Should the cost of production be considerd? 59. Is it con- siderd in the prices of agricultural products? 60. Can any one afford, as a rule, to pay more for an article than he has to? 61. Does the amount of money in circulation affect prices? 62. Would people bid higher for what they want when money is plentiful -63. Is that the same as increasing the "demand"? 64. Could any law prevent them from paying more for what they want? 65. Would combinations of buyers or sellers affect prices? 66. Would competition prevent combinations? 67. Can we trust supply and demand where there is little or no competi- tion? 68. Arc competitors natural enemies who have a right to beat each other all they can? 69. Is competition a kind of war? 70. Sould the law compel men to fight each other? 71. Can we have fair and just prices without competition? 12. Should the gTivernmont regulate prices where there is no com- petition ? 12). Are prices made by men or by conditions? 74. Must condition's be rightly interpreted? Iz'. Should the state see that prices are in accordance with supply and demand? T^. Do middlemen affect the prices to ultimate consumers. 11. If we did away with mitldlemen would it greatly diminish towns and cities? 1'^. Would that hinder the advance of civilization? 79. Is money made more easily in trading than in producing? 80. Does that make too many traders? 81. Could producers and consumers get together efficiently without the aid of agents, mer- chants, traders, — middlemen? ?>1. How can producers get into best touch with consumers? 83. Does the iModucer need to sell 104 THE UNIVERSITY OF OKLAHOMA soon after production? b'A. Can he store goods while waiting for customers? 85. Is it better for him to sell at wholesale or retail? 86. Can he sell cheaper at wholesale? 87. Would sell- ing products liy producers hinder the making of them? 88. Is it better for all that the work of selling and making be separated? 89. Do salesmen have to run risks? 90. How could they meet losses? 91. What effect w^ould business uncertainty have on prices? 92. Are there too many middlemen? 93. Suppose busi- ness is already overdone in your community and a new firm comes in, what can be done about it. 94. Should the other firms agree to raise prices so that all may live? 95. Should the weakest •firm be driven out of Inisiness? 96. Should the public be askt to support more firms than are needed? 97. Are merchants justified in trying to prevent ruinous competition? 98. Should new firms be required to get a license before beginning business in a community? 99. Do middlemen raise prices to ultimate consumers? 100. If there is excessive "spread" between pro- ducer and consumer does it indicate excessive expenses, risks, or profits? 101. Why do so many middlemen get rich? 102. It is a common saying that it costs as much to sell an article as to make it; is that right? 103. Should one who knows just what he wants have to pay as much to have it sold to him as it costs to make it? 104. When a man needs something for a cer- tain purpose how can he best find out what will fulfill it? 105. Do stores help? 106. Should the public have a voice in interpreting supply and demand? 107. Or should it be left entirely to merchants and tradesmen? 108. Who is to determine if prices are just and reasonable? 109. Do bulls and bears balance each other in the long run? 110. Can they be trusted to do full justice to all concernd? 111. Would government regulation of prices abolish supply and demand as a price making influence? 112. Could the government see that producers of necessities get remunera- tive prices? 113. Is the tariff such an attempt? 114. Can 'reasonable profits" be guaranteed to both low and high cost producers? 115. Would a skilful, enterprising farmer be will- ing to have his shiftless, mismanaging neighbor paid a higher price because his production costs were higher? 116. Would such a policy be sure to be abused? 117. Might price control be necessary in war time? 118. Is there a crisis for the poor all the time? 119. Could licensing dealers prevent profiteering? 120. Is there anv limit to the demand for necessities? 121. GOVERNMENT PRICE CONTROL 105 Would that affect the "demand" for them, and hence the price ? 122. Can we do without milk, whatever the price? 123. Can the prices of necessities be regulated without reg- ulating everything used in their production? 124. Could you regulate the price of milk without regulating the price of cow- feed? 125. The wages of laborers? 126. If the farmer does not get as much for cow feed as for other farm products will he raise cow feed? 127. Might lowering the price of milk re- sult in diminishing the supply? 128. Might a higher price of milk be a lesser evil? 129. Could the farmers he compeld by law to raise what the public needs? 130. If the government lowerd the price or cotton would it affect the southern states and the manufacturing states alike? 131. Would that make sectional strife? 132. Would a similar thing be true of Wheat? Of Iron? Of Coal? Of Sugar? 133. Could all sections be dealt with equitably by a government com- mission? 134. Would such a policy endanger the unity of the nation? 135. Could any price Ije raised without diminishing consumption, or lowerd without diminishing production? 136. Why were the merchants of other nations unable to compete with Germans before the war? 137. Will other nations be likely to try the German method? 138. Brazil has bought up her coffee crop to prevent its being dumpt on the market all at once; is that right? 139. Would this policy benefit the citizens of Brazil? 140. Should we adopt it for wheat, cotton, etc.? 141. If one nation does this will the others be compeld to? 142. How would this affect world peace? 143. Why should the League of Nations undertake to regulate international economic relations? 144. Could an international court do it without a League to enforce its decisions? 145. Would those who do not mean to trade fair be opposed to a League of Nations? 146. Should consumers have a voice in making the prices of necessities? 147. Do they have it now? 148. Can they affect prices by refusing to buy? 149. Are producers compeld to sell? 150. Would cooperative buying and selling help? 151. Would practising economy help or injure trade? 152. Would the con- sumer's knowledge of quality of goods help business? 153. 154. If prices were reduced by the government would quality deteriorate? 154. Might government regulation of prices 1)ring greater evils than those it aims to remove? 155. Is the pro- ))lem insoluble? 106 THE UNIVERSITY OF OKLAHOMA BIBLIOGRAPHY (The first numher is the volume; the second numlier the page) AMERICAN ECONOMIC REVIEW: Amer. Economic Assn. Ithica, N. Y., $1.25. 6:26-9. Mar. '16: Tariff and the Ultimate Consumer. H. A. Wooster. 6:49-60, Mar. '16: Iniluence of Speculative Marketing on Prices. A. P. Usher. 7:331-52, Jun. '17; Open Price Association. H. R. Tosdal. 8:sup. 239-56, Mar. '18; Value & Price Theory and Price- Fixing. B. M. Anderson. 9:47-56, Mar. '19; Price-fixing in Competitive Industry. A Pioneer Case. L. H. Haney. 9:Sup. 61-78, Mar. '19; Provisions of the Food x\ct made permanent. W. F. Gephart. 9: Sup. 233-45, Mar. '19; Some Purposes and Results of Price-fixing. G. F. Warren. 9: Sup. 246-51, Mar. '19; Possihilities of Price-fixing in Peace times. T. N. Carver. 9: Sup. 252-71, Mar. '19; Price-fixing Policies of the Food Administration. L. C. Gray. 9: Sup. 272-9, Mar. '19; Price-fixing: Discussion. (Every team should have Vol. 9 Sup. on Price Fixing.) 10: Sup. 156-85. Banking Policy and the Price Situation. H. G. Moulton. ANNALS AMERICAN ACADEMY: 36 and Woodland, Philadelphia, Pa. $1.25. 74:224-35, Nov. '17; Necessity for Gov't. Reg. of Prices in War Time. C. H. Van Hise. 74:256- Nov. '17; Constitutionality of Federal Regulation. Clifford Thome. 74:280-7, Nov. '17: Price Control thru Industrial Organiza- tion. J. R. Smith. 74:288-93, Nov. 17: Price Control. J. E. Davis. 82: 306-22, Nov. '17: Rectifying the Price Situation. A. C. Miller. 89: Parts I-VIII. This numluv contains 253 pp of fine dis- cussion. Every Team should have it. There is nothing hetter. .A.TL.\NTIC MONTHIA'. 41 Mt. \'ernon St.. Boston Mass. 35c. 116:668-77. Nov. '15; Prices According to Law. A, A. Bal- lantine. 125:524-7, Apr. '20: Profiteering and Prices. W. T. Copeland. GOVERNMENT PRICE CONTROL 107 CENTURY MAGAZINE. Century Co. N. Y. 35c. 93:605-11, Fell. '17; Can a Democratic Govt. Control Prices? Davies-Creel. THE FORUM. 118, E28, N. Y. 35c. 56:762-8. Dec. '18: Price of Prosperity. G. Weiss. 60:257-66, Sep. '18; The Wheat Farmer's Dilemma. T. P. Gore. THE INDEPENDENT. 119 W 40. N. Y. 15c. 89:560 Mar. 26 '17; Finance and the Farms. W. P. G. Hard- ing. 91:112 Jul. 21 '17; Patriotism and Profits. Pres. Wilson's Message to Business. 92:134 Oct. 20 '17: Is Price Fixing Possil)le? J. E. Davies. 99:216-7 Aug. 16 '19: What the Economic Crisis Calls for. ^. H. Giddings. 99:249-50 Aug. 23 '19; Mr. Wilson on the Cost of Living. F. H. Giddings. 99:277 Aug. 30 '19; Price-Fixing in Other Days. 100:167 Dec. 13 '19; How to Bring down Prices. A Alitch- cll Palmer. 102:159 May 1 '20; The Only Cure for the H. C. L. Royal Meeker. ILLUSTRATED W^ORLD. Drcxel Ave and 58. Chicago. 111. 25c. 25:603-6 July '16; Bidding against the World. C. D. Murphy. 26:937-40 Feb. '17; New Methods of Price Raising. M. Stratton. 31:941-2 Aug. '19; Keeping up Wages as well as Prices. R. Rankin. JOURNAL OF POLITICAL ECONOMY. University of Chicago Press, 30c. 24:183-4 Feb. '16; New Study of Index Numbers. 27:73-94; 188-209; Price Fixing in Revolutionary France. H. E. Bourne. 27:405 May '18; Price-Fixing Experiment. 27:505-6 Jun. '19; End of Government Price-Fixing. FORTNKiHTLY RFATFAV. Leonard Scott Puli" Co 249 W 13. N. Y. $6 a year. 112:692 Nov. '19; Price-Fixing I)y Law. C. C. Wade. 112:845 Dec. '19; Currencv, Prices, and Rates of Exchange. W. F. Ford. LITERARY DKJEST. Funk & Wagnalls. N. V. Citv. 10c. 65:22 May 22 '20; Profiteering and High Prices. 108 THE UNIVERSITY OF OKLAHOMA 65:27 May 1 '20; Strikes as a Revolt against High Prices. 65:132 May 1 '20; World-wide Price Trend still upwards. 65:30 May 8 '20; Profiteers Jaild and Unjaild. 64:64 Jan. 3 '20; More Light on the Wliys and Wherefores of High Prices. 64 :78 Jan. 24 '20 ; Refusal to buy as a remedy for High Prices. 64:110 Jan. 17 '20; Are Druggists Profiteers? 64:11 Jan. 3 '20; Will Unscrambling the Packers Reduce Prices ? 64:20 Feb. 21 '20; Shoe and Clothing Prifits. 64:139 Mar. 6 '20; Cost of Living in Paris. 63:92-4 Oct. 11 '19; Price-Fixing in Iron and Steel during tlie War. 63:18 Dec. 20 '19; The Farmer not the Villain, etc. 63:84 Dec. 27 '19; Reckless Buying Makes Higher Prices. 62:21 Aug 22t '19; England's Big Stick for Profiteers. 61:15 May 24 '19; End of Price Fixing. 57:92 Apr. 27 '18; Why Prices are so High? 56:18 Mar 16 '18; Is Wheat too Cheap? 55:18 Jul. 28 '17: Profits, Prices and Patriotism. 54:703 Mar. 17 '17; Cause of High Prices. LIVING AGE. 41 Mt. Vernon St. Boston, Mass. 15c. 302:632 Sep. 6 '19; High Prices and Profiteering- A British View of the Problem. MONTHLY LABOR REVIEW. U. S. Bureau of Labor Statistics. Write to your Congressman. Price Tables on the Cost of Living: 10, 1:69-117 Jan. '20; 10, 2:57-99 Feb. '20; 10 No. 4:68-92; etc. (Every month there is an article on this subject.) Articles: 10 No. 5:21-45; .Apr. '20; Price Fixing during the war. F. C. Stoddard. 10 No. 2:399-401 Feb. '20; Improbability of Decrease in Prices or Cost of Living. Royal Meeker. 9 No. 6:22-41 Dec. '19; Family Incomes and Cost of Living. 9 No. 5:1-19 Nov. '19; Clothing and the Cost of Living. 8 No. 2:1-25 Aug. '19; A Study of Food Cost in Various Cities. W. F. Ogburn. 9 No. 1:1-13; July '19: What is tlie American Standard of Living? Royal Meeker. Government Price Control. Paul W. Garrett. 834pp. THE NATION. 20 Vesey St, N. Y. 15c. GOVERNMENT PRICE CONTROL 109 105:58-9; Jul. 19 '17; The President on War Prices. 105:231; Aug. 30 '17; Government Price-fixing; Now and i.ater. 106:468; Apr. 18 '18; Steadying Prices in Australia. 108:302-3; Feb. 22 '19; Regulation of Prices in Russia. 108:439; Mar 22 '19; Cooperation to Lower Commodity Prices. W. J. Boies. 108:562; Apr 12 '19; Stableizing Industries. W. J. Boies. 110:417; Apr 3 '20; Cause of High Prices. NEW REPUBLIC. 421, W 21, N. V. 15c. 11:352-4; Jul 28 '17; Wanted A Policy. Wm. Hard. 14:340-1; Apr 20 '18; The President and the Farmers. 20:175-6; To Bring Prices Down. L. K. Frank. QUARTERLY JOURNAL OF ECONOMICS. Harvard I'niv. Press, Cambridge, Mass. 75c. 31:656-73; Aug '17; Study of Mitchell's Inquiries into Prices, B. W. King. 32:66-100; Nov. '17; Concept of Normal Price in Value and Distrilnition. F. H. Knight. .32:597-620; Aug '18; Price-Fixing in Iron and Steel Indust- ries. A. Berglund. 32:567-92; Sugar Prices and Distribution under Food Con- trol. R. G. Blakely. 33:1-70; Nov '18; Wheat and Flour Trade under Food Ad- ministration. W. Eldred. 33:71-106; Nov '18; Price-fixing of Copper. L. K. Morse. 33 :205-61 ; Feb '19 ; Price-Fixing as Seen by a Price-fixer. F. W. Taussig. 33:560; May '19; Cost of Production and Price. P. G. Wright. 34:138-60; Nov '19; Price-fixing and Theory of Profits. K. Simpson. 34:432; May '20; Price; Prices and Currency in Japan. V. S. Clark. THE REVIEW. 140 Nassau St. N. Y. 15c. 1:606-7; Nov 22 '19; The Financial Situation. Geo. E. kiil)erts. 1:659-61; Dec. 13 '19; What Makes High Prices? Comments mi the Above. 2:194; Feb 28 '20; Profiteer Hunting and Political Economy. 2:243; Mar 13 '20; Fighting the Symptoms. 2:306; Mar 27 '20; Theory of Purcliasing Power. J. L. Laughlin. 2:466; May 1 '20; On Profiteer Hunting. H. Hazlitt. no THE UNIVERSITY OF OKLAHOMA 2:5(i0; May 29 '20; Wave of Price Slashing. REVJEW OF REVIEWS. 30 Irving Place, N. Y. 35c. 54:199-210; Aug '16; Skyward Career of all Prices. J. G. Fredrick. 56:289-92; Sep '17; Government Price Regulation. E. A. Seligman. 59:595-8; Jun '19; Are Prices Coining Down? Irving Fisher. 61 :93-4 ; Jan '20 ; Price-fixing as a remedy for Profiteering. SATURDAY EVENING POST, Curtis Puh. Co., Philadel- phia, Pa. 5c. 64:18; Jan 20 '20; Palmer's Panacea. 192:5 Mar. 20 '20; Finding the Profiteers. A. W. Atwood. 190:18; Apr 3 '20; Branding the Profiteer. A. W. .\twood. SCRIBNER'S. Chas. Scribner's Sons, 597. Fifth Ave. N. Y. 35c. 68:130; July '20; What Stopt the Rise in Prices? A. D. Noyes. 64:8-6; Jul '18; The Farmer and Three Dollar Wheat. C. M. Harger. 64:581-6; Nov '18; Regulation of Food Prices. J. L. Payne. 62:259-60; Aug '17; War Finance and War Prices. A. D. Noyes. THE SURVEY. Survey Associates, 112. E 19, N. Y. 25c. 41 :840 ; Mar 8 '19 ; Prices that are Fair and Reasonable. THE OUTLOOK. 381, Fourth Ave, N. Y. 15c. 115:1484; Jan 24 '17; Prices and Prosperity; Some Rudiment- ary Economics. T. H. Price. 118:531; Apr 3 '18; What a Farm Woman Thinks of High Price Fixing. H. C. Bennett. 119:341-2; Jun ."6 '18: The Farmer's Sad Lot. W. 1. Chaml)er- lain. THE OVERLAN-D. 259 Minna St. San Francisco. Calif. 15c. N. S. 68:337-40; Oct '16; High Prices-Causes and Remedies. O. C. Bellman. N. S. 68:420-4; Nov '16; Bad Name. E. R. Johnson. THE UNPARTIZAN REVIEW. Henry Holt & Co. N. Y. 75c. (Formerly the Unpopular Review.) July '20; 43; The High Cost of Living. Alexander Noyes. INDEX Antitrust Laws 23 Arguments for Price Control 13 A*wood, Albert J. Zl I'ibliography Briefs 69 Capper, Sen. Arthur 52 Cause of Mounting Prices 31 Control by Indictment 35 Control by Laws of Supply & Demand & Competition 22 Control of Public Utilities 26 Cooperation to Control the Markets ?4 Costs of Marketing 5 Continuation of Regulation after the War 36 Dissolution of Trusts, Little aid from 30 Douglas Harry C. 47 Enormous Excess Profits Z?) Evils of Both Rising and Falling Prices 64 Exchange, The 65 Federal Trade Commission 28 Failure of the Law of Supply and Demand 32 Finding the Profiteer 'hi Fisher, Prof. Irving 64 Foreword 2 Government as a Distributor of Goods 20 Jail the Profiteers 52 Keeping down Food Costs 47 Legislation to Control Trusts 25 Xot so Simple as it Seems 39 Objections to Price Control 16 Price Control 3 Price Control in Australia 47 Price Fixing in Other Days 51 Pure Food Laws 27 Questions to Aid Study Quotations, A Few 67 Robb, Dr. T. B. i 3 Restriction of Output 21 Technical Difficulties of Price Control 19 What Happens in the Dark 57 When will Prices Drop 50 Van Hise, Charles H 22 LIBRARY OF CONGRESS 013 741 415 6 DEBATE BULLETINS These are collections of facts and arguments on both sides of public questions. While care is taken to secure ac- curacy in statement of facts no effort is made to test the sound- ness of arguments; they are simply arguments which are used. The debater himself needs the discipline of testing arguments. The purpose of the bulletins is solely toaid debaters in the study of current questions by furnishing materials more or less in- accessible to them. This bulletin is the eighteenth of the series. Extension Number 12. A Student's Manual of Debating and Parliamen- tary Practise. 10c. This is a reprint with a few changes of three bulletins of the University of Wisconsin. Number 13. The Initiative and Referendum. (Out) Number 15. The Unicameral Legislature. 72 pp. Number 16. Bank Guaranty. (Out) Number 17. Woman Suffrage. (Out) Number 18. Consolidation of Rural Schools. Z2 pp. Number 20. Preferential Ballot. 56 pp. Number 21. Government Ownership of Railways. 116 pp. Number 22. The Single Tax. 162 pp. Number 24. Workmen's Compensation. 132 pp. Number 26. Selling Munitions of War. 64 pp. Number 28. Continuing the Monroe Doctrine. 148 pp. Number 30. Teachers' Pensions. 52 pp. Number 34. Compulsory Arbitration of Labor Disputes. Number 40^. Woman Suffrage No. 2. 80 pp. Number 43. The City Manager Plan. 84 pp. Number 47. Government Control of Railways. Supplemen- tary to Number 21. Number Compulsory Military Training, pp. All these bulletins except No. 12 are furnisht free to all citizens of the state. Address UNIVERSITY EXTENSION, Dept. Public Discussion and Debate, Norman, Okla. University of Oklahoma Bulletin, published by the univer- sity, is issued semi-monthly. Entered at the postofnce at Nor- man, as second class matter, under act of congress of August 24, 1912. Accepted for mailing at special rate of postage, as provided for in Section 1103, act of October 3rd, 1917, authoriz- ed on July 8th, 1918. THE UNIVERSITY PRESS