The Effect of Price Controls on Non-price Competition

It has been said that the National Recovery Administration operated under a law which gave it legislative, executive, and judicial functions. But in retrospect it seems to have scarcely passed beyond the legislative pfiase in most of the matters which came under its jurisdiction. The essential part of its record for the economist is the record of the attempts to formulate policy in connection with the code-making process. The NRA, which might have assumed historic importance as an effort to operate under a new national economic policy, in practical effect resolved itself into a great national forum for the Jiscussion of the elements of such a policy. Questions of price control brought many divergent viewpoints into the national forum. Economists were in general opposed to such measures. Business men were much more divided in their opinions. But among these who favored some form of price control there were large firms and small firms, advertisers and iio-advertiser., profitable and unprofitable concerns, manufacturers, wholesalers, and retailers. I, short it could not be sa) i that business men of this persuasion coiformed to any particular type. Arguments offered in favor of price control measures were of similar scope and variety. Very frequently their logic rested more on social grounds than on economic. An argument to which a number of economists listened with some sympathy was the plea for the preservation of the small enterprise as a means of giving fuller opportunities to individual initiative. An attempt was sometimes made to give this view a more acceptable economic flavor by insisting on the essential nature of the services performed by some of the firms which were on the verge of business failure. If these firms were not permitted to survive, it was argued, great social costs might be incurred in replacing them. Similarly in the raw materials industries, such as coal and petroleum, the demand for price control was frequently linked with the need for conserving natural resources. Both types of arguments stressed structural features of economic life. Thus they created resistance and uneasiness in the minds of economists who preferred to