Price regulation

“ That Regulation establishes dollar and cent ceiling prices for thirty-two grades of wastepaper defined by the Price Administrator. It is the type of regulation, of which there have been many, which controls prices by first standardizing or grouping similar commodities, and then fixing one and the same maximum price for each of the commodities in a particular classification. On July 16, 1943, long after Regulation No. 30 was promulgated and fully in force, Congress added the Taft Amendment, (Section 2 (j) to the Emergency Price Control Act of 1942. ”

“ Secondly, while the legislative history of the 1947 Act contains only a few references to the specific problem of priceregulated industries, these references clearly reflect an acknowledgment that state price regulations are to apply to suppliers doing business with the Government. ”

“ So with the price level, while the strong-arm method is not only costly and vexatious but futile, the simple regulation of our instrument for measuring prices, the dollar, will accomplish the same result not only without cost and effort but, what is more to the point, with success. ”

“ Much could be added to show the impossibility of replacing any body, any government or governmental agency as a successful substitute for all the peoples of the world, acting jointly and by means of free competition, as the price fixers of non-monopolistic commodities. ”

“ And this concern and the policy based upon it * * * has expression * * * in a well-known national enactment. * * * competition, not combination, should be the law of the trade."
And so is established the proposition that the Statutory and Common Law, in relation to public policy, is that the public welfare is best served by giving the power and liberty of price fixing as to commodities to the whole body of our people, worked out through competition, and protected from control by any lesser group or groups, or even the Government itself. ”

“ Congress liberalized the right to challenge the validity of price regulations so extensively as it did, even reviving rights theretofore lapsed, because it felt, as we have seen, that rights were unfairly lost through unfamiliarity with the technical requirements of emergency legislation. Price-fixing is not satic ”

“ The power to fix prices, whether reasonably exercised or not, involves power to control the market and to fix arbitrary and unreasonable prices. The reasonable price fixed to-day may through economic and business changes become the unreasonable price of to-morrow. ”

“ There is not a line to be found in these cases under the Act to show the slightest recognition of the definitely established truth, that high prices always have been, and always will be, the forerunner of low prices; that freemen in a free market, with its inducements to gain the higher rewards, strive, invent and compete, so that every temporary rise in price insures not merely a return to the old price, but to a lower one, and finally to the fair and equitable exchange of all commodities, measured by the labor relatively involved. ”

“ It takes us some distance neither wholly to accept nor wholly to reject price ceilings as just compensation. The complications introduced by the displacement of free market prices by controlled prices serve to intensify the usual wariness against undue generalizations in ascertaining the value of specific property taken for public purposes. ”

“ And, first, I premise that labour is, as I have already intimated, a commodity, and, as such, an article of trade. If I am right in this notion, then labour must be subject to all the laws and principles of trade, and not to regulation foreign to them, and that may be totally inconsistent with those principles and those laws. When any commodity is carried to market, it is not the necessity of the vender, but the necessity of the purchaser, that raises the price. The extreme want of the seller has rather (by the nature of things with which we shall in vain contend) ”

“ Congress enacted the Emergency Price Control Act in pursuance of a defined policy and required that the prices fixed by the Administrator should further that policy and conform to standards prescribed by the Act. The boundaries of the field of the Administrator's permissible action are marked by the statute. It directs that the prices fixed shall effectuate the declared policy of the Act to stabilize commodity prices so as to prevent war-time inflation and its enumerated disruptive causes and effects. ”

“ In an effort to ensure a uniform price policy under a decentralized process of price fixing, the law spells out the responsibilities of all entities concerned with pricing, from the Council of State down to the individual enterprise. Jurisdiction over prices for products and services is to be allocated among the various sectors and levels of the economy, and the State Committee for Prices will be responsible for the correct application of the law. ”

“ Thus, the division of the cost of trade, and the division of the advantage of trade, are governed by precisely the same principles; and the only general proposition which can be affirmed respecting the cost is, that it is pro tanto a deduction from the advantage. It cannot even be maintained that the cost is shared in the same proportion as the advantage is; because the increase of the demand for a commodity as its price falls, is not governed by any fixed law. ”

“ If the average thus selected should effect substantial justice — which implies that this recent average price level is not far from the price level at the moment the system is launched, nor far from the price level for any other moment during the past year at least, — nothing more need be done to secure justice on existing contracts. ”

“ Hence, in the disposal of a resource, care should be taken to prevent combination and monopoly in restraint of trade in respect to the same; and the right, as in the case of railway rates, to regulate the price to the consumer should be retained; in other words, care should be taken and provision should be made that the consumer can obtain the product of the resource at a fair and reasonable rate. ”

“ The jobbers and the retailers, to whom the wholesale dealers and manufacturers sell, are not so likely to take currency insurance into consideration in fixing their selling prices; but to whatever amount the cost price of their goods has been enhanced by the necessity of insurance against currency fluctuations, on that same amount they estimate and add for interest and profits; the total enhancement of prices falling ultimately on the consumer, who, of necessity, can rarely know the elements of the cost of the article he purchases. ”

“ It is plain that the Constitution does not forbid the imposition, in appropriate circumstances, of maximum prices upon commercial and other activities. A legislative power to create price ceilings has, in 'countries where the common law prevails,' been 'customary from time immemorial * * *.' Munn v. ”

“ The reasons for dispersion are principally three: (1) Many prices are restrained by previous contract, by legal prohibition, or by force of custom. (2) Some prices are intimately related to the money metal. (3) Each individual price is subject to special variation under the influence of its particular supply and demand. There exists, however, a compensation in price movements in the sense that the failure of one set of prices to respond to any influence on the price level will necessitate a correspondingly greater change in other prices. ”

“ The reasons underlying the rule in cases where no government-controlled prices are involved also support its application where value is measured by a ceiling price. In neither instance should the Government be required to make good any losses caused by the fact that the owner purchased goods at a price higher than market value on the date of taking. ”

“ The best evidence of price is market price,—the price fixed by the joint inquiry and judgment of the world through its free competitive forces. Where that result is thus reached, no other evidence is admissable on the point. On the other hand the best evidence of excessive price is price fixed by monopoly, by private greed. ”

“ If the methods or quantities differ, the Commission must only show that such differences could not give rise to sufficient savings in the cost of manufacture, sale or delivery to justify the price differential, and that the buyer, knowing these were the only differences, should have known that they could not give rise to sufficient cost savings. The showing of knowledge, of course, will depend to some extent on the size of the discrepancy between cost differential and price differential, so that the two questions are not isolated. ”

“ It also makes the constitutional provision for just compensation meaningless since the Government may first fix the price, as if no sales were compelled, and then compel the sales at the prices so fixed. I think the constitutional power to fix prices for voluntary sale in interstate commerce is much less confined than the power to fix prices for taking property. ”

“ All prices have been fixed, or have regulated themselves accordingly. Let us now suppose that there has been a sudden exportation of $10,000,000, and under such circumstances as to delay the rapid filling up of the gap thus created. In the long run, the demand of a country for a circulation may be satisfied just as well with $90,000,000 as with $100,000,000; only it is necessary in the first instance that the circulation should be accelerated or that the price of money should rise 10 per cent. ”

“ It does not follow that controlled prices automatically meet the requirements for just compensation in the forcible taking of property simply because they replaced free market prices which could no longer be relied on to reflect the normal play of free economic forces. A system of price controls which is 'generally fair and equitable' may give rise to individual instances of hardship in the requisitioning of property no matter how conscientiously and competently administered. ”

“ And standards which they prescribe are not the standards for price-fixing under the present Act. The conventional power to fix rates is governed by criteria quite different from those which control the Administrator's action. ”

“ The exchangeable value therefore of a commodity which is at a monopoly price, is no where regulated by the cost of production.
Raw produce is not at a monopoly price, because the market price of barley and wheat is as much regulated by their cost of production, as the market price of cloth and linen. ”

“ The reasonableness of prices has no constancy due to the dynamic quality of the business facts underlying price structures. Those who fixed reasonable prices today would perpetuate unreasonable prices tomorrow, since those prices would not be subject to continuous administrative supervision and readjustment in light of changed conditions. Those who controlled the prices would control or effectively dominate the market. ”

“ The thought seems nevertheless to have persisted that there is something peculiarly sacrosanct about the price one may charge for what he makes or sells, and that, however able to regulate other elements of manufacture or trade, with incidental effect upon price, the state is incapable of directly controlling the price itself. ”

“ The inflationary pressures on prices and rents, with relatively few exceptions, are now at an all-time peak. Unless the Price Control Act is renewed there will be no limit to which our price levels would soar. Our country would face a national disaster. ”

“ To regulate the price for such transactions is to regulate commerce itself, and not alone it antecedent conditions or its ultimate consequences. The very act of sale is limited and governed. Prices in interstate transactions may not be regulated by the states. ”

“ We are aware of numerous decisions in conflict with this view of the law; but we think the sounder rule, and the one in consonance with the common understanding and usage of commerce, is that the purchaser, at whatever price, takes the benefit of the entire obligation of the maker. Public securities, and those of private corporations, are constantly fluctuating in price in the market, one day being above par and the next below it, and often passing within short periods from one-half of their nominal to their full value. ”

“ On the other hand, if once we deliberately choose a price level after reference to an expert and impartial commission and then keep that level unchanged we shall give it a right to exist. The verdict will soon be generally accepted. Any unadjusted factors will gradually make the needed changes. Business will be rid of the handicap of uncertainty as to what the dollar is. In particular, wages will rise to recover the purchasing power lost in the losing race with the high cost of living. ”

“ The anticipated economic effects of the legislation here proposed were presented both by proponents and opponents of the bill in the hearings held by the subcommittee of the Committee on the Judiciary in charge of the bill. On the one hand it is urged that predatory price cutting is a weapon of monopolistic large distributors to crush small businessmen. On the other hand, it is contended that price-maintenance legislation tends unduly to enhance the price of goods to the consumer. ”

“ No one who considers the plain facts of our situation believes that commodity prices, especially agricultural prices, are high enough yet.
Some people are putting the cart before the horse. They want a permanent revaluation of the dollar first. It is the Government's policy to restore the price level first. I would not know, and no one else could tell, just what the permanent valuation of the dollar will be. ”

“ It is on these two points that price ceilings differ from price floors: to hold that a combination may be inferred from the vertical dictation of a maximum price simply because it may be permissible to infer a combination from the vertical dictation of a minimum price ignores economic reality; to conclude that no acceptable justification for fixing maximum prices can be found simply because there is no acceptable justification for fixing minimum prices is to substitute blindness for analysis.
Resale price maintenance, a practice not involved here, lessens horizontal intrabrand competition. ”