The Times. Published on Tuesday and Friday Afternoons. Motto: Public service. TUESDAY, OCTOBER 26, 1920. FUTILITY OF PRICE-FIXING.

Pukekohe & Waiuku Times, Volume 9, Issue 578, 26 October 1920, Page 2

The Times. Published on Tuesday and Friday Afternoons. Motto: Public service. TUESDAY, OCTOBER 26, 1920. FUTILITY OF PRICE-FIXING.

If we are to profit by the lessons of history, then it would appear to be high time that we had learned that price-fixing is a proved economic failure. It was Uied in. the Roman Empire, and failed. It was tried in mediaeval England, with no better results. And it failed lamentably in France at the time of the Revolution. An Australian student of economics, who has evidently made the history of price-fixing the subject of diligent research, provides some interesting information concerning the experiences of the French experiments, in the latter part of the 18tH century. The blockade of the British fleet had stopped importation from oversea. There had been a series of bad seasons, trade and commerce had been disturbed by the taking away of a •large number- of artisans to fight m the army. A general atmosphere of insecurity had been created by the revolution and the continuous strife ' between various classes. As a result supplies of food fell off, and the necessaries of life greatly advance.!. To allay public agitation the Convention in 1793 gave up 7,000,000 francs (£280,000) to the commune in Paris to enable bread to be sold-at i',d per lb. Still prices continued to rise, and the Convention was forced by public opinion (principally directed against private speculators I to enact that a certain quantity of grain should be sent to Paris by each department. This body also passed the "Law of the Maximum.' a measure which fixed selling prices for this grain and other commodities. The law was enacted on May :.!, 1793,. and while it was designed to prevent cornering of supplies, it rimed a! eliminating the profits < f the middlemen, or at any rate, keeping these profits within reasonable limits. The price fixed for flour was the lowest price between January I and May !, 1793, and it was provided that those who sold flour abov3 this maximum should be fined, and those preventing stocks being mackavailable were liable to the penalty of death. We have not yet gone as far as that. Subsequently the Convention made the price of flour uniform all over France, and fixed tlv.I price of wheat at 14 livres per kilo [gram. Some months later the Contention settled maximum sellin;-; 'prices for meat, cattle, lard, butte ■■: oil, fish, vinegar, brandy and beer for 1 a period of one year. It fixed also ilie prices of combustibles, candles, soap, sugar, metals,* tobacco, raw inateiials, salaries, and wages. The basis on which the rates were determined was that the maximum selling prices of commodities should be the average prices of the commodities ruling in the yean 1790, with 33 1-3 per cent, added. Salaries; and wage.were fixed at the rate of 50 per cent. in advance of those obtaining in tl e Mime year. As Mr. Wilkinson tie clares in his "State Regulation of Prices in Australia," this general am; indiscriminate fixing of pries brought about great disorganisation in industries, and created many difficulties in commerce. One effect was that small retailers were ruined, whilst larger trailers and factories made handsome profits. Ultimately the generally unsatisfactory results from the law decided the Convention to amend it. The scheme then adopted limited profits instead of restricting prices, and the new ?nactment provided that the selling price should be the cost of production, with 5 per cent, added for the .vholesalc merchant, and another 5 per cent, for the retail merchant. The cost of transport could also be added in determining the selling price. A

comprehensive inquiry as to the cost "f production of various commodities was then entered into for the purpose of determining wholesale and retail selling rates. D all reads as though the story were of life in our own times in the second decade of (he JiHh century, instead of in France at the end of the 18th century. Before, "however, effect could he given to the inquiry, a change of government took place, leading t" an abandonment of laws founded on the economic, theories of idealists.