Industrial Planning Under Codes
by and Associates
[Harpers, $4.00]
As the editor of this symposium is himself forced to admit in the concluding chapter, a better title would have been ‘Lack of Industrial Planning under the Codes.’ His contributors, variously chosen from their respective code authorities, trade associations, and the personnel of the National Recovery Administration, are practically unanimous in identifying ‘industrial planning’ with the elimination of competition and the achievement of monopoly. Theirs is not a vision of a continuously expanding economy, abundantly furnishing the wants of a great people, but rather a paradise of restriction, attained by the methods of price-fixing, production control, distribution control, basing points, and all the monopolistic practices which have heretofore met, if not with public, at least with judicial censure under the Sherman and Clayton Acts.
The economic historian of the future may regard the abrupt transition from antitrust laws to NRA not so much as a change in our fundamental economic policy as its logical development. What lay behind the Sherman Act was no studied economic principle against monopoly, but rather the politically effective protest of the small entrepreneur against the great masses of concentrated capital which had suddenly become his competitor. Unable to stem the tide by statute, the smaller producer began to seek for himself, by means of the trade association, those prizes of monopoly, stabilization and steady profit, which easily fell to the lot of the great financial combinations. The NRA made the trade association into law. Despite the political howl about the ‘little fellow,’ the NRA was the Utopia of the small or at least the moderate-sized business man.
This book would amply sustain such a thesis. Where monopoly practices had long been entrenched, — as in the steel industry with its basing points, or the automobile industry with its cross-licensing of patents, — the codes, from the producer’s standpoint, were little more than gestures of political conformity, and the authors of this book find nothing that is novel to say about them. Where the industrial unit is small, as in the bituminous coal or cotton textile industries, the codes embodied long-sought objectives which could never have been achieved without the extension of the strong arm of government over the marginal minority. The chapters dealing with these industries present experiences that may well give pause both to the Brandeis decentralist and to the Marxian.
Labor — as Mr. George Sloan, in his chapter on the cotton textile code, is at pains to point out — has as great a stake in the preservation of the marginal mill as the producer. Mr. Sloan, however, fails to mention one rather obvious, and to the lay observer alarming, result of the means adopted under the cotton textile code to effect this preservation. The general textile strike of September 1934, which is largely attributable to the fact that the code authority reduced machine hours for the summer months by 25 per cent without a compensating increase in wage rates, seems to have escaped Mr. Sloan’s notice. The bituminous operators adopted a policy of direct price-fixing, in connection with minimum wage rates based, in most of the regions, upon preëxisting collective wage agreements. This method of restriction, unlike Mr. Sloan’s ingenious device, threatened no immediate injury to labor, and it was, therefore, coöperated in, to such an extent that Mr. Sidney Hale concludes that the United Mine Workers were the most effective policing agency under the code. But labor, because it suffers so in a war of competitive differentials, demanded uniformity. As a result, the administration of the code of this widely scattered industry grew progressively centralized until the Schechter dénouement. In the light of these events the opponent of bigness must acknowledge that decent wage levels require centralization, and the Marxian that labor will support capitalist monopoly.
It must not be inferred from these remarks that Mr. Galloway’s symposium attempts any penetrating analysis of the economic effects of the NRA. Nothing of the sort may be hoped for from an assemblage of axegrinders, however distinguished. There is a chapter on the building industry which would make a good argument for government housing, and one on retailing which indicates that that trade, at least, is not interstate commerce. Mr. Galloway recounts the organization of the National Recovery Administration at length, and contributes some remarks on its historical background, summarily dismissing the Sherman Act as ‘the product of an age of petty trade ... ill suited to . . . the twentieth century.’ Mr. Jack Levin adds the government argument for the validity of the NIIiA under the commerce clause, an argument that would have justified any client’s reliance until May 27. In spite of the events of that fateful day, it may be doubted that even a Supreme Court can teach the economic society dimly discerned through the pages of this book the bounds of federalism.
DAVID DEMAREST LLOYD