The Second Round

In a consent decree before a circuit court last week, U.S. Steel Corp. gave up a 24-year court fight to save the "Pittsburgh plus" basing-point system of setting steel prices. The company promised to adhere "to a pricing method that does not conflict with the requirements of the Federal Trade Commission." But U.S. Steel, which had voluntarily abandoned basing points when they were outlawed in the cement industry (TIME, July 19), had not given up the fight for good; it had merely shifted the battleground. What it had lost in the courts, Big Steel, and all other steelmakers, hoped to regain from Congress.

The steelmen pinned their hopes mainly on Indiana's Senator Homer Capehart, whose special Senate subcommittee was just beginning to pry into the entire hubbub. Capehart said that the Supreme Court's decision in the cement case had thrown all of industry into confusion on prices. He thought the "only pricing practice which may be followed in any competitive industry where freight is a substantial item . . . with assurance of legality is an f.o.b. mill price. Any other pricing system may be found illegal."

No One Price. Not so, said FTC as it heard the chorus of businessmen calling on Congress to do something. The ban on basing points, said Corwin D. Edwards, director of FTC's Bureau of Industrial Economics, was simply a ban on using basing points to fix an industry-wide price. Said Edwards: "Nothing in these orders prevents individual sellers, who act without collusion, from absorbing freight . . . In the future, as in the past, there will be a wide variety of geographic pricing methods in use by different companies and different industries. No particular method of pricing will be prescribed."

No Pat Answer. In its monthly Business Review, the Philadelphia Federal Reserve Bank also said the steelmen were wrong. Steelmen contended that the uniform basing price was a necessary and "natural" protection for an industry with high capital outlay and high freight charges. In effect, said the bank, they were describing their industry as a "natural monopoly." "If [that] were granted," it warned, "a good case could be made out for regulation of the industry as a public utility."

The bank was also unimpressed with the steelmen's fear that the new pricing system will force many plants to move closer to their steel supply. The manufacturer's steel bill, said the bank, was only one consideration in placing his plant. Others were labor, transportation, and markets. Snapped the bank: "The full impact of the change in our economy will not be apparent for some time, and investigators should not be misled by pat arguments which seem to furnish easy answers to complex problems."

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