The Take-Charge Price Czar

ON Oct. 20, a sometime plantation boss, Navy officer, newspaper reporter, FBI agent, import-export manager and Texas-based business-school dean flew into Washington to take on a new job. He became the U.S. price czar. C. (for Charles) Jackson Grayson Jr. found that the seven-member Price Commission he was to head had no staff, no permanent office and no secretaries; he had to ring up the Civil Service Commission in Washington to ask how to go about hiring. It was a situation suited to the take-charge spirit of 48-year-old Jack Grayson, who constantly advises associates that "someone has to make it happen." If Phase 11 so far has a hero, he is it. In less than two months, he has built the Price Commission into the one post-freeze agency that has developed a clear, effective anti-inflationary policy and is determined not to be pushed around by labor, business or Government.

With little help from the Administration, which is maintaining a hands-off attitude, Grayson's commission has moderated pricing policies in three basic industries: autos, steel and coal. The commission's basic rule is that prices may be increased only to reflect added costs, minus any gains in workers' productivity--and then only if the price boosts do not fatten profit margins. Grayson has been flexible in applying this standard. Last week he allowed U.S. Steel an average price increase of 3.6%, in return for a promise that the company would not try to raise prices again before Aug. 1. (Last week U.S. Steel raised some prices 7.7%, but said that the average of its whole line would be within the 3.6% guideline.) Grayson, however, insists that companies calculate costs and productivity carefully, rather than coming in with egregiously high initial requests and then expecting to bargain with the commission. "I hope this does not end up as an Arabian trading market," he says. When officials of one major company protested that they had no measure of productivity, the commission offered to help draw one--by sending IRS agents to scrutinize the company's books. The company dropped its request for a price increase.

The air of decision at the Price Commission contrasts with the confusion rending its sister agency, the Pay Board. The board established a 5.5% guideline for wage raises, but got in the hole very quickly by approving a coal contract that calls for increases of 15% or more the first year. In his boldest move, Grayson acted to contain the inflationary impact of that ruling. When coal companies asked for price rises ranging from 5.4% to 9.4%, the Price Commission allowed only 2.9% to 4.9%. Grayson also announced a general principle that companies can raise prices only as much as they would if wage increases really were held to 5.5%--even if the Pay Board violates its own guidelines and permits more.

That decision frightened some businessmen, who fear that they will be caught in a choking profit squeeze. Grayson discloses that two Nixon Administration officials telephoned to voice "concern over the ramifications of the commission's decision." but he stood his ground. As he told TIME Correspondent Lawrence Malkin: "I will listen to the Administration if someone calls up and says that the policy is not what they would like. But we will decide on our own."

Grayson was raised on his family's cotton, soybean and cattle plantation near Fort Necessity. La. He joined the Navy fresh out of Tulane Business School late in World War 11, and successively tried jobs as reporter for the New Orleans Item, FBI agent in Washington, and partner in a New Orleans import-export firm before settling on a career of business-school teaching. Even his university life was spent mostly as a self-styled "academic gypsy," shuttling between posts at Harvard-and Tulane, before he became dean of the Southern Methodist University Business School in Dallas in 1968.

Grayson contends that standardized business education stifles the entrepreneurial spirit. Entrepreneurs, he thinks, succeed because they never learn the "proper" way of doing things. At S.M.U. Grayson threw out all required courses except one orientation seminar and let students choose their own programs. He also urged them to set up small businesses while they were still on campus.

In the process, Grayson revealed a rare sense of balance that should serve him well in Washington. He enlivened one paper, outlining his plans for S.M.U. in 1980, with shafts of fanciful wit indicating that he does not take himself too seriously. Among other things, he envisioned a school where visiting lecturers included Bernard Cornfeld, Howard Hughes, Joan Crawford and "ex-President Lindsay." He also whimsically described the unexpected success of a student venture in running a penguin ranch; an effort to market penguin eggs for gourmets flopped, but the entrepreneurs cracked the penguin genetic-code and produced a breed of giant birds with handlike flippers that made a hit as "waiters at formal parties."

The unconventional dean caught the eye of George Shultz, now Nixon's budget chief, who eventually conveyed the 'offer of the Price Commission job to Grayson. It is supposed to be temporary. Grayson has not yet moved his family--German-born Wife Barbara and sons aged three and one--to Washington (he also has a 13-year-old son by a previous marriage). Old associates think his devotion to S.M.U. will take him back there before too long. Shultz, ideologically opposed to controls, is already looking for sectors of the U.S. economy that can be decontrolled before next year's election. Grayson himself, however, finds Washington exciting and figures that the Price Commission will continue "at this level of operations" for at least a year, more likely a year and a half. One reason: even if inflation is reined in now. he sees a danger that companies will be increasingly tempted to try for new price boosts as the economy recovers, and they will need a strong hand to restrain them.

*His Harvard Ph.D. dissertation, on oil wildcatting, struck a note unconsciously prophetic of his new job. Its title: Decisions Under Uncertainty.

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