Visible Victory Over Autos

AT a friend's suggestion last week, Price Commission Chairman C. Jackson Grayson put through a telephone call to a key Republican campaign agency: the Committee to Re-Elect President Nixon. From the other end of the line, Grayson heard his own voice proclaiming that General Motors and Ford will not be allowed to raise prices on the 1973-model cars that they will put on sale later this month. Without his knowledge, G.O.P. campaign aides had taped the announcement at a press conference two hours earlier, and were playing excerpts over a telephone number that voters can call free to hear the latest Nixon campaign pitch. (For good measure, there were also some cheery Grayson remarks about prospects for a dip in retail beef prices--but not his gloomy conclusion that food prices generally will continue to rise.)

Grayson, who cherishes his image as a nonpartisan price controller, professed surprise at the blatantly political use of his pronouncements. Yet the attempt to capitalize on his auto-price ruling was predictable. Last month chiefs of the four U.S. automakers were summoned to the White House and asked by Donald Rumsfeld, director of Nixon's Cost of Living Council, to withdraw requests for price increases on 1973 models that ranged upward from $85 per car or truck. G.M. eventually agreed to reduce its increase to $54 per vehicle and Ford came down to $59. Then, last week Grayson announced that no hike at all would be permitted. Any boost, he asserted, would push G.M. and Ford profit margins above permissible limits. Under Price Commission rules, a rise in price is not allowed if it would lift a company's profit margin--that is, its percentage of profit on each dollar of sales--above the figures for a pre-1971 base period. Moreover, Grayson asserted that the auto industry is so all-pervasive that a rise in auto prices would fan inflation throughout the economy and, more important, raise inflationary expectations among businessmen and consumers.

The message is clear enough: for at least the first month or two of the new-model year, motorists will be able to buy 1973 cars at 1972 prices. In effect there will be no extra charge for the new safety and antipollution equipment required by federal law. The Price Commission is still formally considering requests for price boosts of $91 from Chrysler and $150 from American Motors, but neither company can realistically be expected to raise prices when their bigger rivals do not. G.M. and Ford cannot file new requests for price boosts until they can produce profit figures for the current quarter, which ends Sept. 30. Thus they cannot even ask for price hikes again until some time in October.

The contretemps raises several questions. Why, for example, did the White House initially bypass the Government's formal economic control mechanisms and jawbone against auto boosts that were not likely to get through the Price Commission anyway? Quite possibly, aides wanted Nixon rather than Grayson to get credit for stopping the rise. Indeed, TIME learned last week that Rumsfeld never asked Grayson what the commission was likely to do, and did not even tell the price czar about the jawboning until after it had begun.

Grayson's own actions are difficult to explain. First he called public hearings on auto prices for Sept. 12, leaving the implication that the commission would do nothing until then. Last week, after forbidding price hikes, he announced that he would go ahead with the hearings--which seems rather like holding a trial after the defendant has been sentenced. Presumably, the Price Commission wants to get the view of all interested parties on record before judging any new auto-price requests. Right now, however, the hearings shape up as a brightly spotlighted forum for consumer advocates and union leaders.

Automen grumbled that the Price Commission had led them to believe that their shaved-down price requests would be approved, and they reacted angrily to the rejection. "We are astounded by this arbitrary action of the commission," said Henry Ford II. Though G.M.'s second-quarter profits climbed 28% over the same period last year and Ford's zoomed 43%, both automobile companies maintain that the price hikes would not further fatten profits but only offset cost increases forced on them by federal law.

In any case, the Administration has won the highly visible victory over inflation that it sought. Grayson stoutly denies that his motives in turning down the G.M.-Ford hikes were political, and there is in fact a notable coolness between him and the Nixon Administration. Nevertheless, his timetable for further action could hardly be more pleasing to Nixon. According to Chairman Grayson, the earliest the Price Commission could possibly act on any new G.M.-Ford price requests would be Nov. 1, and a ruling would probably come somewhat later than that. Like just after the election.

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