Frank A. Pearson

Principles Involved in Fixing the Price of Milk

With the advent of the war, most farm management men followed the American economists, who had grave misgivings concerning any policies of price fixing. Our economic literature has maintained in general that legally fixed prices are either futile or harmful except in the case of monopoly. The difficulty of maintaining fixed prices at a point satisfactory to buyers and sellers, the danger of forcing legitimate industry into serious situations, and the risk of curtailing or shifting production have been the primary arguments against such governmental policies, all of which have been abundantly illustrated from the records of such attempts. Price fixing policies may be said to rest upon legal forces, moral forces, and economic forces. Legal forces rest with physical power which is administered by certain governmental agencies. Moral forces exert their power through honor, public commendation, disgust, and social ostracism. Economic forces exert their influence by changes in production and consumption. The sudden change in our policy from freedom of control to our present day complicated system of price control has outstripped theory. Our present policy of fixing prices can not be said to be a complete failure as predicted by some, nor can it be said to be a complete success. Success of governmental agenc:es involved in price fixing rests on the fact that these agencies have been guided by economic forces and have been supported by moral and legal forces. Artificial pricefixing policies must be flexible enough in order that these artificial restrictions will act more or less in the same way as an increase or decrease in consumption, which will be sufficient to counteract changes in supply. Economic forces are, no doubt, dominant, but legal and moral forces may play a large part.