The Vampire Economy

Chapter VI

PRICE DICTATORSHIP AND PRIVATE INITIATIVE

“Effective price restrictions are impossible without complete control over supply and demand.”

HOW cunning ingenuity and “private initiative” circumvent official rules in a country under totalitarian rule can be illustrated by the way in which a dealer bought a pig from a peasant in Nazi Germany.

A peasant was arrested and put on trial for having repeatedly sold his old dog together with a pig. When a private buyer of pigs came to him, a sale was staged according to the official rules. The buyer would ask the peasant: “How much is the pig?” The cunning peasant would answer: “I cannot ask you for more than the official price. But how much will you pay for my dog which I also want to sell?” Then the peasant and the buyer of the pig would no longer discuss the price of the pig, but only the price of the dog. They would come to an understanding about the price of the dog, and when an agreement was reached, the buyer got the pig too. The price for the pig was quite correct, strictly according to the rules, but the buyer had paid a high price for the dog. Afterward, the buyer, wanting to get rid of the useless dog, released him, and he ran back to his old master for whom he was indeed a treasure.

These “combination deals” have an interesting economic aspect. The supplementary article which is sold in order to make the whole transaction as legal as possible is not always an old dog, but, in most cases, an article which may have a certain usefulness in itself, though not necessarily for the buyer. The purchase of these supplementary articles therefore largely amounts to waste of money, made necessary to facilitate the purchase of other more urgently needed articles. Private initiative was wont to seek economies which would increase profits and the productivity of labor. Today, in a society which is laboring under great hardships as the result of scarcity of many essentials, the same goal can be achieved only by purposely arranged waste.

Other efforts of “private initiative” have similar economic results. Thus, manufacturers may introduce changes in standardized products which result in making the finished article more complicated, solely for the purpose of enabling the manufacturer to claim that the finished product is a “new article,” which will not be subject to the old price restrictions. The State is enforcing more standardization of production in order to save raw materials; manufacturers must do exactly the reverse in order to defend their private interests.

The new “group discipline” which is being enforced often runs counter to the individual interests of all the group members, so that the group leaders play the role of policemen.

The Deutsche Handelsrundschau complained: “Those businessmen who conform to the letter of the law and instructions [of the Price Commissar] are at a greater disadvantage than those who are less conscientious.”1

This German trade organ therefore defended stricter police supervision of businessmen. Plainclothesmen approach traders as harmless buyers offering them higher prices than those officially set. Such “control purchases” are executed by secret police agents in order to strengthen “national discipline” among businessmen. It often happens that the plainclothesman even makes a special effort to induce the businessman to make an illegal transaction. Many businessmen therefore regard the “control purchase as a swindle maneuver and as immoral.”2

In order to discuss illegal business transactions in a manner that makes them seem legal, businessmen in fascist countries learn to speak the language of experienced underground adversaries of the regime. They are often uncertain as to whether a prospective buyer is “reliable” and therefore talk in terms which are innocent and the meaning of which can be interpreted in different ways.

For example, Mr. A., the purchasing agent of a certain firm, inquires of Mr. Z., the manager of another firm, regarding the delivery of iron wire and receives the following answer: “I am sorry, but iron wire is very scarce and I do not know when I shall be able to deliver any. However, I can supply you immediately with screw drivers made of a new alloy.” This means: Iron wire is available if an ersatz article is purchased at the same time. Mr. A.’s order might then read: “Two hundred kilograms of iron wire costing 150 marks and ten dozen screw drivers made of the alloy for 150 marks.” However, Mr. Z. may insist on a larger purchase of screw drivers, and if Mr. A. fails to comply, the order for the iron wire may be turned down. But as downright refusal to accept the order would be illegal, Mr. A. a few days later might receive a letter from Mr. Z. stating: “Unfortunately delivery of the wire you ordered must be delayed on account of general difficulties of supply. We shall be glad to get in touch with you as soon as we have a new supply available.” Mr. A. would understand this perfectly: he had not ordered enough ersatz.

Combination deals are forbidden in Germany, but they will be common practice as long as the price of articles that are scarce is not allowed to rise and as long as sales of these articles are less profitable than sales of other articles.

Numerous clashes between private enterprise and the State occur as a result of price restrictions, which represent the State’s most far-reaching attempt to control private economy, but effective price restrictions are impossible without complete control over supply and demand.

Such a centralized State economy has not come into existence, although numerous measures have destroyed the old private economy. The Price Commissar alone did not wield sufficient influence over competitive economy to pave the way for State economy. Other departments, besides that of the Price Commissar, have had considerable influence on the volume of production in different industries, through their distribution of raw materials. This was another step toward State manipulation of demand. The full force of propaganda and various coercive measures were used to force consumption of goods which were abundant. The same means were brought into play to prevent the use of those goods which were scarce. Medical experts were conscripted and had to prove that available foods were of greater health value than those which were scarce. But too much proof of this sort defeats its own ends, and the Price Commissar’s campaign suffered such a fate.

When the government started its armament race and launched its spending program, it never intended to set up a price dictatorship. The extension of State control over prices had effects which the government did not anticipate and which were at variance with the original expectations.

A member of the “old guard,” Joseph Wagner, was appointed Price Commissar. He has a huge administrative staff at his disposal and keeps in close touch with the police to insure the effectiveness of his decisions. His job is to fix both wholesale and retail prices for raw materials as well as for finished goods.

It is the duty of the Price Commissar to see that a stable price level is maintained. Price increases are forbidden and in many cases reductions are not allowed. Theoretically, at least, the authoritarian state does not allow any price changes without permission. There are, however, plenty of exceptions and much circumvention, an amusing contrast between theory and practice.

To increase his prices a dealer must have a special permit from the Price Commissar. A request for a price increase must first be certified to by the group leader; it must be accompanied by a detailed statement of necessity and other pertinent data, such as production and distribution costs.

At first, Herr Wagner did not realize the tremendous difficulties facing him. He simply decreed that after November 26, 1936, any increase in prices was forbidden. Perhaps he thought an order issued by a Party leader could suspend economic laws. He soon discovered that he did not have enough power to cope with the problern. Businessmen overwhelmed him with complaints of irregular or indirect price increases, made necessary by rising costs of production. They demanded that they, too, be allowed increases. At first Wagner stood firm and refused to make concessions. But he had no control over costs of production and it was not in his power to decide what should be produced and sold on the market.

Wagner could prevent neither the rise in production costs nor the growing scarcity of goods, the price of which he had “stabilized.” Producers tried to abandon fields where low prices reduced profit and turned to production of more profitable goods. Because of the scarcity of raw materials, it was not easy for a manufacturer to make such a change. On the other hand, market conditions did not aid the Price Commissar. While he fought against price increases, other departments and governmental institutions made decisions which ran counter to his activities.

The scarcity of raw materials grew. Imported raw materials became more expensive, ersatz materials were still more expensive and, in addition, ersatz required new machinery. The huge State orders for armaments created an artificial boom for many articles and the State itself paid higher prices than before. The discrepancy between supply and demand of essential articles widened, and yet their prices were supposed to remain stable.

Within a few months after the announcement of the Price Stop Decree, the Price Commissar had to retreat; price increases were granted for numerous industries dependent on foreign raw materials, especially in view of the fact that they could not obtain ersatz materials without paying exorbitant prices. Growing taxation and increased administrative work were further factors adding to production costs.

However, in mass-production industries where only a small part of the productive capacity had previously been used, the increase in production made possible a more rational use of machinery and plant, thereby reducing overhead. But this factor was effective in these industries only during the initial period of the armament boom. Thereafter they were forced to speed up production to such an extent—often under government orders—that the means of production depreciated prematurely, with a resultant rise in production costs.

Another factor made rising prices inevitable. The State had created additional buying power by inflating the currency. State banks which had to rely on the Reichsbank paid the armament bills, in cash or credit. Under such conditions price control could be effective only insofar as it prevented an uncontrolled or excessive rise in prices. Trying to prevent it entirely turned out to be futile.

The Price Commissar’s policies had unexpected results. For example, the peasants fed their cattle and pigs grain, although grain was scarce and had to be imported from abroad. The reason was that, in the interest of the big agrarians, who had a considerable surplus on hand, the price for fodder had been raised higher than the price for grain. At the beginning of 1937, 100 kg. of rye cost 16 marks, while 100 kg. of fodder cost 16 to 18 marks. Peasants were prosecuted for feeding their pigs grain, but the practice could not be stopped, until on March 25, 1937, Wagner finally conceded a price increase of 12½ per cent for rye.

Party leaders often disregarded economic facts unless these facts agreed with current Party notions. The more insistent the manufacturers’ demand for price increases became, the more the Commissar extended his power and functions. Fear of inflation and hoarding—in part due to the war scare—would have led to a sharp rise in prices and to a repetition of the experience of 1923 had not the State used its totalitarian authority to ban any speculative increase and to insist on “national discipline.” The rise of the price level itself could not be prevented, but it could be held in check and the relationship between different prices could be changed.

The Price Commissar’s power increased greatly when he was given the right to investigate costs of production. Pressure occasionally necessitated his making exceptions to his strict rule of stable prices. But he insisted on the right to check upon the rate of profit and on costs. Often such an investigation would fail to influence his decision in any way. By a stroke of the pen he would decree a reduction in the rate of profit for an entire category of articles.

There were a number of official definitions of the “justified” price. At first the definition was that the price should be “reasonable,” then that it should represent the cost of production plus a “reasonable” profit. But there was no effective control of production costs and what might constitute a “reasonable profit” remained a mystery. However, all this was soon forgotten when manufacturers started complaining about the tremendous increase in the cost of raw materials and other expenses. A new definition had to be found: the price must be “justified from the point of view of national economy.” This was still more mysterious and vague. In reality it meant that the price level of any given commodity no longer depended merely on economic conditions, but also on political factors.

It is relatively easy to control prices for articles manufactured in mass-production industries. The Price Commissar ordered price reductions, claiming that an increase in production made possible more rational use of plant, thereby reducing manufacturing costs.

According to Nazi price statistics—which are misleading—many articles are cheaper than they were before the advent of the Price Commissar. In reality, prices which were officially reduced actually have risen. Cartels and syndicates formerly kept the price “stable” during a depression by granting “special reductions” to the buyers. The official or “list prices” were never changed, only the “special reductions.” The advantage lay in the fact that the price could be changed according to competitive demands and no “official” price increase was necessary when market conditions forced an increase. By the simple device of making the real price identical with the “list price,” it was possible to increase prices from 40 to 60 per cent on the average.

Furthermore, armaments made up the greater part of the output of the big concerns and trusts. During a period of international tension, when quick delivery of planes, antiaircraft guns or material for fortifications is necessary, there is not likely to be much quibbling over the cost sheet. But later the Government’s financial difficulties made it necessary for the Price Commissar to investigate armament costs as well. He issued “Instructions on Prices to Be Charged for State Orders.” When an industrialist, however, thought he ought to have more and said so, some kind of a compromise was usually arranged.

Other “model” instructions issued by the Price Commissar prevent the manufacturer from including certain items in his cost sheets, such as Party “contributions,” wages above the official rates, interest charges on investments not directly connected with the item in question, etc. These “models” enable the Price Commissar to exert pressure on industrialists for price reductions on State orders, and to restrict price increases.

For political reasons, the Price Commissar tried to prevent price increases in consumers’ goods. The unrest among workers, many of whom could hardly pay for the most urgent necessities of life, might have compelled the industrialists to raise wages. Therefore, manufacturers and dealers who had little political influence were forced to absorb the cost of increased raw material prices.

“When it was found necessary to allow an increase in the price of bread on account of the increase in the world price of grain, it was decided that the cost should be borne mostly by the sugar, milk, and brewing industries, which, in turn, were partly compensated by the abolition of certain taxes and regulations. It is obvious that under such a policy a price cannot be regarded as an important factor in regulating supply and demand.

“Under National-Socialist economic policy, the State determines to what extent the increased profits of industry, resulting largely, directly or indirectly, from State orders, should be used for increase of wages or dividends.”3

The cost of the price increase in rye, amounting to some 75,000,000 marks, was thus arbitrarily shifted to other industries. The breweries had to contribute 34,000,000 marks, the sugar refineries, 29,000,000 marks and the flour mills 12,000,000 marks to an “equalization fund” so that the farmers would get more for their product without an equivalent rise in the price of flour and bread. After the introduction of this measure, the quality of flour and bread declined considerably, but the price remained “stable.”

Another similar measure was the cut in fertilizer prices. One day in May, 1937, fertilizer manufacturers, much to their surprise, received an order from the Price Commissar to cut their sales price immediately by 25 to 30 per cent, retroactively as of January 1, 1937. In effect, this price cut was a transfer of income from the fertilizer concerns to the farmers.

According to the German Institute for Business Research, the total price cuts on standardized products amounted to 300,000,000 marks, or approximately 1 per cent of the total value of retail sales (31 billion marks in 1937).

The price of “luxury goods” is not so strictly supervised. In their case, supervision is rendered difficult by the fact that the processes of production are more complicated. Manufacturers, therefore, prefer these branches of industry and it is not uncommon for a concern manufacturing consumers’ goods in the standardized, fixed-price category to switch to the manufacture of “luxury goods,” which have a more flexible price range.

Der Aufbau (a Nazi periodical), expressing its resentment of such shifts in manufacture, said: “While in principle no increase has taken place in clothing prices, in practice the cheaper lines of men’s and women’s clothing have become very scarce and people have had to accept higher-priced goods. This is due entirely to the fact that manufacturers and dealers are too anxious about their profits. These people must be made to understand that they cannot use the raw materials distributed to them in such a way.”

Most of the time it is impossible or inadvisable for the manufacturer to replace a mass-production article by a “luxury” product. In such cases the industrialist will try to reduce costs of production. He may do this by using better technique, employing cheaper labor or lowering the quality of his product. It has become a common practice to sell an article of inferior quality at a price for which an article of better quality could previously be bought. Therefore group or trade associations were ordered by the Government to issue warnings against violations of “national discipline.” The Reich Association of the German Clothing Industry sent the following circular to German textile manufacturers:

NEWS SERVICE
OF THE GERMAN CLOTHING INDUSTRY
BERLIN KIELGENSTR.
BUSINESS ECONOMY—CALCULATION—PRICES
Reference Number 5

Lfg45. Aug. 20, 1937
EDITED BY THE ECONOMIC GROUP AND THE REICH ASSOCIATION OF THE GERMAN CLOTHING INDUSTRY

Price Stop Decree with loopholes. Attempts to circumvent a law … are like desertion in war times. It is regrettable that today “businessmen” look on the law only from the point of view of whether they can circumvent it by any type of swindle. Is there any other explanation for attempts to get around the Price Stop Decree by selling a cheaper quality product instead of the higher quality? … Scarcity of materials is a glib excuse for such unfair business practices.

… Cases of “circumvention of price decrees” should be reported immediately to the Economic Group. They will be dealt with at once.

According to reliable estimates the quality of consumption goods sold in Germany has declined about 30 to 40 per cent since 1933, while the price has remained “stable.”

The Price Commissar is often a silent partner in the manufacturer’s practice of maintaining price by lowering quality—it is more opportune, politically, to avoid a direct price increase.

Group association leaders were ordered by the Price Commissar not to violate price decrees, so that “national discipline” might be strengthened. The following circular from the leader of such a group—the Reich Association of the Building Trades—is illuminating, as it reveals that the violation of the Commissar’s price decrees has become a common trade practice.

REICH ASSOCIATION OF THE BUILDING TRADE GUILDS

(REICHINNUNGSVERBAND DER BAUGEWERBES)

District Saxony.

Dresden—A 1, Gruner Str. Telephone 10754

Printed as manuscript. Reprinting or quotation forbidden.

Druck-R. Schr. Nr. 1/1938

Br.-No. 588. 38. R./Schr. Dresden-A, Febr. 3, 1938

To the Guild Members:

As we know, there are great difficulties in maintaining a supply of lumber in our district.… Under the pressure of conditions our members have shown themselves willing to concede prices which are not in accordance with the decree of September 4, 1937. We urgently warn the members of the grave penalties involved.… Price increases without legal basis are:

1)  Attempts to classify inferior qualities in higher-priced categories.…

2)  Attempts to obtain the highest possible prices without regard to poor quality ...

3)  Reduction of the cutting of building lumber in favor of planks, in order to get higher price.

4)  Combination deals … If a cabinetmaker has to buy additional lumber for which he has no use.

… We therefore decree: “Scarcity is not to be used for open or hidden price increases (see example above).… Arbitrary complaints and denunciations to Guilds should cease. Everyone is responsible for seeing that only reasonable complaints reach the Guilds.”

The leaders issue warnings, as well as open threats, to businessmen. The following confidential circular of the Clothing Industry is typical of the relations between State authorities and businessmen:

REICH ECONOMIC GROUP
CLOTHING INDUSTRY

Strictly Confidential!

To the business leader personally!

“The accursed hoarder!”

It has been definitely established that during the last few months in a number of firms belonging to our association, inefficiency, self-seeking and misuse of capital have led to long-term orders and unnecessary stocks of materials.

Purchases which in the normal way would not have been made until four or five months later, have been made far ahead; ridiculous orders were placed and accepted by the manufacturers during the winter of 1936-37 for delivery in February-March, 1937.

Such behavior calls for the most severe condemnation and can only be described as disgusting hoarding. As stated unambiguously by those charged with the fulfillment of the Four-Year Plan, it is also a crime…

. . . . . . . .

Instructions concerning stocks will be given within the next few days.

Leaders of enterprises who fail to comply with these regulations will be pilloried.

We draw your attention to the fact that under the new powers given to the State Commissar of Prices he is empowered to detain or sentence to prison evildoers or saboteurs and hoarders and that he can close down concerns entirely.

This is the last warning. We have shown you how to mend your behavior immediately. You are betraying the interests of the community.

In most cases it is impossible to know whether an indirect price increase is allowed or forbidden. It largely depends on the businessman’s ingenuity, on his political influence or on the changeable opinions and policies of the Price Commissar. Political unrest among the consumers may make it necessary for the Price Commissar to find a scapegoat, and he might suddenly accuse and even order the arrest of businessmen for indirect price increases which were tolerated yesterday, but are forbidden today.

The Price Commissar has the power of the State behind him and an army of police agents at his disposal. A notice from him to the Secret State Police may mean a sudden change of status from manufacturer to inmate of a concentration camp.

The most repressed and restricted businessman in Germany will not be found in the ranks of big businessmen. He is the retailer, more especially the small shop-owner; the man whose income has shrunk as the result of the steadily rising cost of raw materials and production, and the rigidly governed retail price level dictated by political exigency; the man who supported Adolf Hitler most staunchly in his fight for power and hoped to gain the most by his triumph, but instead has been the most bitterly disappointed in the development of Nazi economy.

Small shopkeepers have the least political influence, and they make the easiest scapegoats when there is an unpopular rise in prices. These shopkeepers were told that the Nazis would destroy the competition of chain stores, trusts and Jewish shopkeepers. The State was going to give them special protection. The Government fulfilled its promise to eliminate Jewish competition, but this no longer impresses “Aryan” shopkeepers. They are caught in the net of price restrictions which specifically forbid increases in retail prices, although the shopkeepers themselves have to pay higher prices and higher taxes than before.

The Price Commissar has granted innumerable price increases to manufacturers at the expense of retailers. The latters’ business has been curtailed by scarcity of many articles which they can obtain only if, in addition, they buy superfluous articles or luxury goods not easily sold. They were badly off when National Socialism came to power; they are in a desperate situation today. Although theoretically still in business for themselves, they have become nothing more than distribution agents for the State, without a fixed salary or even a guaranteed minimum income. Often they survive only by illegally selling scarce articles to customers who are willing to pay higher prices or buy “luxury” articles.

Hundreds of thousands of small businessmen and their customers are forced to violate the law daily, and a whole army of policemen has been mobilized to catch these lawbreakers.

Die Deutsche Polizei, the organ of the S.S., issued the following appeal which graphically shows the relations between the State and shopkeepers in Germany today:

“Businessmen who are ignorant [of the new legislation] must be reminded of the price restrictions; they must know the prescribed prices.… Police, making their regular visits, are informed by the retailers that they were just about to put price tags on or that the goods had just arrived. As a matter of principle, this kind of excuse cannot be condoned any longer. Fixed maximum prices are ignored; shrewd businessmen mark the prescribed maximum price on one side of the price tag, and a higher price on the other side. Even when official prices are quoted, forbidden price increases must be looked for.… Special attention must be paid to the firm’s books.”4

This State control is not everywhere effective to the same extent. A police officer or an agent of the Price Commissar will naturally be more severe with the small shopkeeper than with the big armament manufacturer who has friends in the Party or on the General Staff of the Army. Prices have, therefore, changed income distribution, and the small shopkeepers and manufacturers have lost in the process.

The Deutsche Volkswirt complained of the economic absurdities which hit the small trader in particular:

“Combined sales of foodstuffs and fodder are forbidden. … The unwanted article is not used. … Extremely high penalties have been inflicted on dealers in Leipzig, Cologne and Berlin who combined sales.…

“Wholesaler and retailer have become merely distributors. … Today selling is nothing but distribution … without the most essential element of ‘distribution’ —the quota.…

“The retailer will not make combined sales openly on account of the strict control and heavy penalties, but there is the ‘regular customer.’ He will get more than his due of scarce articles if he always makes big purchases. … The customer with a small purse is the one who suffers. … Besides orderly market conditions, there ought to be market justice too!”5

This cry for “justice” in connection with the price policies of the State was published by a periodical known to be the organ of Hjalmar Schacht at the time when he was president of the Reichsbank. It still represents—if one knows how to read between the lines—the interests of the private trusts. They were disturbed because, with the further extension of State control over prices, the Price Commissar had entered their own bailiwick and had enforced price reductions even when big industrialists could argue convincingly that their costs of production had risen. The attempts of the Price Commissar to investigate prices paid for munitions more closely than during the first Four-Year Plan aroused the industrialists. They felt that the State had taken a sufficiently heavy toll from all classes to be able to finance itself. Prices paid by the State for armaments left a handsome profit, and the armaments business enabled industrialists to get back a part of the money which the State had taken from private economy. On the other hand, the Price Commissar regarded it as his duty to take away from the industrialists as much as possible of what they had taken from the State.

These conflicts demonstrate the financial plight of the State. They also show that price is no longer merely an economic, but also a highly political, factor. Under the totalitarian State, price control has become a matter of governmental policy.

In spite of the Price Commissar, however, price has not become solely a political matter; economic laws still influence the price level. When the lengthened workday and more widespread employment increase the buying power of the consumer without a corresponding growth in mass-consumption goods, prices will rise, no matter what the Price Commissar may do. He can merely influence this process. Price increases may not be visible immediately, but they show up in quality of goods, in “combination” sales and in direct violation of Government decrees.

Under such circumstances nearly every businessman necessarily becomes a potential criminal in the eyes of the Government. There is scarcely a manufacturer or shopkeeper who, intentionally or unintentionally, has not violated one of the price decrees. This has the effect of lowering the authority of the State; on the other hand, it also makes the State authorities more feared, for no businessman knows when he may be severely penalized.

The consumers have similar experiences. They are told by the State officials that prices have not risen and that increases in prices are forbidden. But articles of the old quality are unobtainable at the former prices; consumers have to participate in the process by making illegal offers of higher prices and by replacing articles they used to buy with “luxury products.” The cost of living increases although prices remain “stable.”

This whole system of camouflage to circumvent governmental decrees is carefully hidden in the official picture of the nation’s economy. But sometimes the facts are revealed, as, for example, in a report for 1937-38 of the Reichs-Kredit-Gesellschaft, a Government-owned commercial banking institution, which reads:

“Just as the building index is calculated on the assumption of constant building methods, so the cost-of-living index presupposes a constant standard distribution of purchases on the part of consumers. Since 1933, however, fundamental changes have taken place in this field due to the general position with regard to supplies. The index is intended to express the cost of living for a working-class family of four. In normal times, such people, who represent the great mass of consumers, have always preferred cheaper-quality goods; but during the last few years the increasing scarcity of such goods has forced them to a growing extent to purchase goods of higher quality. In addition, the figure for housing is becoming progressively less representative from year to year since it is based upon rents payable in respect to dwellings constructed before 1918, whereas in actual fact living accommodation is more and more taking the form of houses built since that year.”6

To take another case, the official price index for shoes has remained comparatively stable since 1933. A good pair of men’s shoes cost 12.50 marks in 1933. The same quality shoes—if obtainable—cost at least 20 marks in 1938.

The Deutsche Arbeitskorrespondenz, the organ of the German Labor Front, was still more outspoken as to the contrast between official fiction and reality:

“With utmost conviction and emphasis the Fuehrer insisted on stable wages and prices at the Reich Party Congress. … The stability of wages and salaries is a fact.

“… It is different as to prices. The price level, which had remained unchanged until recently, has been altered to such an extent during the last few months that everybody is made to feel it and this is contagious as nobody wants to be left holding the bag. From the vegetable store to the boarding-house keeper, from the butcher to the milliner, everyone says they must get higher prices, because ‘everything has become more expensive.’ … The authorities in control of prices ought to be more helpful. The Reich Bureau of Statistics would gain in prestige if it were to draw up a representative budget for the workingman as soon as possible. There probably would be unexpected surprises. Prices for the most necessary foods may have remained stable as a result of market regulation by the Reich Nutrition Estate and the fixed prices of the cartels. But this is true only to a limited extent of other articles which are in daily use.”7

It is difficult to realize the full implications of such price control. Calculations of cost in thousands of different trades, industries and enterprises, correspondence concerning thousands of disputes over the real costs of production and “nationally justified” prices are piled up in the offices of the Price Commissar and the bureaus under his control. Instructions issued by them on comparative costs of production and distribution are a mine of information. They lay bare the workings of economic law, especially as reflected in the productivity of labor and the interdependence of a nation’s industries. The Price Commissar collects data and reports which are essential for a planned society, but he does not use them for that purpose. He is interested only in proving that some industrialist or merchant is charging too high a price and can be accused of “sabotaging” government policies.

As long as industry remains under the management of individual capitalists whose interest is profits, the businessman will be in conflict with the Price Commissar, since he forbids sales at a price which is justified by market conditions but not by “national interests.” The struggle of the businessman against the Price Commissar becomes a matter of life and death if and when the latter insists on a price which is unprofitable or would even result in a loss.