One thing is certain about the President of the Board
of Trade's announcement of a cut of 5 per cent. in the retail prices of utility clothing, footwear and sheets, and that is that it will not achieve the effect he intended. That remains true whether the retailers' threat to ignore the cut is carried out or not. For when Mr. Wilson made the announcement, on July 28th, in the midst of the last rush before the Commons adjourned, he said that the Government's purpose was to counteract anxiety about the continued rise in prices and to help stabilise the economy. But anxiety will not be counteracted by sharp practice; and the economy will not be stabilised by a measure which, besides throwing a large body of traders into confusion, could only release a certain amount of pur- chasing-power from the utility clothing market for expenditure elsewhere. It appears that the Government would rather offend the retailers, by reducing their profits, than displease the T.U.C., by ignoring its repeated complaints about the level of prices. But that is only the outcome of some more or less cynical balancing of one outcry against another. It does nothing to restore economic equilibrium, and it distracts attention from the really powerful remedies—such as a substantial cut in Government expenditure. The general level of incomes, costs and prices will never be forced down by an arbitrary outside pressure on a single sector. The connection between an enforced cut in home prices of clothing and a genuine cut in export prices—which is what is really needed—is slight, indirect and uncertain. If costs must be reduced—and they certainly must be—then the best approach to the problem is the direct one. In any case, since machinery for consultation with the trade exists it is better to use it than to make transparent excuses to the effect that there was not time. No good purpose is served by a piece of sleight-of-hand with the utility price regulations. The defiance of the law by the National Chamber of Trade is bad enough, but the President of the Board of Trade, in using his powers in this way, is hardly setting a good example. Neither side gets any credit out of this episode, and the supposed benefit to consumers is quite illusory. The problem of higher production through genuine cost reductions is untouched by it.
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