Philadelphia Coke Co. v. Bowles

• Decision Date: 15 December 1943
• Docket Number: No. 47,No. 50-53.,47,50-53.
• Citation: 139 F.2d 349
• Parties: PHILADELPHIA COKE CO. v. BOWLES, Price Adm'r. CONNECTICUT COKE CO. v. SAME. RAINEY-WOOD COKE CO. v. SAME. KOPPERS CO. (MINNESOTA DIVISION) v. SAME. KOPPERS CO. (SEABOARD DIVISION) v. SAME.
• Court: U.S. Temporary Emergency Court of Appeals Court of Appeals

139 F.2d 349 (1943)

PHILADELPHIA COKE CO. v. BOWLES, Price Adm'r. CONNECTICUT COKE CO. v. SAME. RAINEY-WOOD COKE CO. v. SAME. KOPPERS CO. (MINNESOTA DIVISION) v. SAME. KOPPERS CO. (SEABOARD DIVISION) v. SAME.

Nos. 47, Nos. 50-53.

United States Emergency Court of Appeals.

Heard October 4, 1943.

Decided December 15, 1943.

COPYRIGHT MATERIAL OMITTED

Gilbert W. Oswald, of Philadelphia, Pa. (William A. Schnader, of Philadelphia, Pa., on the brief), for complainants.

Morton Meyers, Atty., Office of Price Administration, of Washington, D. C. (George J. Burke, Gen. Counsel, Thomas I. Emerson and Nathaniel L. Nathanson, Associate Gen. Counsels, and Maurice Alexandre and Irving Schwartz, Attys., all of Office of Price Administration, all of Washington, D. C., on the brief), for respondent.

Before MARIS, Chief Judge, and MAGRUDER and LAWS, Judges.

Heard at Philadelphia October 4, 1943.

MARIS, Chief Judge.

The complainants are independent¹ manufacturers of coke and coke oven gas and represent the major independent production of coke oven gas in the United States. Their practice is to sell coke oven gas to utility companies under long term contracts which specify a basic price for the gas and contain an adjustment clause under which the price of the gas sold is varied on a fixed scale in proportion to increases or decreases in the cost of the coal from which the gas is produced. Contracts of this type are presently in force in the case of each of the complainants except the Philadelphia Coke Company. For reasons which need not here be set out that company's contract with the Philadelphia Gas Works Company for the sale of coke oven gas contains an adjustment clause which is based on increases in the cost of the production of water gas by the Gas Works Company rather than in the cost of coal to the Coke Company.

On April 28, 1942 the Price Administrator issued the General Maximum Price Regulation under which the prices of commodities generally, including the complainants' coke oven gas, were frozen at the highest prices charged by the sellers during March, 1942. Within sixty days thereafter complainants filed their protests against the General Maximum Price Regulation as applied to the sale and delivery of coke oven gas by them under their existing contracts. Thereafter the Administrator denied the complainants' protests, whereupon they filed the complaints now before us.

At the outset we are met with the question whether the Emergency Price Control Act of 1942, 50 U.S.C.A.Appendix, § 901 et seq., authorized the issuance by the Administrator of a general overall regulation of prices such as the General Maximum Price Regulation here complained against. While the complainants disclaim any intention of making a general attack upon that regulation, such an attack is implicit in their contention that the act does not authorize the application of the regulation to their sales of coke oven gas. They base this contention upon the proposition that the General Maximum Price Regulation may, under the terms of the act, only be applied to a commodity if the prices of that commodity have risen or threatened to rise to an abnormal unwarranted or excessive extent and upon the asserted fact that the prices of their coke oven gas have not risen or threatened to rise to that extent.

Passing, for the moment, the question of the validity of the complainants' assertion that the prices of their product have not risen or threatened to rise to an extent inconsistent with the purposes of the act, it will be observed that if the General Maximum Price Regulation is construed as applicable only to prices which are affirmatively shown to be rising or threatening to rise it ceases to be an overall price regulation, but is in effect merely an aggregation of regulations of the prices of those individual commodities whose prices have been shown to have risen or threatened to rise to an extent inconsistent with the act. We must, therefore, consider whether the act authorizes the Administrator to issue an overall regulation fixing maximum prices for all commodities upon a finding of a general threat of inflationary price increases throughout the economy but without an individual finding in the case of each commodity regulated that its prices have risen or threatened to rise to an abnormal, unwarranted or excessive extent.

In the early stages of an inflationary movement it may well be that the individual regulation of those commodity prices which are more particularly affected will be sufficient to halt the movement. There comes a time, however, in the course of an unchecked inflationary movement when it gains such momentum that inflationary pressures with their resulting rises and threats of rises in prices make themselves felt throughout the whole economy. Does the act authorize a general overall regulation of all commodity prices if and when this stage is reached? Section 2(a) of the act specifically provides that "Whenever in the judgment of the Price Administrator * * * the * * * prices of * * * commodities have risen or threaten to rise to an extent or in a manner inconsistent with the purposes of this Act, he may by regulation or order establish such * * * maximum prices as in his judgment will be generally fair and equitable and will effectuate the purposes of this Act." This is a specific authorization to the Administrator to establish maximum prices by a single regulation when the prices of commodities generally have risen or threaten to rise to an undue extent. That Congress contemplated the exercise of this authority through the imposition of a general overall price ceiling, if it should be found necessary, appears from the legislative history of the act.²

The complainants strongly contend that the act is intended to prevent only those price rises which are found to be abnormal, unwarranted and excessive and that it is not intended to confer and does not confer power to prevent all rises in prices. Section 1(a) of the act states it to be among the purposes of the act "to stabilize prices and to prevent speculative, unwarranted, and abnormal increases in prices and rents;" and "to assure that defense appropriations are not dissipated by excessive prices". The act contains no definition of the terms thus used, however, and they must, therefore, be given their ordinary meaning in the light of the kind of danger which the act is intended to combat. Since it is the danger of uncontrolled inflation with which the act is concerned we may assume that only those price increases are to be deemed abnormal, unwarranted or excessive which may have a tendency to bring on or accelerate an inflationary movement. Since in the early stages of such a movement small increases in the prices of some commodities may have no such tendency, they may for that reason be considered as normal and not excessive. When the movement reaches a point, however, at which inflationary pressures begin to appear in commodity prices generally throughout the entire economy it becomes true that any increase, however small, in the price of a single commodity may be inflationary both in origin and effect and may, therefore, fairly be described as abnormal within the meaning of the act. See Lincoln Savings Bank v. Brown, Em.App.1943, 137 F.2d 228; Spaeth v. Brown, Em.App.1943, 137 F.2d 669.

As we have seen, the first stated purpose of the act is "to stabilize prices". To stabilize has been defined as "To make or hold steady; to prevent fluctuations; as, to stabilize prices." Webster's New International Dictionary, 2d Ed., p. 2449, def. 2. To stabilize prices in an economy the whole of which is under general inflationary pressure involves holding them steady against any and all increases even though it may not be apparent that such increases have been brought about by inflationary pressure or that they will in their turn tend to increase such pressure upon the prices of other commodities. In a complicated economy such as ours the phenomena of price increases are the result of a complex of causes, the interaction of many economic forces. When inflationary pressure is one of the major forces operating in the economy it is wholly unrealistic to consider the price of a single commodity as in an economic vacuum and say that no threat of an inflationary increase can be discovered. Each commodity price must then be considered in the light of the fact that it forms an integral part of the whole price structure.

We conclude that if and when an inflationary movement reaches the point where it can fairly be said that inflationary pressures have so permeated the price structure that there exists in the case of substantially all commodities a threat of price increases which if permitted to take place will have an inflationary effect, all further price increases of all commodities are to be regarded as abnormal within the meaning of the act and are, therefore, subject to regulation by the Administrator. We are thus brought to the question whether at the time of the issuance of the General Maximum Price Regulation on April 28, 1942 the inflationary movement in the United States had reached that point. In the preamble to the General Maximum Price Regulation the Administrator expressed his judgment upon this matter as follows: "In the judgment of the Price Administrator the prices of commodities and services generally have risen and are threatening further to rise to an extent and in a manner inconsistent with the purposes of the Emergency Price Control Act of 1942."

His conclusion was based upon developments in the economy of the country which he summarized in the statement of considerations accompanying the regulation in the following language:

"A gap has appeared between the supply of goods and services which is available and the purchasing power or demand of the people who wish to buy these goods and services. This gap is widening. Both military and civilian demand have increased...