The Economy: The Take-Charge Price Czar

ON Oct. 20, a sometime plantation boss, Navy officer, newspaper reporter, FBI agent, import-export manager and Texas-based business-school dean flew into Washington to take on a new job. He became the U.S. price czar. C. (for Charles) Jackson Grayson Jr. found that the seven-member Price Commission he was to head had no staff, no permanent office and no secretaries; he had to ring up the Civil Service Commission in Washington to ask how to go about hiring. It was a situation suited to the take-charge spirit of 48-year-old Jack Grayson, who constantly advises associates that "someone has to make it happen." If Phase 11 so far has a hero, he is it. In less than two months, he has built the Price Commission into the one post-freeze agency that has developed a clear, effective anti-inflationary policy and is determined not to be pushed around by labor, business or Government.

With little help from the Administration, which is maintaining a hands-off attitude, Grayson's commission has moderated pricing policies in three basic industries: autos, steel and coal. The commission's basic rule is that prices may be increased only to reflect added costs, minus any gains in workers' productivity—and then only if the price boosts do not fatten profit margins. Grayson has been flexible in applying this standard. Last week he allowed U.S. Steel an average price increase of 3.6%, in return for a promise that the company would not try to raise prices again before Aug. 1. (Last week U.S. Steel raised some prices 7.7%, but said that the average of its whole line would be within the 3.6% guideline.) Grayson, however, insists that companies calculate costs and productivity carefully, rather than coming in with egregiously high initial requests and then expecting to bargain with the commission. "I hope this does not end up as an Arabian trading market," he says. When officials of one major company protested that they had no measure of productivity, the commission offered to help draw one—by sending IRS agents to scrutinize the company's books. The company dropped its request for a price increase.

The air of decision at the Price Commission contrasts with the confusion rending its sister agency, the Pay Board. The board established a 5.5% guideline for wage raises, but got in the hole very quickly by approving a coal contract that calls for increases of 15% or more the first year. In his boldest move, Grayson acted to contain the inflationary impact of that ruling. When coal companies asked for price rises ranging from 5.4% to 9.4%, the Price Commission allowed only 2.9% to 4.9%. Grayson also announced a general principle that companies can raise prices only as much as they would if wage increases really were held to 5.5%—even if the Pay Board violates its own guidelines and permits more.

That decision frightened some businessmen, who fear that they will be caught in a choking profit squeeze. Grayson discloses that two Nixon Administration officials telephoned to voice "concern over the ramifications of the commission's decision." but he stood his ground. As he told TIME Correspondent Lawrence Malkin: "I will listen to the Administration if someone calls up and says that the policy is not what they would like. But we will decide on our own."