PHASE II: Trouble on Margins

On Aug. 15, the Nixon Administration will celebrate the first anniversary of wage-price controls—but celebrate may not be quite the word. The date also happens to be the deadline for companies with annual revenues of $50 million or more to submit second-quarter profit reports to the Price Commission. Those filings could touch off the first serious clash between price controllers and business executives.

The problem is a regulation that companies winning permission to raise prices must not push their profit margins—that is, their percentage of profit on each dollar of sales—above those of a base period. If they do, they...

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