Money as a Medium Exchange Barter Trading is too Clumsy Large-Scale Production requires a Medium of Exchange Recognition and measurement of changes in the value of money. Classification of Money Stabilization of the Price Level The Value of Money or General Level of Prices Where The Unit of Account is a Fixed Quantity of Bullion, Uncoined or Coined. The value of money or general level of prices where the unit of account is a coin of which the issue is limited. The value of money or general level of prices where the unit of account is a bank-note or currency note. Causes of Change in the General Price Level Possible Occasions of Inflation Ways of Dealing with Risk: Transfer To Specialists Choice Criteria Under Risk Hedging The origin and the functions of money Money, when its use has grown habitual The early history of money Currency in the hunting state Currency in the pastoral state Articles of ornament as currency Currency in the agriculture state Manufactured and miscellaneous articles as currency The invention of coining Qualities of the material of money Utility and value Protability Indestructibility Homogeneity Divisibility Stability of value Cognisability Legal Tender The Greenbacks - The Fluctuating Premium on Gold The Greenbacks - The Effects of Greenbacks Upon Wages Rent - Urban Rents Rent - Farm Rents Interest and Loan Capital Purchasing Power of the Principal of Loans The Rate of Interest Profits Profits in Agriculture Statistical Evidence Regarding Profits The Production and Consumption of Wealth Production Consumption Cost of the Civil War Greenbacks and Expenditures The Greenbacks and Receipts Contraction and Inflation of the Legal Tenders Passage of the Resumption Act The Struggle for Resumption The Purchasing Power of the Dollar Measurement of Changes in the Purchasing Power of Dollar Results of Changes in the General Price Level Buying Problems of the Consumer What is Good Buying? The Principles of Foreign Exchange The General Price Level Price Policies Price Flexibility Price Leadership Price Discrimination Special Pricing Practices Postage Stamp System Policy Implications

Basing Point Aside from the general problems of price determination by a firm, there are a number of particular pricing practices that merit attention. One of the best known of these is the basing point system of prices, made famous by the steel industry. Under this plan, the price charged anywhere was the price at a basic location plus freight from that point to the place of delivery, regardless of the place of purchase. As practiced in the steel industry this was known as "Pittsburgh plus," according to which the price of steel sold anywhere (except in certain areas of the South) was the Pittsburgh price plus freight from Pittsburgh. Thus, if the steel were bought in Chicago from a Chicago plant, freight from Pittsburgh was charged--hence the idea of phantom freight, or a charge for freight which did not exist. During the early 1920's, the Justice Department attempted to dissolve the United States Steel Corporation, and one of the issues was the existence of uniform delivered prices resulting from the practice of basing point pricing. Although the Department was unsuccessful in its attempt, the issue of basing point pricing was not dropped because the Federal Trade Commission began an elaborate investigation into the practice. The result was that the FTC issued an order in 1924 directing the Corporation to cease using this scheme. The corporation did not contest the order but agreed that it would attempt to follow it as far as practicable. Instead of the use of a single base price, the Corporation announced that it would follow a system of multiple based prices. Whether this was in compliance or a violation of the FTC's order never was determined, since the FTC made no efforts at that time to enforce its order any further. In 1925, basing point pricing was brought to the attention of the Supreme Court in the first of several cases involving cement ( Cement Manufacturers' Protective Association v. United States, 268 U.S. 588). The Government did not make much of an attack against the basing point system used here, and the Court actually looked upon the existence of identical prices charged by members of the industry as evidence of vigorous competition. During the 1930's, the FTC began another campaign against basing point pricing. A complaint was filed against the cement industry again in 1937. A cease-and-desist order was handed down against the Cement Institute and 74 producers of cement. Other industries that also had complaints lodged against them were producers of bottle caps, malt, corn products, rigid conduits, milk cans, and crepe paper. Finally, an order was issued against the American Iron and Steel Institute and 101 members. The first case before the Supreme Court culminating from this campaign involved two glucose manufacturers who had used a single basing point system. The Court ruled that this practice hurt competition and was illegal. Now that the single basing point system was outlawed, attention was turned to the practice of multiple basing point prices. The judicial interpretations up to then were not clear on this point, some courts having upheld and others having outlawed this practice. Finally, the Supreme Court ruled on this issue in the case of the Federal Trade Commission v. Cement Institute. There was no question in the mind of the Court that such a system of pricing was illegal, since it resulted in uniform prices and terms of sales all in violation of the antitrust laws. Subsequently, other industries, such as steel, pulp, sugar, and lead, that had engaged in this practice voluntarily abandoned the scheme. Since then, however, a number of industries have placed pressure on Congress to enact specific legislation that would authorize the use of basing point pricing. The abolition of basing point pricing does not mean that freight absorption cannot be used. In absorbing or allowing freight, the seller pays the transportation charge, which differs from basing point pricing in that the absorption is actual freight from mill to place of purchase. It is possible that this practice may give rise to discriminatory prices by varying the amount of absorption, but this, in turn, may run afoul of the law.