On June 13, 1973, I ordered a freeze for a maximum period of 60 days on the prices of all commodities and services offered for sale except the prices charged for raw agricultural products. At that time, I stated that the freeze period would be used to develop a new and more effective system of controls to follow the freeze. Planning for the Phase IV program has proceeded rapidly and I have, therefore, decided that the freeze on food, except for beef, should be removed and more flexible controls substituted in a two-stage process in the food industry. The first stage will be effective at 4:00 p.m., e.s.t., July 18, 1973. The freeze in other sectors of the economy will continue through August 12, 1973. I am also directing the Cost of Living Council to publish for comment now, proposed plans for Phase IV controls in other sectors of the economy. I have determined that this action is necessary to stabilize the economy, reduce inflation, minimize unemployment, improve the Nation's competitive position in world trade and protect the purchasing power of the dollar, all in the context of sound fiscal management and effective monetary policies.

Now, THEREFORE, by virtue of the authority vested in me by the Constitution and statutes of the United States, particularly the Economic Stabilization Act of 1970, as amended, it is hereby ordered as follows:

Section 1. Executive Order 11723 establishing a freeze on prices effective 9:00 p.m., e.s.t., June 13, 1973, for a maximum period of 60 days is hereby superseded except as hereinafter provided. Under

the provisions of Executive Order 11695, the freeze regulations issued by the Cost of Living Council, pursuant to the authority of Executive Order 11723 remain in effect except as the Chairman of the Cost of Living Council may modify them. The price freeze established by Executive Order 11723 remains in effect until 11:59 p.m., e.s.t., August 12, 1973, except to the extent the Chairman of the Cost of Living Council may modify it.

Section 2. All orders, regulations, circulars, rulings, notices or other directives issued and all other actions taken by any agency pursuant to Executive Order 11723, and in effect on the date of this order are hereby confirmed and ratified, and shall remain in full force and effect unless or until altered, amended, or revoked by the Chairman of the Cost of Living Council.

Section 3. This order shall not operate to defeat any suit, action, prosecution, or administrative proceeding, whether heretofore or hereafter commenced, with respect to any right possessed, liability incurred, or offense committed prior to this date.

Section 4. Executive Order 11695 continues to remain in full force and effect.

Richard Nixon

そら

THE WHITE HOUSE, July 18, 1973.

518-256 O-73-2

11

● Phase IV is mandatory, covers most sectors of the economy, requires prenotification and restricts price increases to dollar-for-dollar passthrough of costs.

Freeze prices remain in effect until August 12 in all sectors, except food and health which have special rules effective immediately.

• Proposed rules for non-food sectors will be effective August 12 and are being issued for comment. Comments required by July 31.

• Continues wage and benefit guidelines in effect during Phase II and III.

• Exempts on August 12 small businesses (60 employees or fewer), public utility rates, interest rates and rents, wages and prices in lumber and plywood.

• Establishes procedures to consider decontrol industry by industry.

Food Sector

Phase IV price regulations on food are divided
into two stages, Stage A and Stage B.
Stage A (effective immediately)
-Ceiling prices on beef continued.

-All other food prices may be increased only to reflect raw agricultural cost increases since June 8 on dollar-for-dollar basis.

Stage B (effective September 12) -Ceiling prices on beef terminated. -Manufacturers and processors allowed to pass through all cost increases on a dollar-for-dollar basis.

-Other aspects of food regulations to be similar to controls for industrial, service, wholesale and retail sectors.

Industrial and Service Sector

• Prices remain frozen until August 12 at which time Phase IV regulations become effective.

• Regulations to be issued July 19 for public comment. These regulations will:

-Require companies with annual sales of more than $100 million to give the Cost of Living Council 30 days prenotification before price increases may go into effect.

-Require companies with sales over $50 million to file quarterly reports.

-Require companies with sales of less than $50 million but over 60 employees to file an annual report.

-Establish a new base period for price increases and cost justification-the last fiscal quarter ending before January 11, 1973. Costs incurred prior to the new Phase IV base period are not allowed as justification for higher prices.

-Permit costs to be passed through only on a dollar-for-dollar basis.

-Continue the profit margin limitations.

Non-Food Retail and Wholesale Sector

• Prices remain frozen until August 12 at which time Phase IV regulations become effective. Regulations to be issued July 19 for public comment. These regulations will require: -Preapproval by the Cost of Living Council of pricing plans based on merchandise categories for companies with sales over $50 million.

-Gross margin controls on these categories.
-Continuation of profit margin limitation.

Petroleum Sector

• Prices remain frozen until August 12 at which time Phase IV regulations become effective. Regulations to be issued July 19 for public comment. These regulations will provide: -Price ceilings for gasoline, heating oil and diesel fuel. The ceiling price is computed as the seller's actual cost of the product plus the dollar and cents markup applied to a retail sale of the same product on January 10, 1973. -A ceiling price for crude oil. -Increased crude production and equivalent amount of old oil to be exempted.

-Ceiling prices and octane ratings to be posted on each gasoline pump.

Regulations for Special Sectors

• The health service industry is to be removed from the freeze immediately and returned to the mandatory Phase III controls.

• Proposed regulations for the insurance industry to be issued on July 19 for public comment. The new regulations will go into effect August 12. Until then the freeze remains in effect.

Wages

• The general wage and benefit standards of Phase II and Phase III will be retained. More

detailed information for reporting wage and benefit increases will be required.

• Notification of wage and benefit increases by the largest bargaining units will be continued to be required. Prenotification will be required in individual cases.

• A new organizational component of the Cost of Living Council has been established to review wage and salary and benefit increases in the state and local government sector.

For additional information call the Cost of Living Council Public Affairs Office, 202-254-8830, or Cost of Living Council Operations Center, 202– 254-7880 or 202-254-8520.

Dollar passthrough only no margin maintenance.

Base cost period (last fiscal quarter before Jan. 11, 1973). Same as Phase III.

Average price for last fiscal quarter before Jan. 11, 1973.

Required of all firms over $100 million 30 days before implementation; may be effected unless CLC suspends, denies, or cuts back. Right reserved to reexamine price increases placed into effect. Gross hardship or inequity with consideration for economic disruption. Quarterly for firms over $50

million; annual for nonexempt firms less than $50 million.

Same as phase II, with updated computation.