I. The GMPR: background, 498; pricing rules, 499; reasons for its failure, 500; its usefulness, 507. — II. Specific Prices and Margin Control: alternatives to GMPR, 508; criteria for policy, 509; specific dollar-and-cents prices, 510; margin control, .513 — Conclusions, 519.

CCELERATED amortization, as it has been used both during World War II and in the present emergency, is a device to encourage expansion of essential industrial capacity by offering to private enterprise incentives which will have a minimum direct effect on market prices. While accelerated amortization has been widely viewed as primarily affecting the accounting for profits for tax purposes, it has in fact been more than this. A certificate permitting accelerated amortization has entitled the holder not only to the privilege of more rapid amortization of facilities for tax purposes, but also in many cases to larger gross revenues through higher prices for its products. This has resulted from the fact that many prices in our economy are cost-determined,' and that accelerated amortization has been recognized as an element of cost for some pricing purposes. This is especially true in our war or defense economy. The extent of this price or revenue concession is indeterminate, partly because of uncertainties concerning the volume of products likely to be sold and partly because of the complexities of the process by which military goods and their components are priced.2 At the present time, there are further uncertainties because of failure to clarify current policies. For this and other reasons the value to the recipient of a certificate of necessity permitting accelerated amortization, and the cost to the government of the privileges granted, are both highly conjectural. It is increasingly apparent that the program of accelerated amortization was entered into after Korea without any clear appreciation of what privileges it was intended to grant or what minimum concessions were necessary to induce the requisite expansion. There is, moreover, serious question whether, as a long run device in a society of high level mobilization, accelerated amortization will be a favorable device for strengthening the competitive forces in the economy. It is not surprising, therefore, that the program has been the subject of much criticism.3