Washington Memo

Congress and price controllers find themselves in a tug of war over inflation—and Congress seems to have the heavier team

E. K. LINDLEY June 1 1943

Washington Memo

Congress and price controllers find themselves in a tug of war over inflation—and Congress seems to have the heavier team

E. K. LINDLEY June 1 1943

Washington Memo


Congress and price controllers find themselves in a tug of war over inflation—and Congress seems to have the heavier team

THE STRUGGLE between the Pacific-Asiatic and Atlantic-African theatres for men and materiel continues unremittingly. The public is most thoroughly aware of the demands from the Southwest Pacific, since MacArthur is a glamorous figure and, in addition, is the only American area commander whose pleas are publicly supplemented by statements from representatives of a sovereign government. On the other hand, the demands of the American commanders in India, China, the Aleutians, and the Central and South Pacific, not to mention those in French Africa and Britain, move through regular channels, they seldom reach the public’s ears.

American forces in the Pacific-Asiatic theatre have been built up more than might be inferred from the complaints from Australia, but not sufficiently to satisfy most of the commanders. Even though they may acknowledge the soundness of the strategic decision to knock out Hitler first, most Americans are impatient for a major offensive against Japan. The confirmation that the Japanese had executed some of the aviators who bombed

Tokyo caused a great swell of anger.

As to the progress of the war against Germany and Italy, the centre of greatest optimism is the high command of the Army Air Forces. The faith of these officers in the effectiveness of heavy bombing raids is undiminished. They believe that the RAF, RCAF and the American squadrons are striking really telling blows. Despite contrary reports from Britain, they insist that the American Air Force will continue to concentrate on daylight raids. In addition to bombing, they point out, their aim is to destroy the German Air Force by drawing it into aerial combat with our heavily gunned bombers as well as with fighter planes. This can only be done in daylight.

ON THE food front the coming of spring and early summer has dispelled some of the darker fears of the winter months. Farmers found the manpower and the machinery to plant their crops; they did not go on a sit-down strike. March reports on intentions to plant indicate that this year’s tilled acreage will exceed last year’s by 11 million acres. Department of Agriculture officials think that this estimate may have been surpassed by actual plantings.

The first task of the new Food Administrator, Chester Davis, when he took office at the beginning of April, was to exhort the farmers to go the limit in sowing essential crops. He could not do much else because he was hemmed in, on one side, by the President’s order to all agencies concerned with wages and prices to “hold the line” and, on the other, by the earlier refusals of Congress to vote money for new farm subsidies or incentive payments. Mr. Davis put on a lively hortatory campaign for the planting of more feed grains, without cutting down the production of hay and fodder,

oil seeds, beans and potatoes already planned.

The record-breaking population of livestock and poultry is one of the most pleasant features of the food situation. The pig crop for 1943 is estimated at 125,000,000, as against 105,000,000 last year and an average of 70,000,000 for the years 1932-41. The increase was fostered during the last two years by rising prices for meats coupled with plentiful feed at reasonable prices. But now the livestock and poultry population is pressing against the limits of feed production.

Feed wheat is being, or will be, imported from Australia and Canada, but the Government feels that the time has come to level off breeding and to increase slaughter, especially of hogs. It is equally concerned, of course, with seeing that meat and poultry are marketed through regular channels where prices and distribution can be controlled. A number of larger black market operations in meat have been detected and stamped out, but illegal sales of poultry and butter, especially by small

producers, are believed to be widespread and are not so easily regulated.

The Food Administration and the Office of Price Administration, which share the responsibility, have been struggling with new ways of controlling food prices. The more rigid and comprehensive methods present enforcement difficulties, while those which are more flexible and restricted do not seem adequate. However, OPA has promised to set new dollars and cents ceilings on meats, fresh and processed vegetables and other important foods. These will vary from community to community, depending on distance from producing centres and other cost factors, and OPA intends to

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Washington Memo

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give every housewife a small booklet showing the dollars and cents ceiling prices on all essential foods in her community.

In addition, OPA Administrator Prentiss Brown has solemnly promised that the prices of some foods will be “rolled back,” if possible to the levels of September, 1942, when the President’s first price-wage stabilization order was issued. Organized labor is demanding that they be “rolled back” farther, to the levels of May, 1942, the month chosen by the War Labor Board for pegging ceilings on hourly wage rates.

But how certain prices can either be held or “rolled back” without resort to subsidies baffles most of the Government’s experts. Too many costs, including wages, were allowed to creep up before stringent controls were attempted. However, the lowering of some food costs seems essential to pacify the labor unions and consumers generally.

Leon Henderson, Mr. Brown’s predecessor in OPA, foresaw the dilemma and urged Congress to provide money for subsidies. Congress turned him down and since then has shown no disposition to relent. However, a reopening of the whole question of subsidies, to narrow the margin between costs of production and distribution and prices to the consumer, now seems unavoidable.

Congress Abets Inflation

CONGRESS probably deserves to be called the most powerful of all the inflationary forces in the United States. Its inflationary influence is a by-product of the ordinary Senator’s and Congressman’s normal method of making himself popular with his constituents. It is easier to seek price increases for the farmers in his home district than to explain why the gain is likely to prove ephemeral. It is easier to urge higher wages— although the labor bloc in this Congress is puny in comparison with the farm bloc—than to try to explain to wage earners that they are likely to lose in a race between prices and wages. It is easiest of all to bring pressure on OPA to make a price adjustment for ahome-townbusinessman, since this can be done by a telephone call or by a quiet personal visit unknown to anyone who might suffer from the adjustment.

Congress is also abetting inflation by failing to adopt adequate taxation and compulsory savings. At the end of four months it was still unable to get together on so simple a matter as collecting a portion of the personal income tax atthesource. Admittedly, its difficulty was due partly to the Treasury’s objection to the Ruml plan to abate all or most of one year’s income taxes. As a result of this squabble, Congress has not even begun consideration of the$l 6 billions in additional taxes requested by the Treasury.

* * *

The Republican party has long boasted of its devotion to “sound

money.” During the depression years Republican spokesmen raised the bogey of inflation every time the Roosevelt Administration tried to lift the abnormally low price level. But now that the threat of inflation is real, the Republicans in Congress have turned their back on it and, if possible, are even more inflationary in their actions and omissions than the Democrats.

So the President is hard pressed on every side in his effort to “hold the line.” His economic stabilization director, James F. Byrnes, is squeezing the last drop out of the influence and personal friendships he acquired during many years in the House and Senate, to prevent Congress from going completely berserk. And the President himself is straining the prestige and confidence he has won among the labor unions during ten years in office to keep their wage demands from getting out of hand. At least temporarily he scored a strategic success in persuading the principal CIO and AF of L leaders to concentrate more on the effective control of living costs and less on basic wage increases.

As I write, he has also eaten off the most serious direct threat from organized labor to war production and the “no strike” pledge. John L. Lewis walked up to the very mouth of the cannon before he was convinced it was loaded. When the showdown came, Lewis could see three alternatives.

The first was that the coal mineworkers, ignoring his orders, would heed the President’s plea to return to work. Such a repudiation would have led almost inevitably to the election of new national officers of the union.

The second possibility was that the miners or a large number of them would ignore the President’s plea. In that event, the Government reluctantly but almost certainly would have resorted to some form of compulsion—possibly drafting the miners into the armed services and ordering them to dig coal. The Administration was confident that such an extreme step would not be necessary, in view of its record in strengthening union rights and improving conditions in the mines. But Lewis had to reckon with the possibility.

Either of these two alternatives almost certainly would have meant the end of his career as leader of the mineworkers. His only other course was to give way and order his men back to work himself—-which he did only a few minutes before the President broadcast his appeal over Lewis’ head directly to the mine workers.

As I write, it is not yet certain that in the mineworkers’ case the President has won his second objective, which is to hold the wage line. Indeed, several high Government officials feel that the miners deserve a wage increase, even though it cannot be granted without fudging on the ceilings set by the War Labor Board in its Little Steel decision. The

practical question is how far the Government can stretch the general rule in this case. It might thereby reopen the gates for all the wage demands of those CIO and AF of L unions which have faithfully collaborated with the Government without resorting to strikes or threats to strike.

Restrictions on job-shifting are steadily being tightened. The general rule is that you cannot move from one essential industry to another or from an essential industry to nonessential employment — even at higher pay—without the permission of your present employer or the certification of the local War Manpower Director. By the time this gets into print, the rule probably will be nation-wide, although no one knows how thoroughly it will, or can, be enforced. The areas and industries in which the 48-hour week is compulsory are being extended bit by bit.

Priority on Travel?

THE Office of Defense Transportation has launched a campaign to discourage nonessential travel. In the South and along the Atlantic and Pacific coasts this seems superfluous, as the trains and bus lines are so crowded that travel has ceased to be a pleasure. However, troop movements are increasing, and they are matched, in volume of passenger traffic, by soldiers on furlough. The capacity of railroads and bus lines is stretched to the limit, and they can get no additional equipment.

Many Government experts believe that a priorities system for rail and bus travel is inevitable. But ODT Director Joseph B. Eastman shrinks from such complexities and is pinning his faith on the voluntary elimination of most travel for social and sightseeing purposes. This will include most week-end and vacation travel.

Vacations for workers, however, have been declared by both the War Manpower Commission and the War Production Board to be desirable. Most workers can now afford vacation trips. But they are prohibited from taking them in their own automobiles unless they can save enough gasoline from basic “A” rations— and now they find that accommodation on trains and buses will be limited. ODT is therefore urging employers to spread vacations, throughout the year. Holiday-seekers who feel they must travel are advised to go out and come back during the mid-week days when furlough travel by soldiers and sailors is usually lighter. After surveying all the difficulties, however, a great majority of holiday-seekers are likely to conclude that it will be pleasanter to stay at home and tend to their victory gardens.

The drop in losses to submarines during April made the Navy feel good. Nevertheless it warned the public that the improvement might be temporary for the Navy is braced for several bad months between now and autumn. The last quarter of the year is the earliest that the naval authorities say that the Allies can count on getting the submarine under definite control. However, they seem encouraged by the new arrangements with Britain and Canada for protecting Atlantic convoys—perhaps especially by the increasing air coverage of the sea lanes.

The fact that the United Nations lost approximately 12,000,000 deadweight tons of shipping (or 8,000,000 gross tons) in 1942 has at last been publicly confirmed. But that loss seems less prodigious now that the yards in the United States alone are launching new merchant ships at the rate of 18,000,000 deadweight tons a year.