What Price Prices?

"Today we stand, as we did in the closing months of 1915, at the beginning of an upward sweep of the whole price structure. ... By April 1917, the wholesale price index had jumped 63%; by June 1917, 74%, and by June 1920, it was nearly 140% over the October 1915 mark.

The facts today are frighteningly similar." So said Franklin Roosevelt last week in a special message to Congress, admitting that he had at last found something that frightened him: inflation.

What was to be done? There was only one way out, said the President--set a ceiling on prices. Said he: "In this way alone can the nation be protected from the evil consequences of a chaotic struggle for gains which must prove either illusory or unjust, and which must lead to the disaster of unchecked inflation."

Cowardice. Now came a price-control billj completely rewritten six times, amended countless times, mauled and slashed in last minute conferences between Congressional leaders and Price Boss Leon Henderson. By the time the miserable compromise dropped into the legislative hopper, its only teeth were false. No one apparently realized the basic fact that inflation is an overall thing, uncontrollable in bits & pieces. The bill authorized the President to establish maximum prices for any commodities on the basis of prevailing prices of July 29, adjustable according to other factors (speculative fluctuations, general cost increases, etc.). All prices thus established are finally reviewable by a special three-judge appeals court and by the Supreme Court on certiorari.

But what the bill omitted was most important. Ignored entirely were wages, still rising nationally. Opposition by Virginia's crabbed old Carter Glass drove out a limit on installment credit. A provision for a ceiling on rising rents was jokered down to nothingness. (The bill limits rent-fixing power only to low-cost housing in defense areas--$15 per room per month, where rents have increased 10% in the last year.)

Roll Out the Barrel. Most pusillanimous attempt to catch votes came in the section dealing with farm-commodity prices. In this session the Congressional farm bloc has repeatedly wrested huge gains for the farmer from the Administration, only two months ago forced the parity price up from 75 to 85%. (Parity is an artificial dream goal, based on the average farm price in relation to farm purchasing power for the years 1909-14.) The Administration, giving ground steadily before the farm inflationists, was now willing to grant 100% of parity. But in the desperate anxiety of last week's finagling, the Administration finally approved a deal: the fixing of farm prices must begin not below 110% of parity, or the market price prevailing July 29--whichever is higher.

Even this wasn't enough. Immediately greedy farm-bloc members began to demand 120% or more of parity as the basic fixing point of up-spiraling farm prices (see chart). This was inflation with a bang.

A veteran friend of cotton speculators now moved in on the Senate scene, walrusy, mastiff-jowled "Cotton Ed" Smith of South Carolina, arm-in-arm with a veteran friend of wheat growers, cigaret-eating William Langer of North Dakota. The two new chums, while their colleagues dozed, logrolled through an amendment on another farm bill. Purpose of their amendment: to deprive the Government of another means of controlling prices. They and the futures speculators were angered by the fact that Agriculture Department's credit-&-commodity agencies can prevent zooming price rises at any time by selling or threatening to sell thousands of surplus bushels of wheat or bales of cotton on the market, thus breaking the price.

Smith and Langer last week found a House-passed bill giving relief to farmers who were suffering unjust acreage penalties. To this bill Smith added an amendment freezing the Department's surplus stocks of cotton, Langer tacked on wheat.

No one in the Senate was paying attention. Vice President Wallace put the question, heard only two votes cast: Smith and Langer, both aye. Out of a hum of gossip rose Kentucky's pumpkin-headed Alben Barkley, the majority leader. Blinking, he said: "Mr. President, I doubt if we understand what we are doing. Sometimes, perhaps, I do not know what I am doing. That may be a chronic situation with me. However, the amendment offered by the Senator from North Dakota has been adopted by two Senators voting for it and none voting against it. In my opinion, a little confusion has been created.

The U.S. could well agree with bumbling Alben Barkley. But the bill went to conference; should quickly be adjusted with the House bill and passed. Only a courageous Presidential veto then will stop the inflationary rider tacked on.

Not Awake Yet. The prospect that any kind of price-controlling bill will be difficult or impossible to pass, made it plain that inflation would go farther, would continue until the public yowled at the high cost of living. Then Congress might take effective steps to check inflation. But so far people still thought of inflation as something that would make them rich, could not yet see that it would make them poor.

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