Ceiling over Inflation

Canada last week took care that World War II would not follow the economic pattern of World War I. Like the U.S. and most other countries, Canada was unprepared for the soaring inflation of the first World War, or for the sick swoop of depression that followed.

This time Canada was ready. In the first weeks of the war a Wartime Prices and Trade Board was set up. Considering the fact that Canada has been actually at war for two years, the Board has done a reasonably able job of keeping down prices of necessities, particularly rents. The work of the Board and a Government order providing wage increases as living costs rise have served as a temporary dam against inflation.

But to Nova Scotia-born, law-trained Minister of Finance James Lorimer Ilsley it was no surprise that on Sept. i clothing prices had crept up 17%, food prices 24% above pre-war levels. (U.S. rises 7% and 18% in the same period.) Minister Ilsley and his special board of consulting economists had an eye out for just such inflationary storm warnings, had a storm cellar ready. This month they laid their economic plans before Prime Minister William Lyon Mackenzie King and his full Cabinet.

Last week, in Ottawa, Prime Minister King broadcast to all Canadians Canada's answer to inflation. It was an overall ceiling on prices and wages such as Bernard Baruch has advocated for the U.S.

Beginning Nov. 15, the Prime Minister announced that maximum prices for all goods, rents and most services in Canada will have to stay under a fixed ceiling.*

Employers will be required to pay a bonus to all employes at a rate which the Government will vary according to variations in the cost of living. But no employer, without special permission, may increase the basic wage rate he pays.

There will be price ceilings on farm products as well, but the Government will undertake to see that farmers' incomes do not drop, by paying subsidies.

As Finance Minister Ilsley went to work on the most complicated and rigorous project of Government economic control ever attempted on this continent, he had an interested visitor. Short, gum-chewing Leon Henderson went up on a flying visit from Washington to get some tips on the job he may some day have to do as Price Administrator in the U.S.

* The maximum for the weeks Sept. is-Oct. 11.

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