Price Non-Control

The Price-Control Bill had been messed up to the point of insanity. In all the 153 years of Congress there had been few bills more politically manhandled, or so potentially dangerous to the national welfare. But this week Congress is finally passing it.

Congress sat down six months ago to control inflation by writing a law that would keep prices at the lowest reasonable levels. The final result of 180-odd days' work was a bill guaranteed to raise price levels at least 10%, probably 15%, perhaps 25%.

The problem of controlling wartime inflation required courage and brains, but there was a shortage of both in the bill. No amount of political abracadabra could obscure the simple truth: that if costs and prices are permitted to zoom, inflation will result.

In World War I, the deadly dance of the prices doubled the war bill of the nation. With this grim lesson in mind, the Administration last April appointed bushel-bellied Leon Henderson as Price Boss. Henderson had no real authority to enforce his price ceilings--or at best, questionable authority. But he had seen the interrelated whole of U.S. industry from the topmost contemporary vantage point, the TNEC's two years and nine months of study. Backed by public opinion, Henderson kept prices down by bluff and loud talk.

Study of the Office of Price Administration's record revealed that Price Boss Henderson had done a remarkable if somewhat extralegal job. He had roofed over 70 prices with formal ceilings, had set up 70 more tentative ceilings by voluntary agreements with the industries concerned. The results were good compared with those of World War I. Using Bureau of Labor Statistics indexes:

>From July 1914 to May 1917, prices of metal and metal products almost doubled--up 96%. From July 1939 to mid-January 1942, the same prices advanced only 11%.

>In the same period, prices of all semi-manufactured materials went up an average of 127% in War I; in War II, only 23%.

>The average gain for all commodities, raw and processed, in War I, in the same period, was 79%; in War II, 26%.

>Biggest gainer in War II has been farm products, up 58% (a deliberately created boom), which necessarily carried up raw materials 39%, foods 37%, textiles 36%. But in the same period in War I, farm products went up 87%, foods 72%, textiles 65%, raw materials 91%.

Six months ago the President asked Congress to give Henderson legal powers to do what he was already doing.

Then politics took a hand. The Administration, faced with Bernard M. Baruch's challenge to freeze all prices--wages, farm prices, rents, everything--lost its political nerve. The labor-loving President recoiled from freezing wage levels.

The Congressional farm bloc, most powerful of all Washington groups, put their shoulders to the log and rolled it.

The bill establishes the already inflated market prices of Oct. 1, 1941 as the "floor" for nonagricultural commodities; and the level of April 1, 1941 as the "defense-area housing" rent floor.

But for farm prices three alternative "floors'' were set up: 1) 110% of parity; 2) Oct. 1 or Dec. 15 market prices, whichever are higher; 3) the 1919-29 average price. Furthermore, Leon Henderson's ceiling, when set, is made subject to the veto of Secretary of Agriculture Claude R. Wickard. Further than that, the bill exempts from any price control any commodities now or in the future under marketing agreements-potatoes, tomatoes, oranges, lemons, grapefruit, walnuts, peas, cauliflower, onions, hops, plums, peaches, pears, grapes, fresh and evaporated milk, etc.

The bill was described by the New York Times as "the most brazen sort of class legislation." But, already passed by the House, and due for quick passage by the Senate, it was expected to be signed by the President.

*Parity is the price at which a bushel of wheat or corn, or a given amount of other farm produce, buys as much (in factory goods, taxes, etc.) as it did in the farmer's prosperous 1909-14 period.

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