What Kind of Inflation?

At his first press conference last week new OPA Boss Prentiss E. Brown admitted that prices would continue "an inevitable, slow, well-ordered rise." This increase, he believed, would proceed at the current rate of one-half of 1% per month.

To those who have for some time realized that in fact (if not in theory) the Government is allowing an inflation to pay for part of the cost of the war, Prentiss Brown's statement came as no surprise. The critical question, which Brown did not answer, was: what kind of an inflation will the Government allow?

So far it has prided itself on holding down the price of many luxuries and semi-luxuries, where higher prices might play an effective role in checking consumer buying. But the prices of necessities (especially farm prices) have climbed steadily. Last week this dangerous trend continued. Though the Government at last got around to releasing Government-stocked wheat in order to hold down wheat prices, cotton quotations went to the highest levels since last May, and milk prices in Manhattan advanced 1-c- per quart.

Meanwhile, although Eastern gasoline prices probably will advance 1 1/2-c-per gallon and wine prices were lifted slightly to cover higher transportation costs, the Government persisted in trying to hold its ceiling prices on most non-farm products and services, thus aiding & abetting a wild buying boom (see below). Strangest decision of all was that of the Federal Communications Commission, which proudly announced that it was saving the U.S. $34,700,000 per year by persuading American Telephone & Telegraph Co. to cut its long-distance overtime rates at the very time when the company is far overburdened with long-distance calls.

The one flash of common sense on price economics came from the New York Daily News. In a down-to-earth editorial slugged "Don't Buy A News--Borrow One," America's largest paper announced that in order to cut circulation it had doubled its Sunday price (to 10-c-) in Canada, would soon do likewise for its western circulation, and might in due course "bring the 10-c- price right up to the suburbs of New York City." Moreover, its advertisers will have to pay 10% more for space, reduce their space requirements on the average 10-15%. These changes, the News was quick to point out, will not result in "any perceptible net profits": excess-profits taxes plus higher normal rates on corporate income will take care of that.

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