End of OPA?

All week long there came hints and headlines about the "collapse" of the Office of Price Administration. No less than seven Congressional committees listened to big business, little business, farmers and labor bigwigs talk about "foolish fumblers" and "Malice in OPAland." Columnists gabbed that OPA's functions might be parceled out to the other czars --food prices and rationing to Chester Davis, oil prices and rationing to Harold Ickes, etc.

> Labor unanimously contended that OPA's effort to roll back the prices of meat, coffee and butter to the September 1942 level was not enough because wages were fixed at the May 1942 price level.

> The rollback victims unanimously contended that OPA's plans were both stupid and ruinous. Samples: the National Coffee Association pointed out that a 3-c--a-lb. reduction in coffee prices would save the consumer a neat 36-c- in a whole year, while costing taxpayers $30,000,000 a year in subsidies. The meat industry pointed out that meat is so much more desirable than money that the above-ceiling black markets are flourishing.

> With a hard squeeze on, subsidies are the only way a lot of price ceilings--let alone price rollbacks--can be made to stick OPA has some $400 million of RFC funds to draw on. But Congress, led by the farm bloc, is so dead set against subsidies that it has talked of specific legislation against them. And statisticians calculated that $400 million could roll back the price level only 1%. Yet Prentiss Brown proposed to whack 6% off the cost of living. Meanwhile, with the first roll backs scheduled for this week, no one had any specific plans for subsidies.

Production. Much of the pressure on OPA comes from economic factors over which OPA has no control. Political expediency on taxes, wage control and farm prices have already swelled the gap be tween available goods and available income to enormous proportions. For the duration, price control by itself amounts to shadowboxing against inflation.

But the worst aspect of OPA price control is that it impedes supply:

> In food, where potatoes and feed grain (for livestock and poultry) stay on the farm because ceilings at the distributing level are too low.

> In textiles, where even the Army goes begging, because weavers cannot afford to buy unceilinged cotton and sell at their own ceiling prices.

> In canned goods, where OPA limits cherry canners to pay 10-c- a lb. for fruit that farmers can sell to grocers for 14-c-.

These losses have become inestimable in terms of supply. But many an OPA ceiling is now destroying the incentive to produce and to sell.

Phony Policy. As Pundit Walter Lippmann pointed out last week, for two years the Administration has pursued a phony price policy because it seemed easier. When huge economic incentives are being paid--as they have to be--to make war production vast, a rigid ceiling on civilian goods prices is undesirable: it creates inflation by making goods more valuable than dollars, and it minimizes the production of consumer goods. Rationing and price control were sold to the public as anti-inflation measures, whereas they are actually social measures.

Pressure from Within. Up & down the long corridors of Washington's huge new Census Bureau Building raged a pitched battle. OPA's "slide-rule boys," the Leon Henderson carryovers headed by gangling "5-ft.-20-in." Deputy Price Administrator J. Kenneth Galbraith, grappled with the new "let's-be-reasonable boys," headed by stocky Lou Russel Maxon, the Detroit advertising wizard whom Prentiss Brown hired to humanize OPA.

The two schools fought over grade labeling, over dollars-&-cents ceilings, over how to make OPA orders understandable, over how to work subsidy payments, over making Lou Maxon "general manager" of OPA. Prentiss Brown had not been acting like a strong administrator. Now he told reporters that OPA was not "coming apart at the seams," then admitted he would have to decide between Galbraith and Maxon within the month. This week Galbraith resigned. This might end the internal confusion. It could not stem the outside pressures.

This file is automatically generated by a robot program, so reader's discretion is required.