Peace Terms

For the first time last week businessmen were eager to fill out Government forms. Within 24 hours of WPB's announcement on Aug. 15 permitting production of 79 classes of civilian goods (TIME, July 24), WPB field offices ran out of blanks on which manufacturers could apply for the privilege.

This preview of the bigger rush to come when more reconversion is possible, may have prompted Price Boss Chester Bowles to outline last week the price policies he intends to follow after war in Europe ends.

First he issued a warning: the U.S. must avoid a sudden rise of prices such as occurred in the spring of 1919 after price controls were lifted but before enough goods had been produced to satisfy public demand. He promised therefore that after Germany's fall, when reconversion commences, OPA will:

P: Continue to keep a tight rein on the cost of living by preventing general increases particularly in rent and the prices of food and clothes.

P: Adjust ceiling prices on products that have been produced throughout the war on the same basis as at present.

P: Promptly place ceiling prices on items coming back into production, permitting increases over prewar levels where necessary to allow for increased wage and material costs. (Said Bowles: "In the case of companies which continue to have war business or other civilian business we will also consider ... the general financial position of the firm. . . . We must also take into consideration the decrease in unit costs resulting from technological advances and a high level of output. . . . While some commodities are going to come back into production at higher prices than they went out, not all of them will be higher. The OPA will not set prices which force deflation of general wage levels.")

P: Recheck prices and pricing methods at regular intervals and readjust them to changing conditions.

P: Keep price and rent control in effect as long as necessary--"but not one month longer." (Said Bowles: "The controls which we administer are wartime controls. They were conceived for an emergency period.

... As soon as there is no longer any danger of inflationary price increases in a particular commodity field, price controls should be removed.")

Said he, "We can sum it up this way: Our pricing policies should encourage the fullest possible production of goods and services at the lowest possible prices to the consumer. Unless American industry produces to the limit of its powers, there will be increased danger of depression and eventual collapse."

Chester Bowles admitted that in carrying out his policy in regard to products which reappear in the market as the result of gradual reconversion, prices would have to vary from industry to industry, in some cases from company to company. There might be 100 different ceiling prices for the same item produced by 100 different firms--the higher ceilings going to firms which have higher costs.

As examples of this Bowles pointed out that one manufacturer has had a direct wage increase of 35% since 1940, while another in the same field has had only a 6% increase. Like differentials apply between industries: the hourly wage rates in autos are up 9.6%, in refrigerators 17.4%, in building materials 19.4% over prewar rates. Steel is the same price as in 1942, lumber is 15% higher, cement is 3% higher.

Some manufacturers may feel cheated if their price ceiling is set lower than others, but without such discrimination OPA believes it would not be possible to offer profits to all without giving excessive profits to some.

Best bet who will get the highest ceilings : companies without war orders whom OPA wants to hurry into civilian production.

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