Roses & Cabbages

All over the Dominion, food prices took a jet-propelled spurt last week. Bacon went up as much as 20-c- and was nudging $1 a pound in Vancouver. Other meats were up 6-c- to 20-c-. In Toronto lettuce hit 33-c- (10-c- a year ago), in Montreal it went to 60-c-. Milk was up 3-c- a quart in many areas. Roses, at $5 a dozen, were cheaper than cabbages at $6. Cracked the Toronto Star: "Take your choice."

Lagging six weeks behind the price parade, the Dominion Bureau of Statistics reported that the retail food index stood at 178.7 on Dec. 1, up 5.1 points in a month. The overall cost-of-living index was up 2.4 points to 146. The cost of maintaining a family of five in Toronto was $44.45 last week--$9 more than the average weekly wage.

Part of the increase in meat costs was caused by the newly revised British food contracts, and even in Anglophile Ottawa shoppers muttered to their butchers about "those damned British." But it was not just the British. The government's austerity program by shutting off U.S. vegetables, had created a scarcity that sent prices soaring.

Farmers, packers, wholesalers and retailers alike had their fingers in the housewife's pocketbook. Many a Canadian believed that the wholesaler had his whole fist in. Dealers in cabbages and butter, for example, were widely accused of having stocked up at last summer's relatively low prices and of now selling for all the traffic will bear. Consumers' leagues were not well enough organized to agree on a course of action. Buyers' strikes were mostly in the talk stage. In Vancouver, 50-odd pickets rounded up by the Communist-tinged Housewives Consumers Association paraded with porker-shaped placards reading: "Big business is a hog."

Some housewives said that they would quit buying meat and eat vegetables--until they found that vegetables were as high-priced or higher. As a substitute for lettuce and tomatoes, Finance Minister Douglas Abbott suggested that Canadians eat healthy root vegetables such as beets, turnips and parsnips. No sale--carrots and turnips were marked down in Winnipeg for lack of buyers.

Though the government dismissed general price controls as unworkable in peacetime, it might seek to limit dealers' profits. Mark-up control had been tried in November on canned fruits and vegetables, and it worked. Last week, one of Canada's biggest butter wholesalers, scandalized by what was happening, pleaded with Ottawa to curb his (and his competitors') profits.

The government was hesitant to act, because its policy was to reduce, not increase, controls. But the price inflation was getting out of hand.

The Dominion's financial rulers did take one short step toward halting the inflation of prices and credit. The government-controlled Bank of Canada stopped announcing the prices at which it would buy government bonds.

Henceforth, it would buy & sell only after dickering with its clients (dealers and the big chartered banks). In effect, this knocked the artificially high floor from under bond prices, left them to find their natural level in an almost-free market.

The natural level proved to be several steps lower: 3% bonds of 1966 (callable in 1961), for which the Bank had been paying 104 1/2 to yield 2.60% steadied at 102 for a yield of 2.82%. Since government bonds are the backbone of much of the banks' credit, this meant that the price of money had gone up about one-fourth of 1%. In the long run, dearer money tightens credit and cheapens goods. But it would still be a long time before the Bank of Canada's tinkering with the price of bonds affected the price of cabbage.

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