Battle of the Bulges

Just before Phase II clocked in on Nov. 14, President Nixon allowed that he expected a "bulge" in prices during its first days. The opening decisions of the Pay Board and Price Commission make disturbingly clear that Phase II already consists of a good many more bulges and bumps than smooth roads.

The unions' huffing and puffing has frightened the Pay Board's business members into seeking labor peace at a high price. They have approved a wage raise for coal miners nearly three times as high as Phase IIs 5.5% guideline, and most members seem likely to take a permissive, placating view of labor's "catchup" demands in the shipping, aerospace and railroad industries. By the same inflationary token, most of the increases granted by the Price Commission have been above the 2.5% overall average set for price hikes.

Horatio's Stand. The impact of the coalworkers' settlement hit quickly. Officials of the Old Ben Coal Corp., a subsidiary of Standard Oil Co. of Ohio, asked the Price Commission for a 6.7% price increase to cover fresh wage costs. The case will be decided this week. Commission members are well aware that coal operators unhappy with domestic prices can further increase their fast-rising export shipments, which are not subject to price controls. Coal users already protest that the companies are exporting too much, and that the result could be a dangerous winter shortage of fuel and electric power. Nevertheless, like Horatio at the bridge, Commission Chairman C. Jackson Grayson Jr. has vowed that employers will not be allowed automatically to pass along exorbitant wage hikes to their customers. In effect, the Price Commission has been forced into serving as the Pay Board's monitor.

Detroit's four automakers also applied for increases, and so far two have got them--an exemplary 2.5% for American and 4.5% for Chrysler. But after learning that General Motors, the industry price setter, had petitioned for only a 3% increase, Chrysler chiefs decided that they could really make do with the same and retreated to 3%. G.M., which based its bid on increased costs and new pollution-control and safety equipment on 1972 models, at least scaled clown its original ambitions. Shortly before the price freeze, the company planned increases of 3.9% for 1972. The .9% difference will save the average car buyer about $30, and that is a victory for the Price Commission.

Offsetting Increases. Two big steelmakers, Bethlehem and National, won increases of slightly more than 7% for the price of tinned mill products, which are used to make tin cans. Can companies promptly made plans to apply for offsetting increases in their prices. If those are granted, food companies that use the cans are certain to do the same, and so on, until the boost reaches the consumer. The Price Commission also approved a 3.8% increase in the advertising rates of Chicago's Field Enterprises, but turned down the bid of Virginia's Bassett Furniture Industries to boost prices by 1.8% on the grounds of "insufficient justification." New applicants for price increases included the U.S. Postal Service, which requested a 23.9% hike in third-class mail. All together, more than 160 applications are pending before the commission. Cost of Living Council Director Donald Rumsfeld said that a study of 64 of them showed that requests averaged 3.3%, a level that "does not in and of itself pose any threat."

Perhaps not, but neither the wage nor price decisions of Phase II's first two weeks provide much cause for celebration. There is justification of sorts for early adjustments that exceed the Administration's yardstick: some involve hardship cases and contracts that became binding before Phase II began. But what the public desperately wants to see--and what the President's pay and price officials must provide--are some tough decisions that measure up to the yardstick.

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