Price Controllers in a Panic

June 18, 1951

As the June 30 deadline approaches, when the present price-and-wage control law is due to expire, the statements of the price controllers take on a note of desperation. Mr. Truman professes to fear “an unmanageable torrent of inflation”—which could, in fact, only be caused by his own fiscal and monetary policies. Eric Johnston, Economic Stabilization Administrator, declares that those who oppose the continuance of price and wage controls are led by special interests whose whole attitude is “damn the consumer, and full pockets ahead.” They are “grinding their own ax without thought for the welfare of anyone or anything else . . . at a time when men are dying in battle in Korea for a free way of life.”

It is sad to find Eric Johnston impugning the intelligence, motives, and patriotism of those who disagree with him. Nor does it seem wise for the advocates of price control, in their own interest, to put the argument on an ad hominem basis. Their own sincerity and disinterestedness are not altogether above question.

How seriously, for example, can we take Bill Green, president of the AFL, when he pleads for wage controls instead of free collective bargaining? “If price controls were scuttled,” he says, “wage stabilization would have to go and there would be no limit to the amount of wage increases unions could obtain from employers.” It is surely suspicious to find Bill Green worrying about how high wages might soar unless the government held them down with a firm hand. Some of us suspect that “wage inflation” would not be a very serious problem if the government itself refrained from inflating money and credit and stopped creating boards and “stabilization” formulas that force wage increases on employers.

It is not for nothing that the Wage Stabilization Board is beginning to be called the Wage Stimulation Board. It began by issuing a so-called “catchup” formula under which wages were “allowed” to go 10 percent over the Jan. 15, 1950, level. But what a government board once “allows”, it is taken to approve, sanction, and practically to direct. Then on April 25 Economic Stabilization Director Johnston approved a 6-cent-an-hour cost-of-living increase for nonoperating railway workers. This was 3½ cents above the 10 percent limit. On May 18 the WSB itself allowed a 9-cent-an-hour increase for packinghouse workers, which punched such a gaping hole in the ceiling that even the Board said: “We are fully aware that this decision looks in the direction of a new policy.”

Meanwhile the Board approved cost-of-living escalator contracts signed before Jan. 26, 1951. It has now unanimously approved automatic so-called “productivity increase” pay boosts in contracts signed before the same date. What sort of ceiling is it that is full of holes at the beginning and moves upward with every new major decision? And how long does the Board seriously think that it can use an arbitrary date to approve increases for some workers and withhold them from others? Already Eric Johnston wants to give wage increases to everybody to compensate for the rise in living costs since Jan. 15, 1950. Many labor leaders are willing to “accept” this fake wage control for their own groups in the hope of imposing real price control on others.

As for farm groups, they hardly know where they stand at the moment. A government that has already lost $276,000,000 (through the Commodity Credit Corp.) so far in this fiscal year, in its efforts to hold some farm prices up, is trying to roll meat prices down. It seems on the verge of duplicating the consequences of meat price control in 1946. On June 6, as a typical example, one of the “Big Four” packers slaughtered only one-tenth of its normal quantity of cattle at its Chicago plant because the cattle raisers and feeders would not offer any more at the government ceiling prices.

Even if price and wage control were put in the hands of economic geniuses and political saints it could not be made to work. It creates and intensifies shortages. But when it is cynically used as a political football, it becomes altogether intolerable.