‘They Told Us Then . . . ’

July 2, 1951

Mr. Truman’s radio appeal of June 14 exposed more than ever the logical and factual weaknesses of the Administration’s case for price control.

“These people who say we should throw out price controls and rent controls,” the President said, “are all wrong. They are just as wrong now as they were back in 1946. They told us then that if we would just put an end to price controls, everything would be rosy and prices would stay right in line.”

Though prominent labor leaders and farm groups have been opposing the continuance of price-and-wage controls, Mr. Truman picked the National Association of Manufacturers to symbolize the whole opposition. “The NAM,” he said, “put full-page advertisements in the papers all over the country [in 1946] saying if we would just take off price controls, there would be plenty of things to buy at reasonable prices.”

The NAM did make the mistake of implying that if price controls were removed, the competition and increased production resulting would in themselves bring down prices. But what Mr. Truman has forgotten is that this mistake was not confined to the NAM. It was President Truman himself who, on Feb. 14, 1946, declared: “Production is our salvation. . . . Production will do away with the necessity for government controls.” And Chester Bowles, his price administrator, said four days later: “Production is the only answer to inflation.”

I recall these statements because I quoted and took issue with them in an article in The New York Times of Feb. 25, 1946. I pointed out then that such statements represented “at most only a half-truth. . . . For prices are determined not only from the side of supply, but from the side of demand. Demand is now far greater than it was before the war because money incomes are far greater. And money incomes are greater principally because the supply of money and bank credit has been almost tripled since the outbreak of the war. . . . The solution to the problem of high prices, in brief, is not production alone. It is the production of more goods combined with the cessation of production of more money and bank credit.”

Returning to the subject in The Times of May 6, 1946, I wrote: “Unless there is a radical change in our monetary and credit policy, the upward pressure on prices today seems likely to continue for at least several years. . . . The cure for the present inflation is a change in Federal fiscal and money policy, not constant renewals of price control.”

Prices in fact continued to go up, not because price control was taken off, but because the Administration continued to increase the supply of money and credit. At the end of April of this year, the total of demand and time bank deposits and currency outside of banks was $15,000,000,000 more than at the end of June 1946.

Mr. Truman, in his recent radio address, of course utterly ignored the fact that the upward pressure on prices today comes from his own Administration’s monetary and fiscal policies. And he went on to imply that those who, like himself, favored the price control, were inspired only by the loftiest patriotism, while those who opposed price control were merely “lobbyists,” who “placed private interests above the national interest.”

“After the representatives of the Administration testified in favor of a good, strong law,” he explained, “the

Congressional committees heard from 124 witnesses, representing all sorts of private organizations. And do you know how many of them came out for the bill? Twenty, just twenty.” Instead of concluding that this might indicate some possible weaknesses in the bill, or some real dangers to producers and production, Mr. Truman implied that the 104 opposing witnesses were all placing their “private interests above the national interest.”

Mr. Truman’s strange idea is that the only way to be a real friend of the consumer is to make things tough for the producer. But it is a little hard to see just how the consumer gains by measures that discourage production.