-3- 



It is estimated that Congress has appropriated 200 billion 

 dollars for the war effort since September 1, 1939» The incomes of 

 farmers and Industrial workers are extremely higii. This means that 

 there is a very strong domestic demand for foodstuffs and clothing. In 

 addition, lend-lease purchases have been very substantial, so in spite 

 of the fact that crop yields have been high and the output of all sorts 

 of animal products has also been at an extremely high level, the demand 

 is adequate to absorb these supplies at present or higher prices. 



That leaves the question, ''Will Washington officials take 

 steps to drive down the prices of farm products?" My opinion is that 

 they will not do so. All along, I have been impatient with the 

 reluctance of Congress and the administration to take the necessary steps, 

 especially the proper fiscal policy, to prevent inflation. The Office 

 of Price Administration excuses this delay by saying that prices were 

 permitted to find their own level for a time in order that higher prices 

 and wages would divert materials and workers av;ay from the production of 

 civilian goods to the promotion of war effort. That is a legitimate 

 function of prices. During peacetime, that is one of the chief functions 

 of prices. 



However, it is necessary to permit prices to rise only far 

 enough to induce increased production of armaments and related items. 

 Any rise in price above this level is needless and wasteful. Certainly 

 any further rise in the general price level is quite unnecessEiry, and 

 efforts probably will be made to prevent their further rise. There will 

 be no great harm in permitting prices of commodities which are not 

 essential to the war effort or which are being produced in great surpluk 

 to fall. In agriculture, that applies particularly to v;-heat. However, 

 there is little danger of wheat declining in price much below present 

 levels so long as farmers can place their wheat under government loan 

 at 15 to 20 cents a bushel above present market prices. 



