As A farmer you probably can't buy 

 the lumber you need for a tool 

 shed, but you can get a brightly 

 painted ping pong table — for $50. 

 That's because under OPA price ceil- 

 ings greater profits are realized when 

 lumber is made up into game tables. 



As a housewife you can't buy cotton 

 yard goods to make clothes for your- 

 self and children but are forced to pay 

 high prices for skimpy, low-quality 

 ready-made garments. Under OPA orders, 

 there's no profit in selling yard goods. 



A farmer has great difficulty buying 

 a plow or fencing, but city stores have 

 plenty of portable iron grills for frying 

 hot dogs. It's OPA again. 



"That's Just Too Bad" 



When these conditions were brought 

 to the attention of a Chicago OPA offi- 

 cial, he said, "That's just too bad. We 

 can't help it. If manufacturers want 

 to make ping pong tables instead of 

 things farmers want, there's nothing we 

 can do about it." 



Farmers cannot get what they need 

 because OPA price ceilings favor the 

 manufacture of other things. Likewise, 

 many city consumers can't get meat and 

 other essentials because price ceilings 

 make it unprofitable to sell in that area 

 or manufacture the products they re- 

 quire. 



During the war the OPA price ceil- 

 ing orders were one part of the general 

 inflation control program. In a radio 



By L. H. SIMERL 



lAA Director, Research and Taxation 



Z> 



talk in April, 1942, the late President 

 Roosevelt outlined the six basic features 

 of that program as follows : 



1. Heavier taxes 



2. Increased sale of War Bonds 



3. Credit control 



4. Wage control 



5. Rationing 



6. Price ceilings 



In union there was strength. Used 

 together these six measures kept infla- 

 tion under partial control during the 

 war years. 



At the end of the war, the people 

 had about 140 billion dollars in spendable 

 savings. The federal budget called for 

 expenditures of 83 billion dollars a 

 year. These highly inflationary condi- 

 tions called for a continuation of anti- 

 inflation measures. Instead, the gov- 

 ernment abandoned five of the original 

 controls. This made it impossible to 

 maintain the sixth — price ceilings. 

 Here's the record. 



(1) Heavier Taxes 



This most basic inflation control was 

 greatly weakened by Congress. Tax 

 rates for all individuals and corpora- 

 tions were reduced, and about 12,000,- 

 000 persons were exempted entirely 

 from federal income taxes. This gave 

 wage earners more millions to spend 

 and made more fuel for the inflationary 



fires built by heavy government spend- 

 ing during the war. 



(2) Increased Sale of War Bonds 



The War Bond drives were discon- 

 tinued after November, 1945. The re- 

 duction in Bond sales left consumers 

 with more cash for bidding up prices 

 of scarce items. I 



(3) Credit Controls 



Both government and private lending 

 agencies relaxed credit controls. Ap- 

 praisal values were increased, and in- 

 stallment credit restrictions modified. 

 Easy credit promotes inflation. 



(4) Wage Controls 



The federal government reversed its 

 wage control policy almost immediately 

 after V-J Day. President Truman ap- 

 parently was led to believe that wages 

 had to be increased in order to main- 

 tain consumer buying power and also 

 that wages could be increased without 

 increasing prices. On October 30, 

 1945, the President said, "WAGE IN- 

 CREASES ARE . . . IMPERATIVE 



This was an invitation to labor lead- 

 ers to demand, and a virtual order to 

 employers to pay, higher wages. Print- 

 , ing pressmen, rubber workers, and oil 

 refinery employes went on strike. Auto- 

 mobile workers, lumber workers, and 



L A. A. RECORD 



