IN UNION THERE 

 WAS STRENGTH 



bus drivers walked out. Glass makers, 

 electrical workers and machinists fol- 

 lowed suit. Textile mill workers, farm 

 machinery employes and meat packing 

 house laborers took their turns. Steel 

 mill workers, coal miners, railroad 

 trainmen and engineers brought the 

 economic activity of the nation almost 

 to a standstill. One after another 

 thousands of industrial plants were 

 closed by strikes and lack of materials. 

 The shortages created by labor disputes 

 made for higher prices and increased 

 living costs. 



After strikes lasting more than three 

 months in some instances, wage rates 

 were increased about I8I/2C an hour. 

 These higher wages increased the cost 

 of production and distribution of vir- 

 tually every manufactured product. 

 They also gave many workers about 

 $1.50 a day additional pay to bid up 

 prices. The administration made a dis- 

 astrous mistake when it abandoned its 

 wage control policy and started promot- 

 ing wage increases. 



(5) Rationing 



Immediately after V-J Day, rationing 

 of gasoline was discontinued. Soon all 

 rationing except of sugar was ended. 

 At the abnormally low ceiling prices, 

 people always want to buy more than 

 is available. Hence, without rationing 

 the maintenance of effective price ceil- 

 ings is an impossibility. 



(6) Price Ceilings 



It was to be expected that eflFective 

 price ceilings could not be maintained 



JUNE. 1946 



after the end of rationing and other 

 basic inflation control measures. The 

 OPA, however, made its own failure 

 doubly certain by following impractical 

 policies. The OPA tried to keep prices 

 fixed, while wages and costs of produc- 

 tion rose everywhere. This stopped or 

 delayed activity on production lines. 

 The OPA based its ceiling prices on 

 previous selling prices rather than upon 

 current conditions. This practice 

 favored the inefficient operators who 

 had a record of high costs. It discrim- 

 inated against the efficient managers • 

 who had sold at low prices. It became 

 impossible for efficient manufacturers 

 to continue production of many items. 



Another fatal error of OPA was its 

 policy of trying to keep prices of food 

 and other essentials low while prices of 

 non-essentials and luxury goods ad- 

 vanced. The natural result was that 

 labor and materials were diverted from 

 the production of essential commodities 

 to the manufacture of the more profit- 

 able luxury items, knick-knacks, and 

 gimcracks which fill so many store 

 counters today. Many of the essential 



^JP 



items that were manufactured have 

 been sold outside the United States 

 where OPA has no jurisdiction. 



Since V-J Day, OPA has issued near- 

 ly 10,000 pages of price ceiling orders. 

 Legal methods have been found for 

 avoiding the intent of most of them. 

 Hundreds of others have been simply 

 ignored. For example, according to 

 research reports which have not been 

 disproved by OPA, consumers in most 

 large cities have had to pay 20 to 2*) 

 per cent over ceiling prices in order to 

 obtain meat. Discriminating shoppers 

 will note that in many other lines con- 

 trols have been even less effective. 



Even the government has found it 

 necessary to violate its own price ceil- 

 ings. A few weeks ago when a federal 

 agency decided to purchase a quantity 

 of wheat and corn, it was obliged to 

 offer a "bonus" of 30c a bushel. This 

 action was in direct contradiction to 

 previous oflFicial statements. It has 

 undermined farmers' confidence in and 

 respect for the government. It prob- 



ably has made any future effective price 

 controls over grains imfjossible. 



The original argument for price ceil- 

 ings was that they would keep the cost 

 of living down and thus prevent labor 

 unions from demanding and getting big 

 wage increases. The experience during 

 the last nine months has destroyed thij 

 favorite argument for price ceilings as 

 thoroughly as the atomic bombs de- 

 stroyed Hiroshima and Nagasaki. 



Under conditions which have pre- 

 vailed since the end of the war and 

 with the original supporting measures 

 gone, a dozen OPA"s could not prevent 

 price increases. Price ceilings alone have 

 never prevented inflation in any coun- 

 try, nor has the absence of such ceilings 

 ever caused inflation anywhere. The 

 quicker the people of this country 

 realize these facts, the better. They 

 should recognize that their interests 

 will be better served by eliminating 

 OPA entirely rather than by encourag- 

 ing the false sense of security which re- 

 sults from the mere illusion of price 

 control. 



For many years economists have 

 known that inflation is caused by exces- 

 sive spending on the part of the gov- 

 ernment. They know that inflation 

 can be prevented only by economy in 

 federal expenditures and by heavy tax- 

 ation. 



If government officials and the 

 American people really want to prevent 

 inflation, they will recognize these facts. 

 They will see to it that federal expendi- 

 tures are immediately reduced to less 

 than the amount being collected in 

 taxes. Common sense and history alike 

 tell us that this is the only way that in- 

 flation can really be prevented. 



If labor really wants to keep living 

 costs low and if industry really wants 

 to maintain the free enterprise system 

 in America, both will get on the job 

 and see how much, not how little, they 

 can produce. 



