Evening star., 1941-07-06

index of 26G but real wages. which
takes into account the cost of living,
| in those industries never went above
| an index of 120 because the cost of
| goods and services went up so fast
! The real wages of building trades work.
| ers were actually lower during the war
than before, and persons who had rela-
lively fixed incomes, such as school
teachers and Federal employees in the
District of Columbia, actually dropped
| to 80.
Baruch Urges Price Ceiling
Bernard NJ Baruch, who was chair
man of the War Industries Board, mas
estimated that the extra cost of gov
ernmental purchases during the war
was about $4,000 100000, sum which
had to be paid later with debated dol
lars.
Mr.. Baruch now advocates the eStab-
lishment of a universal price ceiling
for all goods, services, rents and wages
below which prices could fiuctuate, but
above which they could not rise. This
has not yet found favor in Washing
ton, where administration officials be-
lieve that prices for individual but i'm
portant materials could be fixed by a
variety of governmental controls. Mr..
Henderson and others argue that ad-
ministrative difficulties would make the
maintenance OF a price ceiling impos-
Sible. This view is shared by the ex-
perts of the Brookings Institution, who
also question the necessity of such dras-
tic measures.
Seleetive Control Urged.
Charles o. Hardy of the Brookings
Institution, in his recent book, War
time Control of Prices" says:
Control of specific prices may be-
come necessary because of shortages of
particular commodities which force their
prices higher than is necessary to call
out the desired expansion of effort. If
imitation is not prevented it may be-
come necessary in few cases for the
Federal Government to intervene as
war emergency measure, because pub
lie utility rates are not advanced rap
idly enough to keep pace with costs.
The proposal for price ceiling would
tie our hands, committing us in ad-
vance to an enormous task of dubious
success and more dubious value, be-
fore We know what the real needs of
the situation will be-"
The Brookings economists advocate
selective and direct control of production
and prices, with coordination of existing
governmental agencies in directing the
defense program. The institution wants
full use of American production capacity
with a goal of higher real wages, rather
than higher dollar wages.
Danger Seen in Wage Boosts.
Harold G. Moulton, Brookings presi-
dent, in pamphlet entitled "Fundamen-
tai Economic Issues in National Defense" I"
declares:
"The greatest single source of infla-
tionary danger at the present juncture
is to be found in increasing wage rates.
Already there is evidence of material
increases in rates of pay in certain
industries and in certain areas These
increases have resulted in part from
competitive bidding by producing estab-
lishments for certain types of labor, and
in part from pressure on the part of
labor organizations.
Moreover, the payment of time and a
half for work beyond the 4O-hour basic
week has been adopted as national
policy. This means So hours of pay for
AZ hn11rc n u-NrH
per cent increase in cost. If output per
hour is not maintained on the longer
week basis, the cost, of course, is pro-
portionately increased
Increases in wage rates may for a
time be absorbed as the result of ex-
panding output and falling unit COST
But as soon as capacity operation is
reached in any line, further wage in
creases necessitate advances in prices If
profits are not to be eliminated And
once prices begin to rise, the demand
for further and compensating - in
creases becomes insistent."
Present Policy Confused.
What is the present national policy?
That is difficult to say, other than that
it is seemingly confused and CONTRA
dictory. The more ardent New Dealers
talk about general 10 per cent increase
in wages. President Roosevelt was first
thought to be against the farm loans Of
IS per cent OF parity prices, and then
signed the bill. This was a price raising,
D.