Evening star., 1941-07-13
Growing Worry
Seen in Efforts
To Curb Prices
Decrease in Supplies
And Rising Incomes
Intensity Problem
BY FRANK MacMILLEN,
Associated Press Business Writer.

NEW YORK, July l2-Prlces,
the always latent uncertainty IN
this changeover from peace TO a
war-geared economy, thrust them
selves boldly into the limelght this
week and businessmen appeared
more concerned about this aspect
of their affairs than at any time
since the giant defense effort got
under way.
These were some of the things
that brought the price ques-
ton, with its overtones of a pos
sible war-period runaway, 10 the
fore in the minds of businessmen
and economists:
/. The stock market had one of
the Sharpest upthrusts Of the war
period. even though it appeared to
have burned itself out quickly.
2. Leon Henderson. Government
price car, sought additional pow
ers from Congress TO strengthen
his control operations.
g. Competent Washington OBJ
servers reported increasing reluc-
tance apparent in Congress either
to tax away the growing individual
spending power coming from bur-
geoning pay rolls or 10 hold down
such important price sectors as
farm commodities and wages.
Use Simpler Terms.
While economists talked of what
may lie ahead as imitation" or a
decrease in the relative value OF
money" businessmen saw it moe
simply in terms of supply and de-
mand.
To business planners an "infa-
ton period is simply one in which
the supply Of spendable money
whether II happens TO be cash or
bank deposits (check moneyJ-is
increasing more rapidly than the
supply of goods for which people
want to spend.
But this is what has happened
so far. Wholesale farm and indus
trial commodities on the average
have been boosted about 25 per cent
in the past year, food and other
common retail items somewhere be-
tween and 10 per cent.
With the gigantic gearing-up for
the greatest production Job in his
tory which has gone on the past
year, most price experts think this
is not a bad record.
The thing that has them worried,
an important group of them pri-
vately said this week, is-what
comes next?
Supplies Restricted.
There simply will not be the ma
terlal or the labor, beyond defense
needs. they point out. TO turn out
the quantity of automobiles. wash
ing machines. pots and pans and
thousand things which the aver
age man buys in the quantity 10
which We have been accustomed.
Meantime millions of families,
thanks TO rising wage rates. over
time and new jobs. will have more
money to spend and will want more
kinds of goods. probably, than at
any time in the history of the
country.
4AioN. blSl1lNoo 4llCll SdNs IL NIlr
makings of a classic imitation situa-
| ton: more money. a buying mood"
public and too few of the things
/ they want to buy.
One of the possible approaches to
this problem was outlined recently
/ by Henderson and Donald M Nell
son. of the Office production man
sgement, in the article in the
Harvard Business Review, when
they said:
We must strike at rising prices
by limiting the varieties of goods
in favor of larger quantities of
limited varieties
Defense officials are already en-
gagged in setting up machinery with
in key industries to achieve this re-
suit. The Government has been call
ing this policy "Simplification" but
business men have long referred TO
it as Standardization.
Other Outlets Sought
That Government defense people
are thinking along other novel
lines, in addition to price fixing by
fiat. was indicated by the further
suggestion by Henderson and Nell
son that we must perhaps even
devise and promote ways in which
people may spend money without
adversely affecting the defense ef-
fort and the national economy"
Business Week, usually a fairly
accurate reflector of industrial and
financial thinking, said this in its
current issue:
IN a war economy. the Army,
Navy and air corps must have what
they want regardless of price. So
the profit motive. which keeps down
prices when they tend to go too
high, fails to act as an equilibrator
in market in which the military
forces are the major buyers. That's
why regulation is necessary. regard
less of how heterodox it may seem,
economically"
And noting that official efforts TO
control prices so far have been
stacked to favor the farmer and the
worker. while controlling the re-
turn of the manufacturer, the maga-
zine concludes:
You cannot have successful
price control system which is half
controlled and half free to go where