Evening star., 1941-07-31
Control of Prices

The Presidents price-control mes
sage to Congress is an excellent sum-
nation of the evils inherent in any
pronounced inflationary movement,
and, furthermore, it plainly indicates
that a serious infationary trend
already is we'll under way. There is
nothing in the message, however,
which leads to the belief that the
administration is prepared to take
the politically difficult steps which
are essential to any adequate and
effective treatment of the problem.
Pending the introduction of spe-
cific legislation embodying the PreSi-
dents broad recommendations, ap-
praisals of the administration price
control plans necessarily must be
tentative. Nevertheless, certain con-
clusions can be drawn from the Ian
guage of the message.
The President told Congress that
any legislation should include au-
thority to establish ceilings for
prices and rents =" That is broad
language, but since the President did
not stress the point, there is good
reason to believe that he was not
asking Congress to bring farm prices,
which have played such an, impor-
tant part in the rise in living costs,
under the regulatory authority. And
If an attempt is to be made to clamp
a lid on the price of farm products,
what then becomes of the adminis-
tration's parity-price program?
The parity program has no rela-
ton to realities. 1t is an arbitrary
and politically inspired attempt to
give the farmer guarantee-at
public eXpense-that the value of his
products in terms of purchasing
power shall not be less than during
a base period" when agriculture en-
joyed its greatest prosperity. 1t has
been but few weeks since Congress
passed and the President approved
legislation intended, in net effect, to
assure the farmer of 100 per cent
parity price. Is this to be aban-
doned, or is the farmer not to share
in the economic sacrifices" which
the President said must be antici
pated and cheerfully borne?
Control of farm prices, however, is
but one phase of the problem. If
they are excluded from the regula-
tory process, it is extremely doubtful
that price control can be effective,
but that is doubt which might per-
sist even if farm products are
brought under a price ceiling. For
any price control effort is apt to
fail unless accompanied by some
adequate method of controlling the
cost factors that directly and in
evitably influence prices.
Wages are perhaps the most i'm
portant single cost factor. But the
President does not ask that they be
brought under direct control. In
stead, he warns of the hardships
which imitation would bring to the
working class and, in effect, appeals
for voluntary Wage-control system.
At best, that would be an exceedingly
frail foundation upon which to erect
a price-control structure, and if it
fails and there is to be no power to
regulate wages, any effort to control
prices in an effective and equitable
manner is almost certainly doomed
to failure.
High, or relatively high, wages also
influence the price level indirectly.
As the President pointed out, every
dollar spent for defense presses
against an already limited supply Of
materials" 1t is equally true that
every dollar of new purchasing power
left in the hands of wage earners
likewise presses against the limited
reserve of materials. The admins
tration has set its face against all
proposals to Siphon off the excess
purchasing power, which competes
with defense buying, by broadening
of the tax base or by some system
of compulsory saving. But the Off
eial frowns directed at these pro-
posals will not check the unfavorable
economic consequences which result
from pushing up buying power in
a restricted market. The problem is
there, and it cannot be ignored
merely because it carries unpleasant
political implications.
1t should be recognized, of course
that there is limit to the authority
which the President can hope to get
from a Congress in which the various
pressure groups will be striving tc
advance the interests of their par
ticular constituents. That, too, is 6
fact which cannot be ignored, ane
this consideration, coupled with tht
far-reaching Importance and com
plexity of the contemplated leglsla
ton, is sufficient reason why Con
rress should make haste slowly II
this matter. If the price control bll