Evening star., 1941-03-23
Baruch Urges Wartime Controls
Fnancier Calls for Blanket Priories and Ceiling on Prices
By RAYMOND Brandt

defense program during the first year
may cost s2.5O0 100000 more than the
original estimates.
Likewise, control of imitation will pre-
vent the usual unfortunate consequences
OF war, the prenomenon of the Govern
ment piling up a national debt in in
f1ated dollars which has to be serviced
and repaid in more valuable debated
currency after the inevitable postwar
def1ation
The evil of imitation in lifting the
cost of living, dislocating the wage
price relationship, and thus causing
labor unrest and strikes, is another
Justification for the price ceiling as
method of expediting industrial mobiliza-
ton. Labor cannot be blamed for de-
manding higher wages if it finds itself
being squeezed by the rising cost of the
necessities of life and at the same time
sees industry receiving inflated profits,
of which it does not feel it is getting
a fair share"
o. P. M and Advisory Commission
officials declare that this situation has
not yet been reached and there is some
doubt whether it will be reached soon
They also point out that such sweeping
control would require legislation, unless
this country were actually at war, so
the President could assert his wide but
indefinite powers as commander in chief.
Freezing of prices, they add, may have
great popular appeal, but they en-
ole
a ceiling for wages, rents and other
forms of remuneration. The last
named they interpret to include in
terests and profits. Legislation to cover
so many groups, they predict. would
encounter great difficulties in Congress.
Additional Capacity Needed.
The C. I. O. has already protested
against the comparatively few priorities
so far imposed The recent issue Of
the C. I. o. Economic Outlook protested
against priorities on aluminium, which it
claimed were throwing out of work many
employed in the production of nom
defense aluminium goods. The Outlook
said:
"Of course, the way to prevent pri-
critics is to provide sufficient capacity
to meet all demands No priorities
should be instituted and no need for
priorities should be anticipated without
taking steps Immediately to wipe out
the need for the restrictions by making
additional capacity available"
The Government, of course, is doing
its utmost to create additional aluminium
capacity, but in the meantime priorities
are being enforced for national defense
AS a necessary adjunct to the coupled
priorities system and the price ceiling,
Mr.. Baruch would have the Government
strictly control the supply of money by
Liberty Bond campaigns and heavier
taxation.
IF production is at an annual rate of
s85 900. 100000" he writes, $4,000, 900 900
of this may represent munitions. The
public, therefore. is left only SIS 900 ,O0O.-
900 of consumer goods to buy with its
s85 900 900 900 of purchasing power. The
result is inevitably rising prices unless
some restraints are exercised"
fSNOFS heavier taxes.
Mr. Baluch is modes. in his estimates
on defense expenditures. With the
lease-lend and later appropriations they
may reach 20 billions this year, and the
situation concerning consumer goods
may be much worse than he predicts.
President Roosevelt, while refusing
to go into details, has said that the
housewives probably will have to use
plastic cooking utensils instead of the
customary aluminium products. Mr..
Baruch points out that .styles were
standardized during the last war and
that many non-essential articles virtu-
ally disappeared from the market.
The United States News, in SYM
postum on taxes last week, asked Mr..
Barucn whether he favored heavier
sales taxes, heavier taxes on low in
comes or much more stringent excess
profits tax on corporations. He replied:
MY answer is: All"
This carried out his idea that the
Government in financing the defense
program should conduct its operations
with an eye to preventing an initiation
of the money supply, which would make
administration of prices and priorities
more difficult.
.'All effort he writes in the Harvard
Business Review, should be made to
raise the necessary funds first through
taxation, then by borrowing out of saw
ings whether through bonds sold to the
public or from savings banks and in
surance companies, and only as last
resort by inflationary borrowing from
commercial banks"