Evening star., 1941-09-29
Brookings Calls
PriceContro|
Bi||Inadequate
n Per Cent Advance
Loid to Agriculture
And Wage Boosts

years to the advance in agricultural
prices and higher wage rates, a
Brookings Institution report today
said the administration proposed
price control legislation is in
adequate and that farm products
will have to come down and wages
be subjected to control if general
price rise is to be averted.
These views were embodied in a
study of the effects of the defense
program on prices, wages and profits
by DR.. Harold G. Moulton, presi-
dent of the organization, and Meyer
Jacobstein. staff member. They
commented that Government work.
ers are among those who have suf-
fered principally from mounting
living costs.
The authors of the study warned
that the full effect of the rise in
agricultural prices has not yet been
felt. When food costs go still
higher, the report said. there will
be further insistent demands for
high wages and salaries in every
llClu VI lllQuSll y.
The report said that the increases
in agricultural prices, which amount
ed to one-third in the past fiscal
year, are due primarily to Gov
ernment policies and not to condi-
tions of supply and demand.
Effect is Cumulative.
The effect of these policies Is
cumulative, and is already result
ing in an upward spiral of costs
and prices with disastrous effects
upon large segments of the popula-
ton"
The report stated that farm
product prices have gone up be-
cause of Government price guaran-
tees-made effective by loans on
some crops-and by purchases by
the Government under the lease
lend program. The Government
policy has led to speculation, it
was charged.
To uphold the statement that the
rise in the price of farm products
was artifically stimulated. the report
pointed out that relatively small
increases had been noted in the
price of other important commodi-
ties, such as metal and metal prod
uctS. which lie at the heart of the
defense demands.
The second factor in the price rise
has been the increase in the hourly
wage rates of labor, the report said,
adding that an important factor
here has been the policy of the Ma
tional Mediation Board in approv-
ing wage increases in most cases
that have come before 1t.
During the defense period, wage
costs-already advanced by 44-hour-
week legislation with time and half
for overtime-have been further in
creased by various factors"
These factors include shortages of
skilled labor and the tendency of
employers to increase wages during
good times The report said that
manufacturing profits have risen
approximately is per cent, but de-
MED that there had been any prof
iteering.
The expansion Of production and
the rise in prices that have accom-
panied the progress of the defense
have had different effects
on different groups of income re-
cipients. some gaining while others
lost, the report says. The real in
come of farmers dollar income with
allowance for increases in living
COSTS has increased about 80 per
cent. Real wages in manufacturing
are up about % per cent Manu-
featuring profits have risen approx
mately l6 per cent.
Other groups, whose incomes have
not increased in proportion to living
costs. have suffered, it continues.
These include unorganized groups of
laborers in retail trades, small busi-
ness enterprises, farm labor, some
5 100000 employees of Federal, State
and local governments, and large
numbers of professional and other
salaried groups. The many people
on pensions an annuities
have lost, as we'll as those who have
accumulated insurance or other saw
ings funds To these may be added
a largfe part of the 10000 men
now in the armed forces. Finally.
many have sustained losses in real
income as result of the increase
in taxes, which has been felt par
ticularly by persons on fixed salary,
1t is ampliied.
Release of Stored Crops Argued.
Reduction of prices of important
agricultural products, the authors
said, was the most important single
step that might be taken to avert
a further general price spiraling.
This, they added, could readily be
done by releasing to the market a
portion of the crops now stored in
Government warehouses"
In any case, the study continued,
farmers could expect some additional
increase in income as a result of the
Governments plan to expand farm
On the subject of wages, the
authors said:
so long as wage rates remain
uncontrolled, the most that can be
expected in the control of the prices
OF industrial products generally is
to restrain somewhat the rate of
price advance. Recent improve
ments in the position of labor will
be Safeguarded If We check the
forces responsible for rising living
costs. Labor as a whole may in
any case expect some further ex-
pansion of earnings as a result of
increasing hours of work as the de-
fense needs become more intense.
- Business profits might show
some increase in consequence of
stabilized prices of raw materials
and wages, coupled with expanding
output. The realization of addi-
tional gains by stockholders can
readily be prevented by means of
the tax machinery"
Under the price control legisla-
tion before Congress, the study de-
clared, all the price administrator
can do is to try to prevent excessive
increases in manufacturing and