Evening star., 1941-01-19
Slow Price Rise
Carries Threat
For Consumer
Buruch Prediction
Of Federal Action
Draws Attention
BY FRANK NacNILLES,

dollar defense expenditures and the
lease lend plan of aid to Britain
creeping rise in prices has been go
ing on which has attracted little of
the average mans attention as yet.
But it may be more important 10
him in the long run-because he
will feel it in the pocketbook nerve
than a round dozen Of front
page raids along the North African
Coast
Economically, war or "all-out" de-
fense, is first matter Of prodlclnG
the machines Of modern Conflic-.
But that. in its turn IS mex ~icab'T
bound up with the question Of price.
and how they behave or can +
made to behave
The week broIgh. forth rro-
nOrncCnent on prOd"ctlOn a-.1
prices from the man w had 80
g"cqter' e'-roricrco v..N trnm il
the last war, Bernard Vi. h.
cnairr0n q he war industries
board in 1917-l8
Favors Prioritics.
Baruch indicated the backbone
OF an adequate production rror~3nl
in Wartime economy was a raid
system Of giving prior claim on mn,
material and facilities to the war
industries.
But his statement contained this
significant passage:
"As soon as enforced priOrities are
put into effect. there mus BE- 4
fixing Of prices They can struggle
ard use words. kick and scream,
but that will corlc. desnite what an"
authority SAYS, when there ar -C2l
shortages.
Normal tho ebb AID H7w Ct
surnlv and C~r-7-d ~-.l - r.
in r-er tore i 70 mn -7~ ~--No'-'
. end demand - v'c':. al t',o c.
eminent must 6. D~ico~ 80 o~[cr
OF ccnsuroHticn Gnd r7..rI every
tn rg"
america i not At war. but all
to Britain and a gigantic rearn,9-
mert proCram at home have 9l
. influence on prices and production
that is in some respects very SINH
| lar TO the actual state OF conflict.
I What has happened to prices
so far?
Index Up Per Cent.
The broadest measure available
is the Governments Bureau OF
Labor Statistics index. which covers
wholesale commodities. From All
gust, 1899. the month before the
outbreak Of the war abroad, until
the second week in January. this
year. this measure was moved uD
about I per cent.
I The Associated Press average Ct
80 cash commodities at whOlssa-o.
weighted to take account Of thel"
importance in the general econon-1
) picture had il fifth COrseCutl- p
rise this WeoE, and IN the five wee
has advanced nearly per Ger
II is al TIE highest level sing
November. 1857.
Practically all students Of price
have warned that experiences n
this field in the last war are not
f necessarily guides to events nov.
/ But it is at least an interesting CO.
/ incidence that in the correspond
ing period after the outbreak of the
last war. from August, 1914 to De-
Cember. 1915. the Bureau Of Labor
Statistics index also rose about 7
per cent.
That the boost in prices so far
is a wartime imitation" with the
supply Of spendable money far in
excess of what goods industry can
| turn out to absorb it. seems un-
likely Too many kinds of factories
are still far from maximum ca
pacity, much labor is still unem-
ployed
"Bottlenecks" Blamed.
1t seems far more likely that not
general scarcity. but "bottlene-ks"
in some lines. strong urge Of
producers of civilian products TO
beat possible military priorities and
an occasional instance of retailers
taking advantage Of the fatter pay
envelopes of their customers, are
in the background.
Washington efforts to keep the
many billions of defense money
from ballooning the general price
level have so far been confined
mostly to pressure on producers or
sellers of individual commodities
now in great demand to hold prices
down.
This week saw a large railroad
offer scrap steel for sale at SO a
ton at Pittsburgh. Only a few davs
before, when scrap was S24 a ton.
Leon Henderson. in charge of prices
for the Defense Commission. he'd
suggested that $50 was an annie
price. That is the informal pres
sure" method at work
The Government still has in re-
serve, however, important levers on
the price structure other than out
right flXation of values.
One of the most important is
taxation, especially on individuals.
BY keeping the spare cash of the
population down, the power of the
factory worker and the salaried
man to compete against the defense
program for things each requires,
such as automobiles, clothing, gaso-
line and the like. is sharply reduced
and prices tend to stay put.
Credit Control Cited.
Another Government big stick"
is control of money and credit
through the Federal Reserve Svs-
tenn and the Federal lending agen-
cies. By making credit plentiful
for defense industries, difficult for
individuals and on-defense indus
tries, the defense industries are bet
ter able to get the materials they
need without Turing producers with
high prices.
For the time being, at least, most
economists believe these controls
are sufficient Nevertheless. Ba-
ruch's solution of the price prob
lem, in which he apparently as
sumed actual war conditions, stirred
considerable interest
He advocated ceiling" on prices,
setting the quotations of some ar
bitrary date before the war, when
conditions were fairly normal, as
maximum for the prices Of all
Soyte of Coods and sarvicec