Evening star., 1942-09-20
Initiation Control q Fuctor
in Mobilization
By OBen L. Scott.

Roosevelt Is forced to demand power to
place farm prices and wages of workers
under more firm control The figures
disclose what is meant when officials talk
about imitation
Mr.. Roosevelt and his price controller.
Leon Henderson, have cried imitation so
often whxl there was no apparent infla-
ton that the country no longer jumps at
the word. Now that the real thing act
ually is in the works, it takes White
House threat to induce Congress even to
think about imitation controls.
The developing situation itself is quite
simple. On the one hand, the United
States IS entering a period that a few
years back would have constituted New
Dealers dream This is to be a period
OF immense national income 1t is eSti-
mated that in 1943. even after paying
new high taxes, the income in the
hands of individuals, available for spend
ing, will be at least Sis, 900 900 900. That
Is to be true if farm prices and workers
wages are held at or near present levels.
On the other hand. however, this coun-
try is entering period when the volume
of goods and services that can be pur-
chased with money is going to start to
shrink. The estimate is that next wear.
these goods and services, at present
prices. viii be available in volume no
greater than that represented by s67.-
000000,000. This still is a boom level
measured by pre-war standards, but it
is level lower than in 1912.
The result simply is that people are
going to have available for spending not
far from $50,000,0O0 900 more income
than they are going to be able to find
goods on which to spend that money.
They are going to save part of those
billions so that they won't all be out
looking for goods and services, but there
will be enough surplus income to create
highly dangerous situation.
President Roosevelt is told that he
must act to prevent the volume of sur
plus income from growing even larger
II he expects to avoid a runaway price
imitation. He is told, and apparently is
convinced, that it is to be a difficult
problem to keep the income in sight from
running wild. The reason why is that
individuals with income to spend are
going to try either to improve their
standard of living by buying more goods,
now that they have money to spend in
abundance, or they are going to try to
prevent an established living standard
from declining.
nf i1;r
at time when the volume of available
goods is diminishing, there results a
scramble for goods that creates a strong
pressure for price rises.
Other nations at war have faced that
same problem and, to date, have mas
tered it. The formula that they have
used with some success is the tormula
that is to be tried here either with or
without the full approval of Congress.
That formula is as follows:
First, and basically, there is to be
control over food prices. This control is
essential because rising prices CT food,
more than any other single factor, irflu-
ence workers to demand higher wage
rates. In England food prices are held
in line by government subsidies, some
direct and some indirect in the form of
lend-lease food supplies from the United
States. Germany, too, uses subsidies
mixed in with rigid price ceilings.
Next, there is to be control over wage
rates. The greatest source of surplus
income in the United States comes from
rising wage payments to workers. Total
wage and salary payments in 1912 will
be about 65 per cent higher than they
were before the war and, even after
ad iust1ng for higher living costs. they
will be 40 per cent higher. Germany
imposes ceilings on wages, but Britain
does not. British labor, however, has
showed restraint in wage demands.
After that there is a policy of drastic
taxation. Britain and Germany are pay
ing about half Of their war costs by
taxation and thereby relieving much OF
the imitation pressure. The United States,
even with the tax bill that is planned,
will be meeting little more than one
quarter of its war costs by taxing. The
result is to be a greater imitation control
problem in the United States than In the
other major nations at war.
Finally, the imitation control formula
calls for rationing of available goods.
Rationing is very widely used in all other
nations at war In Germany, consumers
are rationed on nearly all goods. In
England it is reported that nearly two
thirds of all retail trade now is trans
acted on the basis of ration coupons, with
money a secondary factor.
The United States is to be forced to
undertake the rationing of a great list
volume of these necessities available for
purchase is going to be far smaller than
the volume of demand from consumers.
To insure fairness of distribution and to
prevent a mad scramble on the part of
consumers to get hold of these goods,
rationing becomes inevitable. This means
that Government will tend more and
buy with his money and to limit the
amount of his purchases.
AS rationing extends money comes to
have less Importance and less meaning.
Coupons then become the objects of
greatest value and meaning. Money tends
to become overabundant and of limited
usefulness, since it cannot readily be
translated into goods and services, which
alone make up living standards. Ration
coupons, on the other hand, represent a
call upon actual goods and are sought
after above all else.
1t is going to be discovered, as war
goes on, that money will buy less and
less. If this is not the case, then the
tod OF l,a LII