The Western news. [volume] (Libby, Mont.) 1933-current, 1943-05-06
T ellis How
To Prevent
InfIution
Continued from Page II

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duction, create shortages and
BLACK markets. in which the
wealthy get what they want at ex-
orbitant prices, and the poor do
without.
Initiation never existed where
there was an abundant supply Of
goods. The remedy therefore is
to encourage abundant production
After prices are adjusted to meet
costs and encourage production, if
a shortage still exists. the answer
is to reduce the demand to fit the
supply. This can be done in two
ways.
Two Methods of Control
The first way is rationing. 1t is
possible to create a surplus by ra-
tioning, and a surplus is the most
effective medium for controlling
prices. Witness the recent meat
shortage with the "black markets.
In less than a week after rationing
was established, butchers had more
meat than they could sell. They
began cutting prices. They reduced
their orders to wholesalers j and
packers, and rapidly the surplus
is working its way back to the
producer. This is plain economies
and does not require an army of
accountants and shoppers. Produc-
ton will soon fit itself to the de-
mand.
The second way Of reducing de-
mand to fit the supply is to syphon
off excess income by forced saw
ings and income taxes We have 35
billion dollars sin excess income
seeking to buy consumer goods. A
large part of this should be used
to pay taxes to help meet the anor-
nous war bill, and much of the
balance should 60 into savings to
be available for use when the war
is over. So far, our only concern
has been to prevent most people
from paying any of the increased
costs of war dislocations. We must
have the political courage to face
the issue.
1t is only fair to the President to
say that he recognizes the serious
ness of the food shortage. Where
production costs bump into price
ceilings, he proposes to postpone the
day of reckoning by paying subsl-
dies to keep farmers in business.
In this column we have given many
reasons before why subsidies should
not be used, so we will confine our
present comments to three reasons,
only emphasizing the fact that the
other reasons are none the less
valid, although they are not re-
peated.
Reasons For Avoiding Subsidies
First-Farmers have no assurance
that Congress would be short-sight-
ed enough to provide hundreds of
millions in subsidies, and with
out such assurance are not likely
to plan crops which bid fair to
result in loss,
Second-It would be impossible
to man a force big enough to ex-
anime into the millions of cases and
prove losses
Third-Let us assume that prices
are held below cost and farmers are
granted subsidies to keep them in
production: As the war progresses
and costs rise, subsidies must 60
up, and we develop an increasingly
unbalanced price structure. When
peace comes and we have to bal
ance the budget, subsidies would be
one of the first items to be cut out
Then either the farmers would have
to increase prices or 60 out of bus
mess. If we refuse to pay produc
ton costs when we have IS billion
dollars of STIR pitts income, what
chances would there be Of raising
prices when income and employ
ment start down? The answer is
none. Agriculture would face a
collapse worse than that which fol-
lowed the last war. We want none
of it.
The vetoed Bankhead bill att
tempted to force the Administra-
ton to follow the mandate Of the
Price Control Act and abandon its
hopeless price ceiling program. The
issue is whether Congress has the
power to do this. 1t is unfortunate
that the Bankhead bill appears
necessary to secure compliance with
the law 1t is also unfortunate that
the issue Should be raised just
when labor is demanding substan-
tial wage increases, for talk of the
danger of initiation beclouds the
fact that Congress is really insisting
on more effective method Of pre-
venting initiation than is now con-
templated.
A Four-Point Program
In our judgment, rigid price con-
| trolls are causing serious food short