Evening star., 1943-11-28
Pressure Groups
May Pay Later
BIZ ODen l.. Scott.

occur during this war. officials respon-
sible for controlling prices are confident
of that fact in spite of efforts by Con-
gress to take off the price and wage lid.
The danger of runaway prices may be
more real after the war, when the public,
its pockets filled with cash. will he
tempted to go on buying spree before
industry is ready to turn out in Zig
volume those peacetime products that
will be in demand. 1t is in this period
that public pressure may force an END to
rationing and price controls.
So long as war continues the Govern
ment will be armed with emergency
powers that can be used to keep prices
under reasonable measure of co-t-cl.
| That is true even if Congress succecd5 IN
| preventing the use of subsidies to stc'---
| lie food prices, and even if Genres
| should succeed in forcing larger W.
| increases for some politically pcv-c-.''l
| groups of workers that the White t1ol-e
| favors.
| An additional living cost increase Of
| about per cent and a general W ?
| increase of about per cent might reevs
from present political maneuvers. Tir.5
increase, however, probably would be
followed by another period of relative
| stability BY that time the German
part of this war may be ending, thereby
introducing enough uncertainties to
check, at least temporarily, the pressures
working for imitation.
All of this is important to keen in
| 10 pf
certainty. 1t also is important to keep in
mind that there are two kinds of infa-
ton involved in the wartime situation.
The first type of imitation is income
imitation This type is not very well
controlled. Congress has baked at taxes
that would take away any large propor-
tion of the greatly increased income
going to persons earning under $1,000
| year. The administration has given
| ground, under pressure from organized
workers, for higher rates of pay. Aver
age weekly income of factory workers is
about 30 per cent higher than it was
before the war. Net cash income Of
farmers, after deducting taxes and ex-
penses, is about three times as large as
in 1899.
* -
The second type of imitation is price
imitation. Here the control has been
better. Inflated incomes, reacting
against the supply of consumers goods,
tend to force price imitation. Through
use of rationing and through use of
price controls the Government has held
most prices within range far narrower
than in the last war. So long as ration
ing and price-control powers remain
| the Government should be able to hold
the rise in prices to reasonably narrow
range.
1t is when the controls are removed
that the real imitation danger will ap-
pear. The degree of that danger will
depend upon two factors. 1t will depend
first of all upon the behavior of the
masses Of people with more money in
their bank accounts and in their pockets
than they ever before possessed. If t.2e~c
people were to rush to spend that money
in the quickest possible time. IT,
could touch off a runaway stt,..-t--!.
The degree of danger will dep =, -,
the second place, upon the speed " =,
which industry can shift bacl; t.
duction of civilian goods to s.
the pentup demands of people y,
money to spend. This second f.
could be dealt with if the CO.
would accept continuance of wa.-ti--e
controls until industry could reccl-
vert to peacetime production.
Whether or not the United States
undergoes a serious price imitation de-
pends primarily upon the attitude of
the people themselves It obviously can
have an imitation spree after the war,
II 1t wants one. On the other hand,
1t can have an orderly transition and
a rather extended period of prosperity.
If it wants to keep under control the
spending of the savings that are being
built up in wartime
What the choice will be in the post-
war period cannot now be foretold with
any certainty In the past, the Amer
lean puohc has shown a penchant for
OVERRIDING both imitation and defation.
History could repeat.
Officials, however, are agreed. that
there is not much prospect that values
Will be wiped out in any postwar in
Hation. 1t is regarded as highly i'm.
probable that there could develop In
this country anything comparable to
the postwar imitation in Europe that
followed the last war; It is more prob
able that prices might take an upward
squirt and then crack at the expense
OF those population groups that now
are doing most to force an increased
imitation of incomes.
Inc farm and labor groups TODAY ara
engaged in an effort to improve their
own positions at the expense of the
unorganlzed middle classes. With the
AID OF Congress, they are succeeding
IN this effort at least temporarily. The
Dig point, however, is that if the farm
ana labor groups succeed in initiating
their incomes in this period and then
use their greater income to force post
war price imitation, they can make in
eVltabie later deflation that would
hurt them far worse than it would hurt
the middle class groups that now are
being squeezed.
A little self-restraint in this period
can save many headaches in the post
war period.
Precedent to Follow