Evening star., 1943-05-16
Income Control in
Peucetime
By ODen L. Scott.

for very severe postwar price imitation
On that point, more and more RESPONSE
BILE officials here are agreed.
Potential trouble grows from deep
seated conviction inside Congress and
outside that there is a magic formula
by which the most costly war in history
can be financed without paying for it,
The result is that policies are being fol-
lowed that lead to a prodigious imitation
OF incomes with only a modest-as COM
pared with other nations at war-tax-
ing OF those incomes.
An official estimate is that wages and
salaries OF workers in the United States
Will be inflated to more than $l0O, ,0O0,-
000,0O0 in 1943. That is more than dou-
BILE the prewar total. Yet income taxes
Will siphon of barely 10 per cent Of that
total, With social security taxes taking
another modest portion. Income of
farmers Will amount to $4,000 ,000,O ,O00
Again that total Is more than twice pre-
war.
Income Is pouring out at a fantasti-
cally high rate. At time when the sup
ply OF goods is not equal to demand in
many lines, savings are rising also at
very high rate. In the midst of this de-
Velopment, Congress is forgiving the
greater part OF years tax liability for
1ncome-tax payers. This means that as
much as $4,000, 900, 900 that was liability
owed by taxpayers to the Government is
TO be cancelled. That number Of dollars,
In savings accounts, checking accounts,
tax notes which had been subject to a
first claim OF the tax collector, now will
become the uncontested property OF the
taxpayer. He will be able to do with 1t
whatever he likes.
The consequence of all this is that
dollars are piling up in the hands of in
dividuals while debt is piling up for the
Government. In other countries at war,
including Britain, Canada, Germany, the
governments are paying for the war at
least so per cent by taxes In the United
States the war is being paid for through
taxation to the extent of one-third or
less.
BY the time the war ends it is very
probable that the Federal Government
will owe debt of s2500oO, 100000 or
more, while individuals will hold savings
of at least 100000, 100000 and maybe
half again as much
Then the soldiers will come home.
They will find that In this war, even
more than in the last, those who kept
civilian jobs were rewarded handsomely.
They will find that civilians have their
billions of savings and their stable in
comes. The resulting demand for SOL
dler bonus very probably will be unan-
sWerable and the size of that bonus
with at least 100000 to share it-obv-
ously will dwarf the bonuses that fol-
lowed the last war.
All of this, as many officials now see
1t. adds up to problem of income infla-
ton that is going to be extremely diff
cult to control when the war ends.
During war, Government is able to i'm
pose controls that hide the effects of in
come imitation. Prices are held in check
by threat of punishment for price ceiling
violators. Savings bond campaigns drain
of billions of dollars of income to be
stored up so long as the war lasts, there
by easing somewhat the pressure on
prices.
The real test comes when the war is
ended and when there is an urge on the
part Of the public to return to normal
People at that time will have vast pentup
wants. There will be a desire to buy the
things that could not be bought during
war and there will be the dollars. in
abundance, to do the buying. Returning
soldiers will want all the types of goods
that are needed to put them in shape
as civilians again.
1t could be possible, with firm controls,
to spread this resulting postwar demand
over number of years. This could be
done by maintaining price ceilings as
rigidly, or more rigidly, than during war.
AT the same time there would have to
be rationing of available goods in order
to keep demand orderly, so that the
scramble for goods would not touch off
pressures that would break price ceilings.
However, 1t may be too much to expect
that the American people will be ready
to accept firm price control and ration
ing once the war is ended.
The great urge at that time, both here
and abroad, readily could be to forget
war restraints as quickly as possible
People with money will be itching to
find uses for it. There then will be a
question whether prices can be held in
check and if they can't, a spiral of ris-
ing prices could get under way.
AS things are working out during the
war, this Government is making strong
effort to keep a price imitation from get
ting under way by placing ceilings on
prices themselves. 1t is prepared now to
use broad system of subsidies to hold
down food prices.
The point is, however, that there is
relatively little effort being made to con-
troll the income side of imitation. BY
holding down prices, without drawing off
income through heavy taxation, the Gov
ernment is actually adding to the inf1a-
ton Of incomes and of savings There
is being built up the base for tremendous
pressures that may get loose soon after
the war ends.
1t is this situation that right now is
causing good deal of worry on the part
OF responsible officials They predict
trouble ahead unless Government make
a more determined effort to get incomes
as well as prices under better control.
Berlin Home Front
From the Providence Journal.