Evening star., 1944-01-30
Controls Needed
When War Ends
By Owen L. Scott.

~ AZ ClCdI IAOW tltdt tIllS COuIlLly, IL
1t wants to. can 60 through the remain
ing war period and the early postwar
period without the violent disturbances
In prices and living costs that came
with the First World War. rather
amazing stability has been maintained
In this part of the economic system
for nearly year.
At the present level of prices and eco
nomic activity, people generally are bet
ter of than ever before in their his
tory. Farmers have net income that
is far above any they ever enjoyed in
the past. The same Is true of industrial
workers. Industry and business have
larger net profits, even in the face of
unexampled taxation and of renego-
tiation, than at any previous time.
The only trouble is that the more in
come person receives the more he
wants. This urge to get rich quick is
about to. reflect itself in an effort in
Congress to bore big loopholes in the
price-control law that expires next June
80. Farm, business and labor groups
already are lining up their strength to
do that Job so that they can have a big
spree before the war ends.
If the country wants wild adventure
in price, as well as income imitation, it
can have one very easily The payofi
then would come in violent postwar
deflation. Or If the country wants sta
bility around this level it can have that,
too, with less of postwar adjustment.
It probably cannot have both.
The real key to the longer range out
look lies in individual savings.
II the present price level Is main
tanned and If the war with Germany
ends late this year and that with Japan
runs through 1945, officials estimate that
individuals in this country will have
stored up about sl36, ,0o0. 100000 in saw
ings. These savings will be spread
widely through the population and
more than 100000. 900, 900 will be in the
form Of currency, bank deposits or Gov
ernment bonds-al very liquid.
That is an extremely large total Of
dollars. 1t will represent an annual
rate Of saving Of about $27 900, 900 900
for five years, or about four times nor
NAL
A resulting choice is this: Price and
rationing controls can be weakened or
removed before American industry Is
fully converted back to the making Of
goods that the public generally wants,
thereby encouraging price-infation
spree, or those controls can be weakened
or removed before American industry is
fully converted back to the making Of
goods that the public generally wants,
thereby encouraging a imitation
spree, or those controls can be main
tanned about as at present during the
war and immediate postwar period to
assure an orderly transition back to
peace.
If the first alternative is taken, saw
ings could be dissipated rapidly in a
grand spree Of buying at rising prices,
followed by the usual headache II the
second alternative is taken, savings can
be used to support high level of in
dustrial activity and Of trade for several
years after the war The choice is a
political choice rather than an economic
one and IL will be taken by Congress
before next June 80. The prospect is
that Congress will try to figure out
formula that would mix some more In
flation with continued, but weakened,
price and ration controls. .-.4.
@a' &An*1& .IU lSG
A complicating political factor is the
fear on the part OF some farm and other
commodity producing groups that the
war will be followed by sharp price de-
clines for their products They want to
get all Of the dollars they can while
the getting is good, with an accom-
panying hope that they can figure out
some way to hold these dollars when
the crack does come. Experience in this
country and in other countries following
the last war appears to show, however,
that the raw material-producing groups
get hurt even more than other groups
when def1ation hits as it inevitably does
following a sharp imitation.
At the same time, there seems to be
general agreement that a period Of
large-scale production and distribution,
with minimum Of unemployment and
maximum Of general well-being for
the population, can be maintained after
the war If the producing interests are
willing to exercise sen-restraint in
price policy during the war.
In the case Of this country, the $780,
000, 900 900 Of savings that will have ac-
cumulated during the war, could be used
to finance an extremely high level of
home building and of durable goods
purchases for number Of years after
the war. The owners Of these savings,
however, would have to be content at
first to take their turn in spending
money. If they all scrambled to spend
at once, before industry was prepared
to fill their needs, there could be a vio-
lent squirt of activity at rising prices
and then collapse.
One major factor that will help this
country make an adjustment back to
peace with minimum of disturbance
will be the fact that the German war
will end before the Japanese. If Con-
gress permits price and ration controls
to be continued during this period, an
important part Of industry can demobi-
lie and reconvert to peacetime produc-
ton while one war is continuing. BY
the time the Japanese war ends, indus
try then couldsbe ready to I'LL many of
the demands Of people with money to
spend. Imitation pressures in that way
could be restrained.
1t is probable that the crucial period
for price and ration controls will come