Evening star., 1948-07-23
Initiation Third Round
Inevitably Must Lead
To Federal Controls
Administration Must Act
In Jonuury to Prevent
Spiral Going Higher
BY Daud laurence

Spiral Going Higher
BY David Laurence
The third round" of imitation ;s
here. After the labor-union leaders
insisted on third round of wage
increases, business managements
naturally began increasing their
prices to Offset the increased ex-
pense.
The present infiation-or boom"
as some people euphemistically de-
scribe 1t-must inevitably lead to
some forrp Of Government controls.
The controls will never come under
Democratic administration be-
cause President Truman is too an
xious to get the labor vote and so
will not favor wage controls.
The Republican administration
next January will find itself COM
PEELED to apply controls-if only for
the purpose of keeping the spiral
from going higher.
The present inf1ationary trend is
the direct result of Government ac-
tion-some Of it unavoidable and
some OF 1t avoidable. With the Gov
ernment financing the purchases
OF goods In $1,000, ,00O,0 inter-
national aid program, 1t was inevi-
table that scarcities of goods would
be intensified and prices would be
bid up.
Likewise, with a $4,000 900 900
armament program, the demand for
materials and manpower has Gre
ated'shortages that also send prices
upward.
Demand for Goods. Services.
The Federal Government is
spending in the neighborhood of
S40,000.000,000 year which means
tremendous demand for goods
and services. The situation in
Europe has brought on arma-
ment spending and the interna-
tional aid program. Nobody in
either political party here can be
blamed for either problem.
America has the biggest crops
In history, but food is still high
in cost because the demand is un-
precedented. The Truman admin
istration spokesmen have misled the
public by trying to connect the
prices charged in steel, for instance,
with the cost of living There is
no connection between the making
of industrial prices and the making
of food prices. There is, however,
direct connection between in
creased wages and increased pur-
chasing power and the demand for
more and more farm products.
The Government, moreover, is
pledged to support farm product
prices so there is little likelihood
that these will reach a natural level
even when supply does start bal
ancing demand
AS long as the President claims
credit politically for the high farm
income and for the high wages and
attempts to derive benefit at the
polls from it, there is little chance
to do anything about imitation. The
message to be delivered next week
by the President will achieve little
attention in a legislative way for
the reason that it will be regarded
as palpably political. Whatever
chance there was for an objective
handling of the economic situation
was forfeited by the Presidents
blunder in using the stage of a
political convention as the place to
announce call for an extra ses-
sion. The Republicans will play
politics, too, this summer and the
imitation will continue at least un-
TIL the legislative and executive
branches of the Government are in
the hands of the same political
party. which may be confidently ex-
pected for next January.
Some Will Divide Party.
The Republican Party then will
be divided on the issue of controls.
The advocates of "let nature take
It's course" will fight hard against
any more controls but the same
school of thought is likewise credit
ed sometimes with the harsh COM
ment that depression might be a
good thing
If Gov. Dewey is elected. it is not
likely that he will allow the infa-
tionary boom to run its course, for
the break, when it does come, could
be so severe as to make him one
term President He must avoid a
major depression. This means that,
while he may not have in mind any
such program today, he will find
himself confronted with the neces-
sity of advocating some form of
wage and price controls-that is,
holding of the line at Levels then
existing. If the result could be
obtained by voluntary cooperation,
1t would be even more desirable
But the voluntary cooperation"
urged early this year just before the
third round of wage increases and
the attempts of some big companies
to hold the price line as a means
of warding off the wage increases
came to naught.
The moment the Federal Govern
ment enlarged its huge spending
program, wages rose and prices rose.
Somewhere and somehow this trend
has to be reversed. Maybe the Gov
ernment may be compelled under a
Republican administration to do
that which President Truman re-
fuses to do now-namely, to treat
wage control and price control on
the same basis.
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