Evening star., 1950-10-15

advisers within the Government
with whom this reporter has dis
cussed the question. They hold
the view that something like the
OPA of the last war must be set
up and something like the little
steel formula which curbed wage
increases in that war is bound
to come.
These informants of necessity
are anonymous because their ad-
vice is not now being followed by
those at the policy-making level,
to whom they are subordinate.
Answers Differ
There is provision, in the De-
fense Production Act. for price and
wage controls over large segments
of the economy. although the act
itself contains escape clauses for
favored groups. Even so, much of
the economy could, at the discre-
ton of President Truman, be
placed under wage and price con-
trolls. But the administration is
seeking to avoid them, and the
stock answers to questions about if
they are to be imposed are that
the machinery hasn't been set
! up," that the matter is under
study" that we ought first to try
fiscal, credit and debt manage
ment devices" to see if they will do
the job.
These are the answers the in
quiring reporter gets at the policy
level, up to and including Presi-
dent Truman. At what might be
called the thinking, or advisory
level, the answers are quite diff
ferent but unquotable.
There the inquiring reporter
who has the confidence of the ad-
visers is told that price and wage
controls are inevitable if the in
f1ationary spiral is to be stopped.
There he learns that the little
steel formula and price controls
did work in checking the imitation
of the last war, if only after in
f1ation had got off to an impress
sive start.
1t may be worth looking back
to those days to examine the his
tory Of the little steel formula,
which checked the wage spiral,
and the price controls which
checked the cost of living.
Twin. Controls Mandatory.
These were not "hortatory eco
nomics" in the expressive phrase
of one administration adviser who
thinks that is just exactly the
course We have followed in the
current imitation. They were
orders of the Government which
required certain things to be
done rather than the exhortation
for voluntary restraints and the
mild controls so far imposed
which have been Government pol
icy since Korea.
From one of the highly placed
advisers this reporter got two fat
statements, paraphrased here in
summary of a long conversation:
l. The little steel formula
did put lid on imitation.
2. We have got to come to it,
or something very much like it
soon, if this imitation is to be
checked.
He and the others made the
obvious point that you can't con-
troll wages without controlling
prices. The twin controls were
used in the last war, and the pres
ent Defense Production Act makes
it mandatory to use both, if there
are to be any direct controls.
What then was the little steel
formula? The old War Labor
Board formulated it in a decision
applying directly to a wage in
crease sought from four steel
companies by the CIO United
Steel Workers. The WLB decision
in this case came In July, 1912,
and was applied until the end of
the war in wage dispute cases.
Escape Clauses
Briefly, the WLB found that a
tragic race between wages and
prices" had begun in January,
1941. and as a result the cost of
living had gone up by Is per
cent. So it concluded wages
ought to be permitted to rise no
more than Is per cent, taking
as the base period January, 1941,
when the spiral began. It said
that II a group of employees had
received since January, 1941, in
creases amounting to Is per cent
of their wages, it would allow no
further increases.
Even here there were various
escape clauses which did edge
wage rates up. through reclassifi-
cation or upgrading of workers,
promotions, merit increases for
individuals, increases in produc-
tivity, job re-evaluation and such
devices.
But the late Harry A. Mills,
wartime chairman of the National
Labor Relations Board and chair
man of the economics department
at the University of Chicago, in
a recent book of which he was
author, had this to say about
the little steel formula:
Under the Sterilization Act of
October, 1912, it continued as an
effective brake. AS q conse-
quence, increases in the basic wage
structure were held to moderate
proportions, and for many import
ant industries, general increases
were held to little more than Is
per cent"
The Sterilization Act was the
one which put teeth into price
controls, administered by the OPA
With that background, it is H.
Eliminating to get down to the
statistics during the period Wher