Evening star., 1950-07-25
Reserve Board
on Need
For rControIs
Consumer Prices Now
Highest Except for
Brief 1948 Peak
By J. A. O'Leury


than at any other time except for
short period" in 1948, the Board
of Governors of the Federal Re-
serve System reported to Congress
today.
The board warned that unless
prompt action is taken on controls,
"the country will face serious prob
lens of gray markets and spiraling
prices. Not only would this upset
our economic balance but it would
add to the difficulty in procuring
manpower and materials necessary
for the military effort"
Secretary of the Treasury Sny-
der later told a news conference he
is "sure" President Truman will
ask Congress this week to raise in
divdual and corporation taxes.
The Reserve Board joined Sec
retary of Commerce Sawyer in
urging the Senate Banking Com
mittee to lose no time in passing
the production and credit control
bill. The Federal Reserve officials
reported that in the week ending
July Is department store sales
rose "a per cent above a year ago,
with increases ranging from IL
per cent in the Richmond district,
which includes Washington, to 80
per cent in the Dallas district.
Sales of automobiles and houses
have risen to record levels" they
said.
Tax Boost Gains Ground.
AT the same time, the move for
an early boost in taxes as another
means OF curbing initiation in this
emergency period was gaining
ground at the Capitol.
Secretary Sawyer testified the
t1ve-point pending control bill is a
compromise between full indus
trial mobilization and reliance on
voluntary methods, as advocated
by some Republicans.
Mr.. Sawyer said the pending bill
is an effort to meet the present
adequately, but he added:
Il feel I should say to the COM
mittee, however, that even though
the powers proposed in this bill
are strong. it is my opinion they
will not suffice if there is q great
expansion of military expendi-
lures beyond the programs con-
templated at the present time.
Prompt and vigorous action under
this bill will do much to prevent
the necessity for additional
powers"
Started Before Korea Fighting.
The Federal Reserve Board,
which regulates the flow of cur
rency and credit, told the commit.
tee that "even before the attack
by the Communist North Koreans
on June Is, prices were rising and
we were in a potentially inf1a-
tionary situation"
Because of developments of the
past few weeks, it is imperative
that steps be taken to reduce or
defer civilian demands and to les
sen infiationary pressures," the
board went on.
THE state of public psychology
has already stimulated consumer
buying and the accumulation of
business inventories.
Backing up testimony yesterday
by w. Stuart Symington, chair.
man of the National Security Re.
sources Board. the Federal Re.
serve governors stated:
Prices of % basic commodities ,
which had risen Z per cent from
January 8 to June %, advanced
sharply after the invasion Of
South Korea-10 per cent in one
month. The all-commodity in
dex of wholesale prices, which had
risen 4 per cent by June 20, has
since jumped 3 per cent further.
Rise Began in March.
Consumer prices began to rise in
March and recently the advance
has been further accelerated. Con-
sumner prices are now higher than
at any other time, except for a
short period in the latter part
of 1948.
Senator Robertson, Democrat,
of Virginia suggested at the start
of today's hearings that the more
urgent sections of the control
bill be lifted out and passed i'm
mediately while the committee
(See CONTROLS, Page A-4.)
r., ~,TIonnor IrLol