Evening star., 1950-10-01

CI1dlA HAL VI GAAC oOdAo VI SOtNA k4s
There is ample statistical prooi
fortunately, however, the "cancere
and is being treated by the Tru-'
man administration, not with
radical surgery, but with salveS
and ointmentS.
Congress, before rushing back to
the hustings, passed a Defense
Production Act giving to President
Truman very considerable powers
to invoke economic controls, and
a first installment tax bill de-
signed to raise an additional SAT-
billion after it has been in effect a
full year.
An Election Approaching
Both pieces of legislation were
full of loopholes to soften their
impact on large segments of the
economy. The Defense Production
Act-the control legislation-first
enjoins the President to encourage
voluntary" action to stabilize
wages, and prices, and If that
doesn't work to put ceilings on
prices and wages, selectively at
first, and then, if he should find it
necessary to put price ceilings on
a substantial part of the economy,
to put ceilings on everything, with
the exceptions and qualifications
set out in the bill.
The bill increasing taxes SAT-
billion looks small against the $17.2
billion supplementary appropria-
ton. mostly for military purposes,
that Congress passed about the
same time, carefully omitting
from the bill an excess tax on
war profits. and omitting also a
withholding tax on stock divi-
dends which had been intended
chiefly to discover dividend in
come not reported on income tax
returns.
All this could not be unrelated
to the circumstance that there is
an election coming up in Novem-
ber. Economic controls and high
taxes are not especially popular,
even though they may be neces-
sary evils.
Such controls as we have seen so
far were imposed first on Govern
ment sponsored housing, by tight
ening the terms on which the FILA
and the Veterans Administration
would insure housing loans. This
was done by order of President
Truman even before the Defense
Production Act was passed.
Then the Federal Reserve Board
increased slightly it's rediscount
rate, a move. intended to require
bankers to hold more Of their as
sets in cash reserves and so re-
strict the amount they would be
able to lend to their customers.
Wage-Price Pattern
. The Federal Reserve Board also
reimpoSed a modified form of
World War IFS Regulation w,
which requires larger down pay
ments and shorter repayment pc
riods for installment sales of auto
mobiles, refrigerators and other
household equipment.
There followed, from the
National Production Authority op-
Grating in the Commerce Depart
ment, an order to industry pro-
hibiting a business to accumulate
inventories beyond normal re-
quirements.
Meantime. it is Illuminating to
look at what has been happen
ing to wages and prices.
There are three principal in
dexes Of prices maintained by the
Bureau Of Labor Statistics-on
basic commodities, on wholesale
transactions and the consumers
price index which measures,
roughly, the cost of living.
The commodity price index is
the most sensitive to price move
ments. What happens. to, 1t is
reflected later in the wholesale
price index, and the wholesale
price index still later affects the
consumers price index.
The commodity index, at mid
September. was 25 per cent higher
than it had been June Is, when
Korea was invaded, and 35 per
cent higher than 1t had been in
March.
The wholesale price index, by
mid-September, had risen a little
more than per cent since Korea.
Latest available figure for the
consumers price index is for mid
August, when it had risen some
thing less than per cent, since
Korea. The current rise in this
index started in April, however,
and the increase since the first
of the year Is a little under 4
per cent.
Some Other Signs
In the meantime, organized
labor has been moving for wage
increases in advance of the expira-
ton date of contracts or the dates
on which they may reopen the
wage provisions.
In the automobile and electrical
manufacturing industries, these
moves have been generally sue
cessful and the big CIO Steelwork-
erS' Union has asked the COM
panies to advance to October 8
the date for reopening wage dis
cussions, instead of the November
l date fixed in the contract.
Corporation profits have not
been tagging, either. In the Sec
ond quarter of this year they were
at an annual rate, before taxes,
of $35 billion. an all-time high.
Last year they were $27.6 billion
and the peak year was the 1948