Evening star., 1951-05-06

held In check next fall, when the
trolled until they have reached
the higher Of two levels, parity,
or the average of the month be-
fore Korea. The latest parity
index figure, for April Is. is 100,
or 9 per cent above the computed
fair balance between what the
farmer pays for what he buys and
what he gets for what he sells.
But this is an average figure and
most farm products are still below
parity.
Beef and cotton are above
parity and this has enabled Mi
chael v. Disable, director of price
stabilization. to impose the CELL
ings he has on beef and cotton.
Mr.. DiSalle'S actions brought
screams of anguish from the farm
organizations and their spokes-
men in Congress. 1t would be
surprising if an effort were not
made, when the Defense Produc-
ton Act comes up for revision, to
weaken rather than strengthen
the limited powers OPS now has
to control prices Of farm products.
Each Of the pressure groups re-
ferred to has a plausible argument
for its point Of view. Business
generally argues against direct
controls, urging instead such in
direct measures as higher taxes.
economy in non-defense spending
and imposition of stringent credit
regulations. 1t points with pride
to its large profits as necessary to
finance the large expansion in
industrial capacity needed to meet
production goals.
"A Vicious Circle
Labor argues that escalator
clauses would become imperative
If the cost Of living is stabilized
and agriculture defends it's escala-
tor clause-parity-on the ground
that it measures only equal treat
ment for the farmer and cannot
be tampered with if the Nation is
to get the foods and f1bers neces-
Isary in the expanded defense
ECONOMY.
The fact appears to be that each
group seems to be saying that
stabilization is fine-just so long
as the other two are the ones
stabilized.
That is the sort of vicious circle
which has led us to where we are,
with wholesale prices 16.5 per cent
}above the pre-Korea level and the
Consumers Price Index-roughly
the cost of living. 8.4 per cent
higher since Korea. That 16.5
per cent rise in wholesale prices
lis in the pipeline and has to come
out somewhere. Most of it, on the
basis of experience, will be on the
retail level where it will show up
in a higher figure for the Con-
sumers' Price Index, despite the
price ceiling regulations.
Aside from the organized pres
sure groups, which by and large
seem likely to be able to go on
grinding their own special axes.
there are hundreds of thousands
of the silent sufferers from inf1a-
Ition-thoSe on relatively fixed
incomes-the unorganized work.
ers, the marginal farmers. the
small businessmen and marginal
producers, school teachers, those
retired on pensions, those living
on purchased annuities or invest
Iments and hundreds of thousands
of others.
Causes of Imitation
These, more than any other
group, will be the real sufferers
from further inflation-the cam
cerous growth" as Mr.. Wilson and
others put it, which must be cut
out, if it is not to prove fatal.
In its simplest terms what is
happening is that for the next
two or three years, at least, We
plan to take out Of civilian pro-
duction some $50 billion a year.
and with that $50 billion make
guns, airplanes, tanks and the
other instruments of defense.
In doing that. we will be adding
to the purchasing power Of the
people. Civilians will be paid for
making them, but they don't eat
tanks. or build houses with air.
planes, or buy the shoes, the
blankets, the tents and the other
paraphernalia an expanded mill
tary force of 3.5 million men re.
.quire.
Roughly, that $50 billion a year
measures the inf1ationary gap
the difference between what
people have to spend and what
there is available for the civilian
economy to buy. In the absence
of effective controls, direct and
indirect, that $50 billion Of surplus
buying power can be used to bid
up the price of what is available
for the civilian economy. and so
pour gasoline on the flames of in
flation.
Tax Increase Due
It would be encouraging to re.
port that there is powerful senti-
meht in Congress for mopping up
that $50 billion in taxes, in Stricter
credit controls, in some sort Of
forced savings plan; that the peo-
pie realize the dire need for such
action and are prepared to make
the individual decisions to bear
these burdens the lesser Of two
evils. But such a report would
not square with the facts as they
can be observed here.
President Turman has asked
Congress for an additional $40
billion in taxes. The con.
gressional committees are daw-
ding about acting on this, be-
unused, perhaps, by a temporary
budget surplus. The informed