Evening star. [volume] (Washington, D.C.) 1854-1972, 1956-09-20


Lost OF three articles.
ton had reacted to the march
of prices to record high.
President Eisenhower voiced
concern. and his administration
lined UP behind Federal Reserve
Board efforts to hold the new,
higher price line.
There is speculation that, un-
less the unprecedented boom in
Industrial expansion slackens of
soon, the board may move again
this fall to make credit tighter
and borrowing more costly.
Such governmental unity was
missing in May, when three
cabinet members publicly criti-
cized the boards April boost in
the discount rate to 234 per cent.
The three we're Secretary of
Commerce Weeks, Secretary of
Labor Mitchell and Secretary Of
the Treasury Humphrey. They
said the boards timing was off,
and that the move might ag-
gravate an expected business sag
in the July-September quarter.
Sag Failed to Set In
1t developed later that MAY
was the month in which the
consumer price index. touched
the previous all-time high. In
June and July it rose almost IL
per cent more.
And the July-September sag
never set in. Instead, the total
dollar value of all production
apparently is setting a new
record - though much of the
gain represents higher prices
rather than physical output.
In August, the Federal Re-
serve again boosted the discount
rate, this time to 3 per cent. This
means that it raised the interest
rate on money borrowed by its
member banks for relending
The effect is to raise private
interest rates and discourage
borrowing.
This time there was no quar-
rel. Ranking officials noted that
major banks had boosted Their
basic interest rate before the
Federal Reserve moved to "fol-
low the market"
SqueIched Cole Plan
Mr.. Eisenhower's economic
high command for while
squelched a proposal by Housing
Administrator Albert M. Cole to
lower the down payments on
Government-underwritten mort
cages.
However, today the White
House announced the Federal
Housing Administration had cut
from Z to 5 per cent the mini
mum down payment on homes
appraised at $4,000 or less.
And at the same time the Fed
Ieral Home Loan Bank Board
boosted the borrowing limitation
of its member home financing
institutions and the Federal Ma
tional Mortgage Association took
steps to provide more funds for
builders and buyers.
The FNMA also agreed to is
sue advance commitments to buy
home mortgages at prices more
favorable t. the seller and raised
the price paid for mortgages
from 80 per cent to "a per cent.
Hope to Contain" Initiation
There remain signs that the
administration is not wholly
certain that imitation can be
stopped cold.
One high White House adviser
said in an interview that the ad-
ministration's policy is one of
economic growth while contain
ing imitation" He added that
containing" doesn't mean "pre-
venting"
Apparently 1t means exercising
such restraint as is thought nee
Iessary to keep prices within rea-
Isonable bounds, without choking
of the expansion of production
and employment. 1t does not
mean that prices will not rise;
lit seems to mean they won't run
away.
The same official conceded
that the rise already recorded
may be damaging, to some ex-
tent" politically.
But he added that the stabili-
cation record of the Eisenhower
administrations 3 per cent rise
in living costs in 31a years-is a
remarkable achievement" par
ticularly in view of the very
high use" to which the economy
is being put.
Secretary Mitchell has re-
duced the argument to simpler
terms. The Republican rise. he
told reporters. compares with
a "a per cent increase under
Truman.
When reminded that two wars
and congressional insistence on
the removal of price controls
had complicated President Tru-
mans problems, Mr.. Mitchell cut
of the discussion with: "All I'm
quoting is the statistics"
Democrats Cite Fact Sheet
The Democrats are unin-
pressed. They have contended
that stability began in the last
year Of the Truman administra-
ton. A fact sheet" from the
Democratic National Committee
declared:
"The only reason the overall
cost Of living remains fairly
steady is the severe drop in farm
prices which has brought about
somewhat lower food prices"