THE DEADLY PARALLELS

On April 9, Clarence Randall charged that "a corrupt politi-
cal deal" exists to give the CIO Steel Union its demands.
The language used by Phil Murray of the CIO in his
April 7 broadcast and the April 8 broadcast of President
Truman reveal significant parallels. The following are
typical:

On Postponing Strike

APRIL 7-MURRAY:

"The Union has voluntarily postponed this strike four times since our contracts terminated on January 1st. We have waited patiently for 99 days."

APRIL 8 TRUMAN: "But the fact is that in the present case, the steelworkers' union has already postponed its strike since last December 31st-99 days."

On WSB Recommendations

APRIL 7 - MURRAY: "The Wage Board's recommendations... are fully in accord with America's program for economic stabilization."

APRIL 8 - TRUMAN: "The Wage Board's recommendations... are in accord with sound stabilization policies."

On "Catching Up”

APRIL 7-MURRAY:

... the steelworkers have a chance to partially 'catch up' on the diminished buying power of their wages."

66

TRUMAN: "... the steelworkers would simply be catching up with what workers in other major industries are receiving.”

On Inciting a Strike

MURRAY: "They have deliberately incited a steel strike."

TRUMAN: "They are trying to get special, preferred treatment... And they are apparently willing to stop steel production to get it."

8

(Reference to the following will be found on p. 2011.)

STATEMENT OF ROGER L. PUTNAM, ADMINISTRATOR, ECONOMIC STABILIZATION

AGENCY

On behalf of the entire Economic Stabilization Agency, I want to reiterate as strongly as I can our position that we do not desire to continue the direct economic controls and the annoyances which go with them a moment longer than necessary for the stability and the safety of this country.

Speaking for myself, I don't like controls, and if this emergency were not of a nature to convince me the controls are absolutely necessary right now I would certainly not be administering them. Furthermore, I have found in all levels of my Agency a general conviction that the controls, while presently necessary, should be dispensed with as soon as possible. We are agreed on that.

Beginning months ago, the Office of Price Stabilization has progressively exempted from price control a variety of items which are not significant in the cost of living or in the general economy. In addition, we are now embarked on a program for suspending or relaxing price controls in certain so-called "soft market"

areas.

The policies in connection with that program have been outlined in a progress report from the OPS Committee on Relaxation of Controls which has been submitted to you by Governor Arnall. I have reviewed those policies from the standpoint of their impact on the stabilization program generally, and I have approved them.

The program outlined by the OPS Committee provides for suspension or relaxation of ceiling price controls in appropriate soft market areas where prices are substantially below ceilings and where an easing of the controls would not have an unstabilizing effect on the price structure or on the economy generally.

The scope of the program is limited however-of necessity-by these facts:

1. The American economy today is not a "soft" one. It is, rather, a hard economy with certain soft spots in it. The great majority of items subject to price control are either at or very close to their ceilings. Without the ceilings, the price level would undoubtedly be much higher.

2. The inflationary pressures inherent in the tremendous defense program in which the Nation is engaged are bound to increase as expenditures for defense continue to rise toward a plateau level of $65 billion a year.

3. There are a number of areas-in large part at the raw material and primary producer levels-where prices are substantially below ceilings and supplies are in such good shape that, for the immediate foreseeable future, a revival of sharp inflationary pressures is not now anticipated. However, there are important other areas where prices now are soft but where, under readily foreseeable circumstances, inflationary pressures could quickly revive and become serious.

In addition to these broad economic facts, consideration has been given to the inescapable international fact that we are living in a period of extreme peril to our country and to the whole free world. We have launched our defense program in an effort to stem that peril, but while we step up our efforts to rearm, we cannot be sure from one day to the next that we will not suddenly face the intensified economic strain of a new international crisis.

For these reasons I agree that we should not at this time pursue any program of price decontrol for any important part of the economy-that is, the dismantling of the structure of price ceilings in the area or areas decontrolled.

It would be premature and exceedingly dangerous to throw away our carefully constructed barriers against a surge of price inflation in any important cost-ofliving or defense commodity, even though, in some cases, present market supply conditions may be favorable and prices may be low. Some of these presently low prices are highly volatile and could, in the absence of controls, quickly push up from current levels to extremely high ones.

To reimpose controls in an area which was completely decontrolled would be time consuming at the very moment when speedy action might be imperative. It would result in widespread confusion to business and to consumers and would, in many instances, cause more inequities and hardships to individual firms than could possibly result from keeping the present controls continuously in effect.

On the other hand, there is no justification for maintaining the burden of controls in areas where the controls do not presently serve a demonstrable economic purpose and where these controls can presently be suspended or relaxed without resulting in a wave of unstabilizing cause-and-effect reactions, and

where they can be reimposed quickly and effectively whenever that might become necessary.

I have, therefore, approved the policy of-

(a) Suspending present ceiling price regulations, and substituting standby or inactive regulations, in soft market areas where it is practical and consistent with over-all stabilization policy to do so, and where the standby regulations can be restored quickly to active status under specified circumstances; and (b) Easing or eliminating reporting and record-keeping requirements under existing ceiling price regulations applying to soft market areas whereever it is not practical or consistent with over-all stabilization policy to suspend the ceilings entirely.

Vast and complex difficulties are bound to arise in connection with a suspension program-difficulties of properly defining and bounding a soft-market area, of determining the degree of "softness" in nonstandardized items where prices may vary widely between individual sellers, and of preventing any psychological wave of panic buying which could result from a public misunderstanding of the reasoning behind suspension actions.

For these reasons, considerable thought was given to the advisability of limiting policy recommendations on this subject to a program of easing the burden of reporting and record-keeping requirements in the soft market areas. Such a policy could perhaps be justified on the theory that ceilings which are far above market prices cannot do the seller any real economic harm and that therefore the only steps actually required to ease the burden of controls in these areas were those which would eliminate as much of the reporting and record-keeping red tape as possible.

But just as we have rejected the idea of complete price decontrol in these areas, so we have also rejected the idea of maintaining all of the price controls in active status merely because they may not be hurting any one. We do not

think the Government should be satisfied with keeping controls merely because they don't do any harm, but rather believe we should be under the positive obligation of setting aside those controls which need not now be kept in active status.

Thus we have the dual responsibility of easing controls where we can while at the same time assuring the Nation in these perilous times of adequate protection against the ravages of further inflation.

To protect the public interest in the process of suspending or relaxing price ceiling requirements, we must be certain:

1. That we have adequate machinery for measuring the trend of prices in the soft-market areas chosen for suspension action so that we can be informed of changing conditions as they occur; and

2. That we have the means for transforming standby controls into active controls whenever necessary in order to prevent inflationary price increases. The OPS has been engaged in a series of pilot studies aimed at applying the proposed suspension standards and safeguards to those areas where soft markets can be clearly defined. Areas where prices are standard and quoted daily lend themselves readily to the use of these standards. In some of these areas, decisions on suspension actions have already been reached by the OPS and having been reviewed within the Economic Stabilization Agency from the standpoint of their effect upon stabilization generally, are being announced and made effective by the Office of Price Stabilization today.

In the meantime, the OPS is proceeding with additional pilot studies to explore the possibility of similar action in other areas where the difficulties of carrying out a suspension program are much more complex.

In its study of this problem, the OPS is concerned primarily with the effects of its proposals on the structure of price stabilization. OPS relies necessarily on the ESA Administrator, in consultation with officials of the other constituent organizations of the Agency, to analyze and weigh the effects upon the rest of the stabilization program of the price suspension actions it recommends.

In my review of the OPS recommendations, I have weighed carefully the possible impact on stabilization generally of the proposed program of ceiling price suspension in qualified soft market areas.

Conscious as I am of the close relationship between price stabilization and wage stabilization, I have considered the possibility of taking simultaneous parallel suspension action in both prices and wages. However, after careful study, I am convinced that such action is neither practical nor necessary in the public interest. Prices of a particular commodity may be below ceilings and possibly even depressed, but wages in the industry as a whole or in the locality may, for reasons