Campaign Against Inflation

The President's economic advisers have been warning him that full-blown inflation is on the way. The warning had been sounded many times, and at last the President was ready to hear it. Paunchy Price Boss Leon Henderson estimated that living costs, up 15% since World War II began, will rise at least 23% more this year unless drastic steps are taken.

Franklin Roosevelt took counsel with his economic-war aides in the White House last week: Vice President Henry Wallace, head of the Board of Economic Warfare; Treasury Secretary Henry Morgenthau Jr.; Leon Henderson; Federal Reserve Chairman Marriner S. Eccles; Budget Director Harold D. Smith. They went in softly by a side door, came softly out the same way. From that session, the President went straight to a conference with his Combined Labor War Board. The significance was obvious. Labor has been a chief bar to an over-all anti-inflation program. Labor, for the first time since 1933, must now get used to the idea that there will be no more wage increases.

Within the next fortnight the President will go on the air with a talk to the nation. He is expected to speak bluntly, mapping a broad campaign to curb inflation, asking Congress for the laws to make it work. The framework of the plan was already settled. Main points:

>Freezing of all rents and retail prices (possibly including food prices) by Leon Henderson's OPA. Price ceilings will be set at a level of some date earlier in the year. Ceilings will take effect the day the President speaks, or soon after.

>A labor-wage policy, amounting to an unofficial ceiling on wages, will stop wage increases except in cases of actual hardship, or if the cost of living rises. (But the President figures that, with prices frozen, the cost of living will not rise.)

>A law limiting "excessive" war profits. To get his wage ceiling, the President will have to answer labor's demand for a profit ceiling, although corporations have already had their taxes multiplied.

>A request for more than the $7,600,000,000 increase in taxes recommended by Henry Morgenthau. Reason: the President does not think a tax-shy, election-conscious Congress will give him much more than $7 1/2 billion-but he wants to be sure he gets that much.

> Probably some kind of compulsory savings--possibly the bill introduced by Senator Prentiss M. Brown of Michigan to pay overtime wages (and salaries above a certain figure) in war bonds. (Senator Brown's plan is dear to the heart of Anna Eleanor Roosevelt Roosevelt.) The President was confident that Congress would give him the kind of controls he wants. One reason for his confidence was a Gallup poll last week which showed that 66% of the people polled approve an over-all ceiling on wages and prices (including farm prices).

Eyes on the Needles. The men who watch the gauges indicating how the U.S. war economy is going scanned their dials anxiously this week. The needle points crept up & up. Like a good head of steam in a boiler, higher wages and prices had been useful for a while --the steam behind the throttle was pretty low when the war boom started. But now the indicators inched toward the danger point.

Federal experts estimated that the total national income in 1942 will be $103 billion (at February's price level). Of that $103 billion, they guess, the nation will have $55 billion to spend, with almost nothing to spend it on. Of this, taxes will sop up about $18 billion, savings and investments will absorb another $20 billion. The $17 billion that remains is the dangerous "wild money" which will roll around the china shop like a bull, crashing through prices, breaking up ceilings and walls, unless the Government finds a way to ring its nose. And to complicate matters a large part of this money will be in the hands of wage earners while the proposed taxes will fall heaviest on salaried people and investors.

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