The Thaw

First reactions to the big freeze ranged from "too late" to "better late than never." "It stinks," cried a Brooklyn housewife.

Protests, requests and questions poured into Washington. Labor unions and many consumers complained that prices were pegged too high and left too flexible, while wages were locked tight. Farmers and meatmen protested that meat controls made black markets a certainty. The price order disrupted commodity exchanges for a day, but it sent stocks merrily upward.

The confusion and complaints were expected. Defense Mobilizer Charles Wilson, Economic Stabilizer Eric Johnston and their lieutenants, now equipped with powers which make them a government-within-the-Government, turned immediately to the job of converting the stopgap decrees into detailed, workable programs which would bring prices and wages into balance and keep them there.

No Scrap Yet. The wage-freeze order had to be thawed out almost immediately, and had to be replaced completely in a few days by a formula for a flexible system of wage controls. A first test was John L. Lewis. His coal contract (TIME, Jan. 29) had been signed before the wage freeze, to go into effect after it. The Wage Stabilization Board was ready to grant John L.'s miners the 20-c--an-hour wage raise contained in the new contract. Explained one coal official: "I doubt like hell if they're going to get into a scrap with John Lewis this early in the game."

Other unions had made similar wage gains which had to be allowed or disallowed, and still others needed them to catch up. The WSB had to set an overall limit--probably a rise of 10% above pre-Korean wage levels--and then persuade organized labor to accept it without strikes and stoppages. Another decision would affect "escalator clauses," under which wages in some industries rise & fall with the cost of living. A third would have to deal with annual productivity increases such as those written into the autoworkers' contracts.

As the plaints of labor unions swept in, Wage Stabilizer Cyrus Ching promised speedy action and pleaded for a little time. "When a freeze is issued, it lowers the temperature all around," said Ching. "In such a situation, it's advisable to keep your shirt on."

No Rationing Yet. On the price front also, the freeze was just the beginning. Said Dr. Edwin G. Nourse, ex-chairman of the President's Council of Economic Advisers: "Prices have not gone into the deep-freeze locker but just into the kitchen refrigerator, where the kids come in and open the door every time they want a snack."

With only a few hundred employees on hand, Mike DiSalle had to build a staff of 6,500. Thirteen OPS regional offices and 42 district offices were opened around the U.S. this week, 29 others were ordered set up by March 1. Economists, lawyers and commodity experts went to work on specific ceilings, which will gradually replace the flat freeze of last week. (Before it was through, in 1946, OPA had issued more than 8,000,000 of them.) Already under separate orders: auto prices (rolled back in December), hides (rolled back last week).

As the ceiling prices were figured out, there might be some rollbacks from the price levels set by the freeze. Some of the rollbacks, said DiSalle, will be "substantial." There would also probably be some increases for those who had obeyed Mike DiSalle's voluntary-freeze request in December. Businessmen had to keep all sorts of records, were told to prepare for a flood of questionnaires and directives needed to put price ceilings into operation.

For the present, there would be no rationing. "We feel that there is a great sufficiency of consumer foods," said DiSalle, "and we don't anticipate the need of rationing any time in the near future, possibly not at all." But the OPS would have to be ready to invoke rationing in case supplies fell too low to meet demand.

No Wrist-Slapping. To enforce price controls, Mike DiSalle profited by mistakes of OPA in World War II. Then essential, low-priced items disappeared from the shelves as manufacturers channeled their materials into fancy sports shirts, frilly dresses and expensive gimcracks which brought fatter profits. In his freeze order, DiSalle prohibited manufacturers from switching to higher-priced lines, or producing cheaper "similar" products for the same price. He persuaded Mobilizer Wilson to issue a new order to his Defense Production Administration--it authorized DPA to use its priorities and allocations to force manufacturers to produce adequate quantities of inexpensive apparel and durable goods. To prevent a repetition of World War II's black market in meat, DiSalle's experts began drafting a plan for licensing meat slaughterers. It would confine meat processing to legitimate business firms, block a sudden sprouting of new firms aiming for black-market sales.

DiSalle also got help from President Truman. The President ordered all Government agencies to contribute lawyers, economists and other experts to the ESA until its own staff is complete, and authorized DiSalle to use FBI men and other Government investigators to comb the country for price-control violators. With that kind of help, the OPS hoped to root out violators early and punish them heavily (maximum penalty under the law: a year in jail, $10,000 fine) to discourage other violators. "There will be no wrist-slapping," promised a price official.

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