Potshotting Inflation

The Administration last week wheeled up its artillery, and uncertainly fired in the direction of that dangerously infiltrating enemy, inflation. The result: one clean miss; two potshots.

The miss was fired by Economic Stabilizer Eric Johnston. He approved a 6-c--an-hour escalator clause raise for 1,000,000 non-operating union railroad workers (telegraphers, clerks, etc.), thus blowing a hole through the wage ceiling he had put on in February. Johnston argued that 1) there were special reasons for doing so in this case, and 2) other unions wouldn't be able to sneak through the same hole. But the same special reasons seemed to apply to 1,000,000 other railworkers. Other unions whose wages are tied to cost-of-living escalator clauses were thinking up special reasons for themselves, too. The Government's attitude toward the whole touchy subject of escalator raises was becoming plainer: to try to slow them down without stopping them altogether.

Slowdown on Parity. Old Artilleryman Harry Truman, firing off his major charge of the week, seemed to have the same slowdown idea in mind for farm parity. He didn't want to freeze parity, as labor unions and consumer outfits were urging him to do. Instead, he proposed that farm prices be stabilized" by calculating parity only once each marketing season rather than monthly as at present. "It won't roll back any prices," said one White House adviser. "All it does is to simplify enforcement of prices already under control." The plan caused an immediate flurry of opposition from farm-state Congressmen, but the Administration thought that the protests were just for the record and that farm groups weren't really mad, and had not really been hurt.

The President's parity proposal was part of a message to Congress, a month overdue, calling for amendments to the Defense Production Act, which expires June 30. In some of its other proposals, the message was stronger. The President asked 1) power to revoke the licenses of all price violators, 2) stiffer rent controls, including the power to control business rents (the first time a President has made such a request), 3) authority to buy critical materials, and 4) the right to pay subsidies to producers of essential goods when their production is hurt by price ceilings.

Rollback In Beef. The most thunderous salvo of the week was fired by Price Controller Mike Di Salle. He ordered an 18% cut (about 5-c- a Ib.) by next Oct. 1 in the price that may be paid for live cattle. He also fixed dollars & cents ceilings on wholesale and retail beef prices, and set up stand-by machinery for beef rationing (although price officials hastened to say that they saw no prospect of rationing in the near future).

Price officials glibly estimated that their day's work would roll beef prices back to pre-Korea levels, save housewives an estimated $700 million a year. Lower prices should be seen in butcher shops by Aug. 1, they said, and by Oct. 1 beef should be down about 10-c- a Ib. In New York and other cities, beef prices are the highest they have ever been, and there is also a shortage of beef, although the U.S. cattle population is 2% to 3% higher than last year. Di Salle's men said that even after they had rolled back livestock prices 18%, farmers would still be getting 120% to 125% of parity.

U.S. meat producers angrily asserted that the rollback would only drive beef into the black market, where the ordinary housewife would never see it. Secretary Brannan's Agricultural Department was also fighting Di Salle. Brannan argued that cutting down the price the producer is paid is no way to encourage him to produce more.

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