Future of Price and Wage Controls

Report Outline
Coming Decisions on Economic Controls
Controls, Prices, and Wages Since Korea
Deflationary and Inflationary Prospects
Special Focus

Coming Decisions on Economic Controls

Early Deadline for Republicans on Price-Wage Curbs

What to do about price and wage controls is one of the questions that will call for early decision by the new Republican administration and the new Congress. Statutory authority for those controls, and the remaining rent controls, runs out on Apr. 30, 1953. Hence, after President-elect Eisenhower enters the White House, he and the Republican leadership in Congress will soon have to make up their minds whether (1) to let the controls lapse and dismantle the control machinery or (2) seek a renewal of the authority, even if it should be planned only to hold it in reserve, with or without a supporting skeleton control organization, for possible use in the event of a new and serious inflationary threat.

Because the Defense Production Act, which granted the price and wage stabilization powers, made their exercise discretionary with the President, the Chief Executive has authority to lift the controls at any time. At the end of November, when relaxation of inflationary pressures already had led to suspension of ceilings on nearly two-thirds of the items originally subjected to price freezing, it was rumored that President Truman was contemplating termination of all price and wage controls. The White House, however, issued a prompt denial. And on Dec. 3 President Truman publicly stated that it was his “firm intention to continue a strong stabilization program and turn it over to the new administration as a functioning, effective entity”.

Threat to Wage Control from Conflict in Coal Case

It looked for ten days as if the President would be frustrated in that purpose. His statement of intention was made in a letter to Economic Stabilization Administrator Putnam which announced that he had decided, contrary to the recommendations of all top stabilization officials, to overrule the Wage Stabilization Board and allow bituminous coal miners the full wage increase won in recent contract negotiations. The Truman decision in the coal case threatened to result in complete collapse of the machinery for wage stabilization. W.S.B. Chairman Cox immediately resigned in protest, and his resignation was followed almost at once by that of all the board's industry members, who in a joint letter of resignation bitterly assailed the coal decision and said it made the wage stabilization program “nothing but a sham and a mockery”.