Price-Wage Restraints in National Emergencies

October 25, 1961

Report Outline
Inaflationary force in the economy
Price-Wage Controls in Peace and War
Alternatives to Direct Controls

Inaflationary force in the economy

The threat that another round of inflation will be set off by current business expansion and by government spending to meet the world crisis has made the Kennedy administration acutely aware of the need to take precautionary action. The President recently made an unusual appeal to steel industry leaders to hold down prices, and he promised to urge equal restraint on steel labor leaders next spring when a new wage contract is to be negotiated. When Kennedy addressed the nation on the Berlin crisis last July 25, moreover, he said he would ask Congress in January for any increase in taxes needed to balance the budget in the fiscal year 1963. Although the President seemed to soften that stand at a news conference on Oct. 11, Secretary of the Treasury Douglas Dillon took pains to emphasize to the American Bankers Association at San Francisco six days later that “A balanced budget for fiscal 1963 is exactly what President Kennedy intends to submit to Congress next January.” However, a large deficit is unavoidable in fiscal 1962.

Threat of Inflation in Present Critical Period

Economic experts agree that the combination of a strong business expansion, rising international tension, and a large federal budget deficit generates powerful inflationary forces. The upturn in business from the recession of 1960–61 has been steady though not spectacular. Unemployment has remained at close to 7 per cent of the civilian labor force on a seasonally adjusted basis, but total employment has risen to record high levels. Aggregate personal income is setting new records each month.

Soviet threats to the Western position in Berlin and intensined Red guerrilla operations in Southeast Asia led the President to ask Congress last summer for $3.5 billion more than originally projected for military expenditures. Combined defense and non-defense appropriations voted by Congress this year were the largest in peacetime—$95.8 billion, which was $12 billion more than the total appropriated at the 1960 session. President Kennedy expressed confidence, July 25, that the American economy was capable of sustaining appropriations of this magnitude, but additional strain will be imposed if the world situation worsens.

ISSUE TRACKER for Related Reports
Cost of Living and Wages
Apr. 17, 2020  Inequality in America
Sep. 08, 2017  Universal Basic Income
Apr. 08, 2016  Future of the Middle Class
Apr. 18, 2014  Wealth and Inequality
Jan. 24, 2014  Minimum Wage
Jun. 19, 2009  Rethinking Retirement
Mar. 06, 2009  Middle-Class Squeeze
Mar. 14, 2008  Gender Pay Gap
Dec. 16, 2005  Minimum Wage
Sep. 27, 2002  Living-Wage Movement
Apr. 17, 1998  Income Inequality
Oct. 27, 1978  Wage-Price Controls
Jun. 16, 1978  Military Pay and Benefits
Mar. 23, 1966  Rising Cost of Living
Oct. 25, 1961  Price-Wage Restraints in National Emergencies
Jun. 21, 1961  Wage Policy in Recovery
Jun. 11, 1958  Prices and Wages in the Recession
Sep. 18, 1957  Control of Living Costs
Nov. 02, 1955  Wages, Prices, Profits
Jan. 26, 1954  Minimum Wage Raise
Jan. 02, 1954  Cost of Living
Jan. 21, 1953  Guaranteed Annual Wage
Dec. 17, 1952  Future of Price and Wage Controls
Nov. 19, 1951  Fringe Benefits and Wage Stabilization
Dec. 06, 1950  Wage Control
Jun. 13, 1949  Wages in Deflation
Jun. 04, 1947  Guarantees of Wages and Employment
Oct. 29, 1946  Decontrol of Wages
Dec. 01, 1945  Minimum Wages
Sep. 29, 1945  Wage Policy
Oct. 27, 1944  Wage Security
May 17, 1943  Incentive Wage Payments
Aug. 25, 1941  Prices, Profits, and Wage Control
Apr. 28, 1941  Wartime Changes in the Cost of Living
Sep. 21, 1940  Two Years of the Wage-Hour Law
Nov. 01, 1938  Industry and Labor Under the Wage-Hour Act
Jan. 20, 1938  Wage Rates and Workers' Incomes
Apr. 11, 1935  The Cost of Living in the United States
Sep. 01, 1930  Wages and the Cost of Living
May 24, 1930  The Anthracite Wage Agreement
Feb. 20, 1925  Measure of Recovery in Profits and Wages Since 1920–21 Depression
Economic Analyses, Forecasts, and Statistics