PRICE CEILING

Auckland Star, Volume LXXIII, Issue 163, 13 July 1942, Page 5

PRICE CEILING

U.S. PRECAUTIONS

ANTI-INFLATION GUARD

In issuing a general maximum price regulation, the United States Office of Price Administration termed it "the corner stone for a comprehensive programme to eliminate the danger of inflation."

It was not claimed that the regulation ensured that the standard of living of any individual or group or of the nation as a whole would remain unimpaired, but that in its larger context it was necessitated by the danger of inflation.

The Price Administration pointed out that both Australia and Canada had preceded the U.S. in adopting a general price ceiling (states the Sydney Morning Herald).

In measuring the gap between the total purchasing power and the total civilian supply of goods and services available for purchase, the official statement estimated that the latter would be progressively reduced by about 1 per cent a month for the rest of the year. During 1941 individual income totalled £28,750,000,000. Of this, £5,625,000,000 was accounted for by personal taxes and individual savings, £23,125,000,000 was spent on consumers' goods and services.

During 1942, at the then rate of income payments, individual income would total £36,562,000,000. Of this it was estimated £9,687,000,000 would be saved or paid to the Government in personal taxes and £26,875,000,000 would be spent.

The supply of goods and services available for civilian use totalled £23,125,000,000 in 1941. During 1942 the supply would total £20,312,000,000, compared on the basis of 1941 prices. Allowing for the increase in prices up to April 1 last, the supply would total £21,563,000,000. Thus demand in 1942, unless limited, would exceed supply by £5,312,000,000. A mild stage of inflationary price advance had been already passed through, and a more severe and intensive stage, as the above analysis showed, was being entered—a stage where the upward movement of prices would increase both in magnitude and tempo. "The universal price ceiling serves as the framework for other policies which will diminish the inflationary gap," the statement added. "It makes possible an effective war labour policy, more stringent income and excess profits taxes, and greatly enhanced savings. . . . Both the universal ceiling and these related econo-mics-measures are thus essential to overcome inflation. Together they can abruptly and effectively stop the inflationary spiral."