CONTROL OF PRICES

Gisborne Herald, Volume LXXIV, Issue 22494, 25 November 1947, Page 3

CONTROL OF PRICES

WILL NOT CAUSE SLUMP LESSONS FROM AMERICA MELBOURNE. Nov. 12. Price control in Australia might prevent industry from attaining maximum production but it was very unlikely that continuance of controls would prove a major cause of another depression, said the Professor of Economics at Melbourne University, Professor Wilfred Prest. He was commenting on statements by industrial and commercial leaders that continuance of price restrictions for another year might produce an acute economic depression. The professor said that an increase of 26 per cent in United States production in 12 months since the lifting of price controls, supported the American claim that unrestricted prices stimulated production. In May, 1946, before prices were released, US. production was up 60 per cent on the 1935-39 average. By May, 1947, production was up 86 per cent. However, there had been similar increases in production elsewhere, and the claim of U.S. industrialists that the lifting of the ceiling was responsible for the increase might not be the whole truth. Professor Prest said that in the midst of Ihe depression in 1932, Sir Theodore Gregory, then Professor of Economics at London University, had said it was then recognised that the way to prevent a depression was to control a boom. Slow Rises Obviously the Australian Government had taken this principle to heart and were maintaining checks which prevented the boom from really getting going. However, the Government had lifted ceilings in a number of commodities and had reduced or abolished certain subsidies. There was a general slow rise of prices and this should hove a stimulating effect on production. Industrial leaders advocating removal of controls here forgot the American lesson that with rapidly soaring prices came acute industrial unrest and prolonged stoppages. It was always claimed that abolition of restrictions by stimulating production would reduce prices, but in the United States it had had exactly the opposite effect and prices were still climbing.