The Northern Advocate "NORTHLAND FIRST" Registered for transmission through the Post as a Newspaper. THURSDAY, AUGUST 23, 1945. TOYING WITH INFLATION

Northern Advocate, 23 August 1945, Page 4

The Northern Advocate "NORTHLAND FIRST" Registered for transmission through the Post as a Newspaper. THURSDAY, AUGUST 23, 1945. TOYING WITH INFLATION

REMARKING that a burnt child may beware of the hot stove, but still play with matches, the “Christian Science Monitor'' deals editorially with the need for the exercise of methods which will safeguard the people of the United States from the perils of inflation. The comments made may not be entirely applicable to conditions affecting New Zealand, but they. are, nevertheless, of a character which the people of the Dominion should ponder over at a time when the question of continuance' or relaxation of price controls and restrictions accepted during wartime is being made a subject for discussion. . The paper, after referring to the burnt child who may play with matches, says that United States Congressmen, somewhat restrained by remembrance of the heady economic spiral and disastrous descent which followed World War I, may vote to continue the Price Control Act, but amend it in such a way as to play havoc with the carefully laid bulwark OPA (Office of Price Administration) has erected against post-war inflation. Senator Thomas, it is pointed out, proposed an amendment which would force OPA to revise its policy and guarantee food and cotton manufacturers and processors a profit on every item they turn out, something they have never enjoyed in peacetime. This, the “Monitor” says, would mean higher prices for all food and most clothing. An amendment proposed byi Senator Taft provides for removing wage controls and all price controls on non-agricultural products by the first of next year. Senator Taft contends that the groundwork for a major depression will be laid if narrow price margins and tight regulations are retained in the reconversion period. He declares it will deter the establishment of new businesses and expansion of others, with consequent unemployment. The “Monitor” admits that complex and changing conditions may betray prophecy in this field, but it stresses that experience recalls that it was not rigid economic controls, but an almost complete lack of such controls, which preceded the 1920 depression in the United States. Labour, too, speaks for itself and to the contrary on the unemployment issue, in the words of the president of the American Federation of Labour, Mr. William Green, who says that “amendment of the Price Control Act would result in crippling the reconversion and re-employment programme, and bring about widespread idleness.” A spokesman for the CIO (Congress Industrial Organisation) has also assailed the proposed amendments, and 28 other national organisations have joined in an attempt to offset the strong pressure being brought to bear on Congress to relax the controls. No one, says the OPA officials themselves, denies that mistakes have been made in the pricing programme. But, the “Monitor" comments, industries and individuals have recourse to the law in the Emergency Court set up especially to pass on appeals from the OPA regulations. Adjustments have been made in many instances, but repeated increases and subsidies have failed to satisfy meat producers, despite the fact, that profits as a whole are many times, those of pre-war years. “In fact,” says the “Monitor,” “profits of most price-con-trolled industries have continued to rise during the war. Some firms have not fared quite so well, but neither have white-collar workers, pensioned individuals or servicemen. In normal times many firms fail every year. Chairman Wagner of the Senate Banking Committee has warned that to abandon stabilisation would be to betray America’s fighting men, and ‘with inflationary pressure at an all-time high, no human agency can set the inflationary spiral in motion and then regulate its speed.' Now is the time of all times to keep a firm hand on the controls! ” So concludes the influential American newspaper, whose opinion should be surveyed by New Zealanders in the light of conditions as they exist in the Dominion.