COST OF LIVING

Nelson Evening Mail, Volume 77, 28 April 1942, Page 4

COST OF LIVING

U.S. ECONOMIC POLICY OUTLINED BY THE PRESIDES”! SEVI;N-POINT PR<>GRA MM V. Ulec. 9.45 a.m.) Washington, April 27. j “After Pearl Harbour the Aineriean people adopted a national programme of war production which would have been railed fantastic two years before,” said President Roosevelt. "It has required shifting the major part of American industry from products oT peace to w eapons of w ar. Inevitably but with the nation's full approval this enormous programme is disloeating industry, labour, agriculture and finance. It is disrupting the normal manner of life of every American and every American family. In this we repeat the pattern of the first World War. although on a vastly greater scale. “During the earlier war there were j certain economic factors which pro- ! i duced unnecessary hardships which ; continued long after the Armistice. It is my belief that a great deal of suffering caused* then can be avoided now. These economic factors relate primarily to the easily understood phrase which affects the lives of all of i us—the cost of living. Because rises i in the cost of living in the last war were not checked at the beginning the people of this country paid more than • twice as much for the same things in 1920 as in 1914. The rise in the cost of living in this war has begun parallel to the last. The time has aefinitely come to halt the spiral, and we can face the fact that there must be a drastic reduction in our standard ’ ot living. While the cost of living based on the average prices of necessaries has risen about 15 per cent. • since the autumn of 1939, we must now act to keep it from soaring an-

; other 80 or 90 per cent, in the next • year or two and hold it near the present level. We must therefore • adopt as one principle of our domestic objectives the stabilisation of the cost , of living, for this is essential to the • fortification of our Nvhole economic ■ structure. Relying on past and present experience I list for Congress the following points which, taken together, may well be called the present na•j tional economic policy:— REASONABLE PROFITS ONLY “(1) In order to keep the cost of living from spiraling upwards we must first tax heavily and in the process keep personal and corporate profits at a reasonable rate, the word ! ‘reasonable’ being defined ‘at a low level.’ “(2) Fix the ceiling prices which consumers, retailers, wholesalers and manufacturers pay for the things they buy. Also ceiling prices of rents for dwellings in areas affected through war industries. “(3) Stabilise the remuneration received by individuals for their work. “(4) Stabilise prices received by growers for the products of their lands. “(5) Encourage all citizens to contribute towards the cost of winning the war by purchasing war bonds | with their earnings instead of using 1 their earnings to buy non-essential ] articles. ; “(6) Ration all essential commodities of which there is a scarcity so that they may be distributed fairly among consumers and not merely in accordance with the financial ability to pay high prices for them. “(7) Discourage credit and instalment buying and encourage paying off debts, mortgages and other obligations, for this promotes savings, retards buying and adds to the amount available towards credit for the purchase of war bonds. “In the first item, legislation is necessary and the subject is now under the consideration of the House of Representatives, its purpose being to keep excess profits down and at the same time raise large sums for financing the war. LIMIT OF INCOMES ! ’’This means that a sum equal to | over half the entire national income I will be spent for the war effort. Profits i must be taxed to the utmost limit | consistent with continued production, i This means all business profits, not j only from making munitions, but from making and selling anything else. We I seek to take by taxation all excess profits. At the same time, discrepancies between low personal incomes and high personal incomes should be

lessened. I therefore believe that in this grave national danger, when all excess income should go to win the war, no citizen ought to have a net income of more than 25.000 dollars yearly. “The second item is adequately covered by the existing law. The third item does not require legislation under present circumstances. I believe that stabilising the cost of living will mean that wages generally can and should be kept to the existing scales. PRICE OF FARM PRODUCTS “Regarding item (4). for nearly nine years it lias been the policy of the Government to seek an objective known as parity—in other words farm i prices that give the farmer an as-

surance of equality of individual purchasing power with fellow Americans in industry. Some farm products have not yet reached parity, and others have exceeded parity. Under the existing legislation a ceiling cannot be placed on certain products until they reach a level somewhat above parity. This calls for legislative action restoring the original excellent objective of obtaining parity for farmers.” Concerning item (5) President Roosevelt said: “In order to raise the billions needed to pay for the war and at the same time to prevent a disastrous rise in the cost of living, we must more than double the scale of our savings. Every dime and every

dollar not vitally needed for absolute necessities should go into war bonds and stamps to add to the striking power of the armed forces. I have been urged to recommend the adoption of a compulsory plan of savings by deducting a certain percentage from everyone’s income. I prefer, however, to keep the voluntary plan in (‘fleet as long as possible. “Regarding item (6) I am confident that for the basic necessities of life rationing will not bo necessary because we will strive to the utmost to have an adequate supply, but where an important article becomes scarce rationing is the democratic and equit-

able solution. Item (7) should be mode effective as soon as possible now that money is becoming more plentiful. When the war is over the elimination of private debts and accumulation of savings will provide a form of msurance against post-war depression. "Thp result tv ill me ill <l>n<