"Battle of the Century"

(See Cover)

One day last week Chester Bliss Bowles picked up his office telephone and heard the voice of a farm-bloc Senator: "Damn it, Chet, everyone else is getting his cut. You've got to give the farmer his."

Hulking Chet Bowles leaned back in his chair and listened patiently. Then, calmly, like a teacher going over a lesson with a backward pupil, he replied: "But, Senator, you know the farmer is doing all right. When have farm markets been so good? Or prices so high? Or mortgages so few?"

The argument ended with both unconvinced. Chester Bowles transferred his 190 Ibs. to a more comfortable chair and grinned. To a visitor he observed, with a happy air of tense excitement: "Oh, boy, are those pressures building up! We're in for it from here on in. This is the worst yet!"

The tougher the pressure gets, the better Chester Bowles seems to like it. A once-thwarted public servant and social thinker who has just come into his own, he loves his job. Where onetime Price Boss Leon Henderson let the heat frazzle his temper, where onetime Price Boss Prentiss Brown simply got out as fast as he could, Chester Bowles plows ahead with unconcealed pleasure, his big jaw jutting forward like the prow of one of the boats he used to sail in races to Bermuda.

Bowles's great delight in government may be a bad thing for the postwar U.S., as the National Association of Manufacturers has been charging (in advertisements prepared by Benton & Bowles, the firm which Bowles helped found). It may be a good thing, as a vast majority of the nation's plain people believe. At all events, it must be reckoned with.

High Pressures. The pressures under Chester Bowles--from the farm bloc, from labor, from manufacturers caught in price squeezes or just eager to make more money--were stronger last week than ever. The forces of inflation were more irresistible than even immovable Chet Bowles, as a dealer in economics, perhaps realized.

During the war, the U.S. had seemed to do a pretty fair job of avoiding the symptoms of inflation. And President Roosevelt's men boasted of their superiority to the men of World War I. But actually the Government had failed to combat the real causes of inflation. Only 41% of the cost of war was paid for by taxation; the rest was financed by selling Government bonds, almost one-half to banks. This created what Federal Reserve Board Chairman Marriner Eccles calls "monetization of the public debt": by the complex workings of modern finance, sale of a million dollars in Government bonds to a bank produces the same end result as printing a million $1 bills.

Rough Money. In the wartime economy, everything was scarce but this artificially created money. The money was poured out in high profits (before taxes) to encourage industry, high wages to encourage labor, reasonably high prices to encourage farmers. It had--and still has--no place to go.

From Pearl Harbor Sunday to V-J day, savings of individuals had risen $145.5 billion. Money in circulation had quadrupled over the prewar period. The process was still continuing. Individual incomes in the twelve months ending next August are estimated at $123 billion. Along with past savings, this will give the public around $300 billion of spendable money--and the last estimates of the year's production foresee only $101 billion of goods and services to spend it on.

By the inexorable workings of the law of supply & demand, Chester Bowles was in for a rough year.

Clogged Channels. There was only one real cure--production.

During the war, U.S. manufacturing capacity grew so fast that nobody really knows how big it is today. Steel capacity, 81,619,000 annual tons before the war, is now 95,000,000 tons. The auto industry, which never made more than 4,500,000 passenger cars a year, can turn out more than 7,000,000 in the next twelve months.

But these statistics in the big industries tell only part of the story. The channels from factory to consumer are clogged now by postwar readjustments, by continuing shortages of parts and thread and the little businessman's zippers, by strikes, shifts in the working population, hoarding by speculators who are betting on higher prices. Once the channels are clear, they will start spouting a flood of automobiles, electric fans, chromium bathrooms, aluminum dishwashers, movie cameras and nylons such as the world has never seen before.

The businessman says that the way to clear the channels is higher prices, to meet higher wages and higher costs, and to stimulate the production of honest goods. But Bowles has made himself the symbol of "holding the line" against higher prices. So what Americans will be seeing and hearing in the next year will be a lot of zigzags, a lot of doubletalk, reels of red tape--all byproducts of the most ambitious peacetime campaign to stave off the workings of the fundamental laws of a competitive economy.

Man with a Mission. Undaunted by these ambiguities, Chester Bowles fully understands his Mission; he regards his price ceilings as sacred, his job as a crusade. When he talks about his efforts to persuade Congress to extend ceilings to June of 1947, he likes to call the debate "the battle of the century."

Most of his friends suspect that Chet Bowles, who started from scratch and had earned a million dollars at 35, never had a job he really liked before. Now that he has one, at 44, he is making the most of it. He arrives every morning between 8:43 and 8:45, calls endless conferences, lunches at his desk, stays late.

The goldfish-bowl life of a Washington administrator, and his utter dependence on Congress and public opinion--phenomena which have made many a Government-drafted businessman flee from the capital in horror--affect Bowles like a double dose of benzedrine. Once a great man for keeping in the background, he has learned to enjoy public speaking, cross-examination by Congressional committees.

In the smoky Virginia hills near Washington, Chet Bowles has a white frame house, his own brook, a big swimming pool. There live his second wife, "Steb," a former social worker whom he married in 1934, two daughters, a son, two spaniels, four Persian cats. In the evenings he likes to sprawl on the living-room rug, surrounded by his family, with a cocktail and the afternoon papers. On mild weekends, he likes to have family picnics, with a bountiful supply of hot dogs and cold milk.

But more & more, Chet Bowles is foregoing these pleasures for work. In recent months he has spent most of his spare time writing a book on his theories of society and government. Called Tomorrow Without Fear, it will be out in April. Chet Bowles says that it is addressed to "the puzzled conservative." Friends who have seen it describe it as "a bold book which will make him or break him."

Foods & Fred Allen. Bowles always wanted to be in government. From his great-grandfather and grandfather, both named Samuel Bowles, famed liberal editors of the once-famed Springfield (Mass.) Republican, he inherited what he calls "a feeling for the people's side." While he was going through Choate and Yale, with desultory marks for scholarship and high praise for his golf, young Chet kept planning to find a job in Washington.

He failed to find one that suited him. Disappointed, he served a brief stint on the family newspaper, then went to Manhattan to try his hand at advertising. Another youngster named William Benton, a year older but four years richer in experience, hired him to write trade-paper ads for the old Batten agency at $25 a week.

At first Benton despaired of ever teaching his protege anything about copy writing. But four years later they had enough skill, money ($16,000) and mutual confidence to start their own firm of Benton & Bowles.

The rest is advertising history. Benton, a whiz-bang salesman, snagged accounts from General Foods and Procter & Gamble. Bowles concentrated on market research, thought up radio ideas like the old Maxwell House Showboat (first big-time program with continuity of characters and scene), helped a despairing comic named Fred Allen dull his satire so that radio audiences could understand it.

Salesman at Work. By 1936, Bill Benton had enough money to pull out, become vice president of Chicago University, finally Assistant Secretary of State. Bowles retired five years later, rich enough to go sailing for the rest of his life.

Despite his Republican background, he had fallen into the habit of voting for Franklin Roosevelt. Out of his market research, and his admiration for the New Deal, he had decided that the future of the nation lay in raising the living standards of its lowest-bracket third. One day he called on Connecticut's late Democratic Senator Francis Maloney and said: "Senator, I want to get into Democratic politics. How do I go about it?"

Senator Maloney soon had the answer. He had Bowles made OPA chief for Connecticut. Then, after Leon Henderson was forced out by irate Congressmen and Prentiss Brown failed to win friends with a policy of appeasement, Maloney told Assistant President Jimmy Byrnes that Bowles was the man to head OPA. ''What's wrong with him?" asked Byrnes. Replied Maloney: "Only two things. He was on the America First Committee and he's damn fool enough to want to come to Washington."

Bowles got the job. He made enemies, but not nearly so many as testy Leon Henderson. He lost friends, but not nearly so many as Prentiss Brown. One of his most persistent foes, Nebraska's Republican Senator Kenneth S. Wherry, with whom he has had some bitter public debates, once complimented him: "Big Boy, you're the best salesman in the U.S."

Foods & Squeezes. Under President Truman's new wage-price policy, Chet Bowles will turn OPA over to Paul Porter, a longtime friend and admirer who will become the fourth price boss of World War II and the fifth in the nation's history. Moving up to the post of Economic Stabilizer, Bowles will still fight OPA's battle for ceilings, will have additional power over wages and allocations.

His policies are already established. Wages will be permitted to rise, but Bowles insists that the 18 1/2 pattern set in steel will not be the pattern for all. So will some ceiling prices rise--but as little as possible. For the most part, the wage increases will be squeezed out of profits, which Chet Bowles believes are big enough to stand the pinch.

If Bowles can get Congress to accept this plan for another year, cost of living items like food, clothing and rents will rise only slightly, or not at all.

Dislocation, Complication. The big problem is: can production really get started under such a program? In agriculture, every new price ceiling has caused a new dislocation; the U.S. has alternated dizzily between meat shortages and grain shortages, between a shortage of ice cream and a shortage of butter. In industry, the problem is vastly more complicated.

No matter how price control is administered, it works against the essential genius of U.S. industry, inspired by the profit motive to produce more & more at a constant rise in wages and living standards. An economy with price controls is not really free enterprise at all--the vital forces of profits, competition and the free market cannot operate.

At best, however carefully and sympathetically planned, price control would be in conflict with the traditional U.S. system. And many a businessman considers Chester Bowles far from sympathetic--possibly because, in his fight for the consumer's pocketbook, he has become the darling not only of the nation's housewives but also of its noisiest leftists, who like to think of price control as a step toward planned economy.

In any conversation among businessmen, the inevitable evils of price control are a prime topic: there are countless stories of production held up for lack of a little gadget that a parts manufacturer cannot profitably build at present ceilings. Nobody has yet figured out how Chester Bowles, Paul Porter or anybody else can adjust the price ceilings of hundreds of steel fabricators with sufficient speed or accuracy to avoid long and costly delays.

The new wage policy is another stumbling block. Big Steel, granted a $5-a-ton price increase, can take an 18 1/2-c- wage rise in its stride. But the little manufacturer has to meet his employes' demands before he can ask for price relief. Lew Schwellenbach has conceded that the new price policy, even if it ended all the big strikes, might start a raft of little ones.

The Middle Ground. Surveying the prospects, the National Association of Manufacturers threw up its hands--full production could never be reached in a controlled economy. Since inflation could never be licked without production, price controls would have to go.

Said Chester Bowles: "Outrageous . . . irresponsible leadership ... in effect, their advertisements say, 'Pay us the prices we ask or we won't produce. .. .' "

This week will appear a document which N.A.M. and Chet Bowles both might study with profit. Prepared by economists of the Committee for Economic Development, which includes many of the nation's smartest and most progressive businessmen, it charts the reasonable middle ground on price control. C.E.D.'s economists believe:

P: Price control should be maintained until production gets started; ceilings should then be removed as rapidly as possible. By June 1947, the U.S. should have no ceilings except on rents.

P: While price control continues, every effort should be made to stimulate production. Ceilings and policies should be liberalized to permit profitable production all along the line. The 1936-39 profit level, on which the OPA sets its standard for price relief, should be raised by about one-third.

P: Meanwhile the Government's inflationary fiscal policies should be overhauled. The budget should be balanced immediately at the level of current tax receipts. If the basic inflationary pressures remain, the Government should set up a budget surplus--taxes may still have to be raised.

P: The reward for wise policies would be great: the next three years would see a rapid increase in productivity and a rise of about a third in the purchasing power of U.S. wages.

The penalties for unwise policy, it was clear, would be equally vast. Chester Bowles, who wants to finish his job, who has turned back suggestions to run for governor of Connecticut, whose more ardent friends think he should settle for nothing less than running for President, will have to get production started, for his own good and the nation's.

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