The New Policy

In 10,000 words (some of them ambiguous), Economic Stabilizer Chester Bowles this week told industry what the new wage-price policy really means. The clarification still left vast areas of fog. The policy does not mean, said Bowles, that the 18 1/2-c--an-hour steel increase is to be the pattern for U.S. industry. Nor does it mean that a wage boost, alone, is enough to get a corresponding boost in price ceilings. But the policy did mean, he said, that companies can now get prompt price relief if 1) they have been squeezed into the red by rising wages and low ceilings or 2) a forecast of earnings indicates that profits will fall below the 1936-39 period.

Said Bowles cheerfully: "[The new policy] means quicker settlement of wage problems. It means prompt price relief where hardship exists. . . . It means that the way is cleared for all-out production." What was more to the point, he finally admitted what businessmen have been wearily saying: OPA's cost absorption policy has reached its limits in many an industry, including household furniture, low-cost clothing and household appliances.

Production has been stymied because it is unprofitable. (General Electric, for example, says it was losing $4 on every washing machine it made before the strike.) Now, presumably, these industries can expect that further increases in costs will be passed on to consumers.

Up in the Air. But on wages, the new policy left employers right where they were--up in the air. Bowles said that each case will be considered on its merits. A different "pattern" of increases will be set for each industry. The general objective will be to let wages rise 33% above 1941. However, wage increases not approved by the National Wage Stabilization Board cannot be used as a basis for a price increase. Thus the red tape which now tangles wages, prices and production looked just as snarled as ever.

Nevertheless, in marked contrast to his truculence towards businessmen only a few days before, Bowles showed a sweetly reasonable air. Then, he had stood up before the National Farmers Union in Topeka, Kans. and tonguelashed the "irresponsible, reckless, greedy organizations [who opposed price control] . . . the National Association of Manufacturers . . . the heads of the National Retail Dry Goods Association with all the phony propaganda . . . the real estate lobbies . . . the packers' lobby and textile lobby."

If he was trying to get a rise, he got one. N.R.D.G.A.'s President Benjamin H. Namm shouted right back. The Association, said he, "does not seek an end to price control." What the Association did want was to change the way price control worked, notably many of the things which Bowles himself now admitted needed changing.

Down to Earth. To step up production of low-cost cotton materials and clothing, OPA granted textile mills increases which will bring them $250,000,000 more a year, add 5 to 15% to the prices of shirts, shorts, etc. OPA also gave a price boost to makers of men's & boys' suits. Now manufacturers who have been hoarding them, waiting for just such an increase, may put them on the market.

All this means that the consumer will pay more for many an item. But it also means that he may be able to buy articles now off the market. For cheap articles, he may pay considerably more than he did before the war. But if the policy works, he will save money in the end by being able to buy cheap goods again instead of expensive substitutes. Most encouraging of all was the evidence that Bowles and businessmen were beginning to think along the same lines.

This file is automatically generated by a robot program, so reader's discretion is required.