The Freeze

All week long, Price Stabilizer Michael DiSalle bustled around Washington with a satchelful of dummy regulations, pronouncements and memoranda. "When you bob a cat's tail," he explained, "you cut it off close to the body, not an inch at a time. Otherwise, you always have a sore tail--and a mad cat." Mike DiSalle's bosses in the mobilization high command agreed. All that remained was to determine just how close to the body to slice, and when.

The whole U.S. knew the controls were coming. What held them up was one last wrangle over wages. Congress had decreed in the Defense Production Act that if prices went under control, wages would have to be controlled too. But the three labor members of Cyrus Ching's Wage Stabilization Board balked at putting their names to a wage-freeze order; they could hardly face the union rank & file again if they had a hand in initiating one. Cyrus Ching, a man of overabundant patience, laid the problem before his boss, Economic Stabilizer Eric Johnston; Johnston, under pressure from above to act by the weekend, decided reluctantly that he would have to sign his own name to the wage decree.

Finally, one afternoon last week, the Government was ready to bob the cat's tail. Ten minutes before a scheduled press conference was to begin, Johnston handed the wage order to Cyrus Ching, who hardly had time to skim through it before he lumbered into President Truman's press-conference room in the old State Department building. There he was joined by Mike DiSalle and his satchel. But before either had a chance to begin, a press officer let the big cat out of the bag: "Mr. DiSalle and Mr. Ching are here to discuss a wage & price order issued today, freezing prices & wages as of yesterday."

Under Control. A dozen newsmen stampeded for the door to flash the news to their offices. Photographers clambered over bodies and exploded bulbs in the faces of DiSalle and Ching; reporters ran in & out to scratch down answers to a few questions, then phone more of the news to their desks. Cy Ching moaned softly, "If I ever get out of this mess..."

In that atmosphere of tumult and frantic improvisation, the nation got the news it had been waiting for: prices & wages, which had zoomed to the highest levels in U.S. history were finally under control. The controls reached down to the farthest corners of the giant U.S. economy. They were wrapped up in two sweeping decrees, which covered three principal areas:

Wages. Frozen temporarily as of Jan. 25 for everyone--corporation presidents, movie stars, baseball players, as well as factory workers, truck drivers, day laborers.

Prices. Frozen at the highest level they reached between Dec. 19 and Jan. 25--meaning, for all practical purposes, a freeze as of Jan. 25. Exempt: real estate, professional fees, publications, broadcasting, insurance rates, transportation fares and rents (plus raw wool and cotton--although cotton goods were frozen).

Food Prices. Because the congressional farm bloc had written into the law a provision specifically exempting farm prices below the level of parity,* they would be handled in three ways. Products already bringing parity prices (beef, pork, lamb, veal, rice) are frozen as of Jan. 25. Products now selling below parity (milk, wheat, corn, poultry, butter and 70 others) will be allowed to rise all along the line on a straight dollars & cents basis until they reach parity levels. In both cases, controls begin after the products leave the farm. Exempt: fresh fruits, vegetables, fresh fish, seafood.

Better Than Nothing. Both the price & wage decrees were admittedly only stopgaps. The Government had decided to act first and work out details later. The freeze was far from perfect. It was speckled with pinholes and blatant inequalities, with provisions that had to be altered almost immediately, with questions that would take weeks to answer. For one thing, there was no rollback of sky-high prices. DiSalle had pressed for one, but a rollback would have required another precious two or three weeks, while prices continued to zoom. The general rollback was abandoned.

The wage order raised almost as many problems as it settled. It blanketed all wage and salary earners; yet some were in occupations that could obviously not be subject to wage controls; it ran across the provisions of already negotiated union contracts (see below). It was unworkably inflexible.

But no one claimed perfection for the big freeze. "It may . . . impose inequities upon some particular individuals or businesses," admitted Mike DiSalle. "But the inequity caused by action cannot be compared to the far greater inequity that inaction would inflict upon the great mass of the American people."

Few thought that the freeze would stop inflation, because it was aimed at the effect rather than the basic cause (see BUSINESS). The decrees were the raised hand of the traffic cop who had to bring all the cars to a halt before he could untangle a traffic jam. As the immediate din of beeping horns, screeching brakes, cursing drivers and pedestrians indicated, it was going to be a long, tough untangling job. But, at last, the jam was under control.

* A formula designed to guarantee the farmer a "fair return" for his products in relation to the cost of what he buys.

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