PHASE I

Aug. 15, 1971-Nov. 13, 1971

WAGE-PRICE FREEZE

A clampdown on nearly all pay and price increases, with the major exception of unprocessed farm products. The Cost of Living Council is created, with Treasury Secretary John Connolly as chairman, to enforce the freeze. Compliance is widespread, though some unions complain that the rules are antilabor.

EFFECTIVENESS: Excellent.

Inflation reduced to an annual rate of 1.9%.

PHASE II

Nov. 14, 1971-Jan. 11, 1973

WAGE-PRICE CONTROLS A system yardstick designed to keep inflation in firm check. Wages are to rise no faster than 5.5% annually, prices no more than 2.5%. Profit margins are controlled. Enforcement is divided between the Pay Board and the Price Commission. Compliance is mixed at first, then moves to within acceptable distance of the goals.

EFFECTIVENESS: Extremely good. Inflation cut to an annual rate of 3.4 %

PHASE III

Jan. 11, 1973-June 13, 1973

PARTIAL DECONTROL A move toward voluntarism in which Phase ll's yardsticks are loosened. The Cost of Living Council, with Labor Economist John T. Dunlop of Harvard as chairman, again handles enforcement of both wage and price rules. Compliance is progressively less complete, especially on price increases, with little objection from COLC.

EFFECTIVENESS: Terrible. Inflation soars to an annual rate of 9.2%.

FREEZE II

June 13, 1973-?

PRICE FREEZE

A second ban on price--though not wage--increases for up to 60 days, again with farm-level prices for food products exempt but not those beyond the farm level. Companies that posted big price increases during Phase III will be audited, and special attention given to retail food and gas prices. COLC is to enforce the freeze and plan Phase IV, which the President promises will have "tighter standards" than its predecessor.

PHASE IV ?

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