Bulge After Death
After 2 1/2 years of controversy, the nation's first peacetime wage-price controls died last week, leaving disillusion and double-digit inflation in their wake. Almost immediately, prices began to scoot higher on a wide range of goods, including cars, light bulbs, liquid oxygen, some air-conditioning equipment and those basic materials, steel and copper.
The Administration made some pleas for restraint. In a speech to the U.S. Chamber of Commerce, President Nixon warned businessmen and labor leaders that "if the fires of inflation continue to burn too strongly, demand for controls will come up again." John Dunlop, head of the Cost of Living Council, sent telegrams to more than 200 companies that had signed agreements to keep prices down in exchange for an early release from controls. He reminded them that the Administration considered their commitments to be still binding. The force of his warning was somewhat weakened by the fact that un der present law, the COLC itself will go out of existence on June 30, leaving no agency to enforce the pacts.
No demand for controls was very ev ident last week. The Senate defeated a move by liberal Democrats to give the President power to reinstitute wage-price restraints for another year. It gave preliminary approval -- by only a 44-to-41 vote -- to a much more limited measure granting authority to reimpose controls on companies that violate formal price-restraint agreements. But even that proposal must still get final approval in the Senate and then the House, where it faces strong opposition. AFL-CIO President George Meany and other union leaders are putting heavy pressure on Democrats to kill all controls, which they contend held wages down while letting corporate profits soar. In the same vote, the Senate also endorsed a measure to create a new agency to replace the COLC. It would have power to call public attention to inflationary moves by companies, unions and the Federal Government, and even subpoena businessmen and labor leaders to public hearings. But it could not issue any orders to roll back wage or price increases.
Price Boosts. Whatever happens, most experts expect at least a temporary further bulge in living costs following the end of controls. The beginning of that bulge appeared quickly. Last week, U.S. Steel kicked up prices an average of 5.7% on its entire product line. Anaconda, Kennecott and Phelps Dodge jacked up copper prices by 18%, to 800 per Ib. Chrysler added an average of almost 3% to the price of all its cars and trucks, and Westinghouse raised the price of its light bulbs by 10%. Hedonists will be hurt: the newsstand price of Playboy will go up 25%, to $ 1.25 a copy. The annual "membership fee" charged to holders of American Express credit cards will rise 33%, to $20. On the blue-collar front, 12,000 West Coast members of the International Longshoremen's and Warehousemen's Union saluted the end of controls by walking off their jobs for one day. Two years ago, the COLC knocked 300 an hour off the wage increase that the union had negotiated. The dockers now are bargaining to get that 300 and more.
There was one bit of happy news for consumers: predictions of record harvests this fall caused farm prices to fall 6% in the month ended April 15, the second straight decline. Citing lower livestock costs, the Hormel packing company cut the price of its meat products by 7% to 14%. Among other things, the price of Spam will drop by 7-c- a can.
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