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Your Pocketbook 51-06-20 The Threat of Inflation
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Your Pocketbook 51-06-20 The Threat of Inflation
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- [00:00]
Ryan Seacrest
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- [00:24]
Unnamed Announcer
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- [00:31]
Julius S. Wickler
In cooperation with the Office of Price Stabilization, the station to which you are listening presents your Pocketbook. The featured speaker on today's transcribed program is Julius S. Wickler, OPS Deputy Regional Director for New York and New Jersey. Mr. Wickler.
- [00:50]
Unnamed Speaker
As most of you already know, your pocketbook is usually devoted to a discussion of the operations of the Office of Price Stabilization. Today, however, I want to talk to you not only about the Office of Price Stabilization, but also about a related subject that I believe is a vital and imperative concern to each and every person who calls himself an American. I want to talk to you about inflation and of the threat inflation is to our national security. You all know that with the start of the Korean conflict a year ago, prices in the United States started an unprecedented rise. You all know that we are fighting in Korea to prevent a worldwide domination by communist forces. What many do not realize or have forgotten is that inflation marches at the side of Communism. In the battle to destroy our way of life, many persons reacted to the price spiral by demanding that government do something about it. When price controls were introduced as the law of the land, many people seemed to be generally satisfied that this was a step in the right direction. But not all. Some said in effect, of course, we need price controls on the other fellow or control prices, but don't control the prices I charge. I am an exception. My business is different. Of course, many businesses have their own special problems and price control is difficult for all. But there can be no exception to equal sacrifice in keeping America strong. Let me take a few minutes of your time to explain why we have price controls and other economic regulations at the present time. Even prior to the Red invasion of South Korea, our government was aware that the only way to fight the threat of communism was to build and maintain a strong national defense, not only in manpower, but in the power to produce goods. Initially, our program called for the expansion of our armed forces through 1952 until they reached the strength of of about 3 million men. Initially, it was thought that parallel with the expansion of our armed forces, our productive economy would gradually shift its emphasis from a wholly peacetime production to the double job of producing for civilian needs and a large scale rearmament program. With the start of the Korean conflict, however, we were obliged to hasten the process in order that we would be prepared to meet aggression wherever and whenever it threatened. When the President of the United States signed the Defense Production act of 1950, he did so because he knew the chips were down. He knew that if this nation was to survive as a free nation, we must be prepared. Even though the citizens of the United States and the nation would have to undergo some sacrifices economically. It was expected that the effects of the shift to a defense economy would show in two closely related ways. First, production for defense would naturally cut down production of civilian goods. Secondly, increased defense production would mean more people working, more people earning more money, and with the urge to buy more goods. Here are the seeds of inflation. If more people are working and making more money, they buy more goods. The only problem is that there is a greater demand for fewer things to buy. This may not be apparent when shelves are loaded with goods, but it will become increasingly obvious as our industries expand their fence they air defense production. Some say that if the stage is set for inflation, why shouldn't we just let it develop? Why shouldn't we just let it take its natural course? Why indeed? But listen for a moment to these illustrations of inflation in action.1. For every 2% increase in the general cost of living, Our defense budget, for which we all pay taxes, must be increased at the rate of $1 billion a year.2. At today's prices, our armed forces can only get two airplanes. For the amount of money that was originally set aside for the purchase of three, they can buy only two tanks, two guns, and yes, only two stretchers for the money that had originally been set aside for the purchase of three of each of these needs of war. According to the Bureau of Labor Statistics, wholesale prices today are 20% higher than they were a year ago, 16% higher than they were at the time Korea was invaded. We all know that materials needed in the national defense effort are produced by the latest mass production techniques. Normally, these techniques and the large volume of products involved would result in lower prices. But except in very rare instances, these anticipated reductions in prices per unit of merchandise have not occurred. Inflation has already increased the cost of raw materials and labor and and these increases have been reflected in higher prices. To date, these increases have amounted to more than 7 billions of dollars over original defense budget appropriations to date, these increases have eaten up almost one fifth of our original national defense appropriation. In effect, the United States has already lost $7 billion worth of defense equipment. And this loss of guns, tanks, planes and stretchers has been just as damaging to our national security as if it had been shot down in battle or captured by the enemy. Our government is currently contracting for defense goods and labor at the rate of $5 billion a month. And if current expectations are met, much of this money will start flowing back into the economy in the fall of this year, at just about the same time that civilian production will be decreased by the expansion of the defense production I mentioned a moment ago. The government is planning to continue to contract at that average rate of $5 billion a month for defense, hitting the peak of productive spending sometime in late 1952 or early 1953. To fight disastrous inflation, our government moved early on the old and basic assumption that an ounce of prevention is worth a pound of cure. The administration's program called for the alignment of domestic forces on three fronts. It was planned that we would inflight inflation three ways, by controlling prices and wages and by levying new taxes. Now, these three methods of battling inflation were and are theoretical programs. Until they are fully understood and backed by the people of the nation, Their ultimate success or failure will be largely due to the manner and extent of individual cooperation. This cooperation is naturally implicit insofar as the tax aspects are concerned. But as far as wages and prices are concerned, and especially with regard to prices, your cooperation is needed on a full time basis. In an editorial in the New York Herald Tribune of June 5, that newspaper points up a basic point of consideration in the present Washington discussions of an overall control program. What the Herald Tribune says, and I quote, is between now and July 1st, Congressmen need to take a fresh look at the economic scene, Taking in what lies in the distance as well as in the immediate foreground. To look only at the foreground is to miss the most important features of the picture. The foreground shows some tapering off tendencies in prices and incomes, and it shows even some hardships. Spotty unemployment, employment, some denials of consumer wants, a few burdensome accumulations of unsalable inventories and some cuts in profits. Some lobbyists have tried to persuade Congress that the economic scene is all foreground. Since we are now enjoying a breathing spell from hyperinflation, they say we shouldn't have adopted anti inflation controls in the first place. They never admit that one of the main reasons for our having escaped ruinous Inflation as well as we have is that our combination of taxes and economic controls has been set at least moderately effective during the first year of defence mobilization. This is a reason to strengthen these restraints and not to scrap them. The Herald Tribune editorial goes on to say, and I am still quoting, the other main reason for our having escaped really ruinous inflation is that we have been very slow in moving from the Armament Drafting Board to the assembly lines. Our factories poured out huge quantities of civilian goods. But to prevent inflation by producing civilian goods instead of arms is to lose the main struggle. Winning that struggle means that in the course of switching to arms output, we shall cut civilian supplies while civilian income is still rising. Those spending forces must be kept in check by taxation and controls. The time to stop the time bomb clock is now. What the Herald Tribune says then, is that control should not only be continued, but they should be strengthened. What I say is that controls will be immeasurably strengthened if they have your full backing. If you are a businessman, you are privileged to grumble about the restrictions that price controls place on your operation. But it is your national duty to cooperate. If inflation is allowed to develop, it may well be that you won't have any business operations to control. Remember that the price regulations issued by the Office of Price Stabilization have been written into as fair and equitable a manner as is possible, and written in cooperation with many business experts. They have been written for the good of a nation and for your own personal and business security in the long pull we face in this troubled world. If you are a housewife or a consumer, cooperate fully with the economic mobilization program by buying only what you need when you need it. Don't be frightened into panic buying and don't hoard. Avoid black markets. Remembering always that it takes two to make a black market a buyer and a seller. If you refuse to be a black buyer, black marketeers will disappear like so many bad dreams. As businessman and buyer and seller, remember that the Office of Price Stabilization has been developed for the protection of all against a common threat. If you are not clear on the purpose of the Office of Price Stabilization or how it affects you, call us, write us, or visit us. All of our district offices are staffed with friendly people whose job it is to help you. And if there are times when the economic mobilization program seems erroneous to you, remember that when you are being asked to do is nothing when compared to what is being asked every day of our youth in Korea. If, having listened to my words, you are honestly and sincerely able to answer yes to the question am I doing my best to help my government in these trying and perilous times, then you are fulfilling your highest obligation as a citizen. Remember, too, when asking this question that in your answer lies the future of America and the fate of a nation.
- [14:35]
Julius S. Wickler
You have just heard an address by Julius S. Wickler, deputy regional director for the Office of Price Stabilization in New York and New Jersey. Mr. Wickler was a featured speaker in this week's edition of your Pocketbook, one in a series of transcribed programs designed to keep you fully up to date on the national price stabilization program. Your Pocketbook is edited and produced by Bill Silek, and this is Mario Yarn speaking.
- [14:57]
Ryan Seacrest
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- [15:21]
Unnamed Announcer
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