Equality of Sacrifice
OUR FUTURE LIVING STANDARDS
By LEON HENDERSON, Administrator, Office of Price Administration
Radio address delivered over Station WOL and the Mutual Network, June 5, 1942
Vital Speeches of the Day, Vol. VIII, pp. 595-597.
TONIGHT I am to speak to you about the President's national economic program. I am going to talk straight from the shoulder, for it is terribly important that everyone understand clearly what the program calls for and how essential the program is to the winning of the war. This is a tough war. To win it, will take everything we've got. It will take the work and sacrifice of every man, woman, and child in the country. That's not pep talk, it's cold fact.
We all know that the war will have to be won on the battle fronts. It will have to be won out there where our boys are fighting—on the sea, in the air, and on the land. It can't be won anywhere else. But whatever the courage, whatever the heroism, of our boys out there, the war can be lost right here on the home front.
The war can be lost unless you and I—unless the entire civilian population—do the job that is assigned to us, and do it right. The President's program provides the strategy for the home front. It shows us our battle stations. It gives us our marching orders. The rest is up to us.
What is it that is expected of us? I can put it in three short sentences.
We must produce to the limit of our capacity and our strength.
We must produce more than we have ever produced before.
And we must learn to live on less.
That's what it takes. Only in this way can we put into the hands of our boys the weapons that will insure and speed the final victory.
That means we must reorganize our daily living to one of stern self-denial, so that our fighting men will have all that they need. Today we call this conversion, but down the centuries men have known that in time of war they must beat their plowshares into swords and their pruning hooks into spears. They have known what we know today, that to achieve victory in the field there must be sacrifices at home.
We face a savage cut in our standard of living. This is one of the grim necessities of war. No one is unwilling to make these sacrifices. Everyone recognizes that they are part of the cost of victory. There are only two questions in people's minds. First, are the sacrifices being distributed fairly? Second, are we making sure that every sacrifice is translated into effective fighting power? In other words, is the sacrifice fair? Does it count in the final victory?
Before the announcement of the President's program, we were already pulling in our belts. In April of this year we on the home front consumed almost 10 per cent less of goods and services than we consumed last August. This meant sacrifice, it meant the first stage in cutting our standard of living.
But this sacrifice was neither fairly distributed nor, I am sorry to say, did every part of it count in furthering the war program.
The sacrifices we civilians made we made through paying higher prices. We were spending more and more money, but we were getting fewer and fewer goods. The housewife, spending her carefully planned budget, came back from the store with a lighter market basket because prices were up 2 per cent one month, 3 per cent the next. Her dollar was not going as far as it used to.
But not every housewife came home with a lighter basket. Many were able to bring home a basket just as heavy as before because their incomes were large enough or had increased enough. Still others came back with heavier baskets.
This means some families were making a heavy sacrifice. Others were making a light sacrifice. And some were actually better off because of the war.
Everyone bitterly resented this increase in the cost of living. I believe it was because everyone recognized how unfair were the sacrifices brought about in this way. Everyone saw that rising prices were imposing harsh sacrifices upon some and giving windfall profits to others. A few were made richer while many were made poorer.
Because the nation's sacrifices were distributed so unevenly and because there was no assurance that these sacrifices counted in the war effort, there was uneasiness, distrust, and social and industrial friction. I do not think it is unfair to say that in the months before the President spoke, many were engaged in a scramble to advance their own selfish interests, to get what they could without regard to the national interest.
This hurt production. Vitally needed materials were being hoarded, precious time was lost in industrial disputes, men felt they were unfairly treated and did not produce what they were capable of producing. Not everyone understood the economics of the situation, but everyone sensed that this was no way to fight a war.
It was to stop all this that the President formulated his seven point program. This program is designed to distribute the sacrifices of war fairly and to make those sacrifices count. This program stabilizes our economy. It assures the full marshaling of all our productive power for the prosecution of the war. It guarantees a healthy and sound productive system when this business of war is over.
Under the President's program we have made a frontal attack against the rise in the cost of living and have brought it to a halt. The General Maximum Price Regulation hasput a ceiling over practically every retail price at its March level. These prices cannot go up; they can only go down. Rents in war production areas, where 90 million Americans live, have been stopped from further increase. Wherever present rents are too high, they will be put back to a fair level.
The stabilization of the cost of living is no longer a promise. It is a fact. Every worker now knows how far his wages will reach. Every farmer now knows that when he harvests his crop the dollars he gets will not be frittered away in rising prices for the things he buys. Every saver, every purchaser of War Bonds, now knows that his and her savings are secure, that their value will not be eaten away by inflation. The worker, the farmer, the saver—all of us— know that this is true so long, and only so long, as the cost of living remains stable.
We at the Office of Price Administration are determined to keep it stable. Whether we succeed or not, depends not alone upon our administration of the price ceiling. It depends upon the effective carrying through of all the other parts of the President's seven point program. It depends upon the stabilization of wages and of farm prices. It depends on our paying heavier taxes and increasing our purchases of War Bonds. It requires restrictions on consumer credit, and the paying back of debts. It requires the rationing of all essential consumer's goods that become scarce so that all of us may have what we absolutely need.
All these parts of the President's program are necessary to secure equality of sacrifice. They are necessary for the continued success of our control over the cost of living.
As to stabilization of wages, we face the basic fact that the war program is cutting down the supply of consumer's goods. At the same time, it is swelling the stream of civilian incomes. If wages and other incomes continue to grow at the same rate they have this past year, the pressure of swelling spending power upon the shrinking supply of civilian goods will smash through our price ceiling.
Rising wage rates not only add to the dollars bidding for a dwindling supply of goods, but they increase the costs of production. It is true that in some industries profits are large enough to absorb increased wage rates and still maintain ceiling prices. In many industries, however—particularly the civilian industries—this is no longer true. In these industries, rising wage costs would force a break in the universal ceiling. I want to say frankly, that unless wage rates are stabilized—that is to say, unless wage adjustments are limited to remedying substandard and inequitable conditions—the cost of living cannot be held. We shall be back where we were before the President spoke. The choice before us is just that simple.
The stabilization of farm prices is equally necessary. Food prices constitute a third of the cost of living. Because of the agricultural provisions in the emergency Price Control Act, a number of farm products cannot now be brought under the ceiling. Furthermore, unless Government-held feed stocks can be sold at present prices, a rise in the price of feeds will force up the costs of producing meats and dairy products. The Congress must take action to permit the stabilization of farm prices. Unless this is done, the cost of living cannot be held. Here, too, the choice before us is just that simple.
The President has recognized that the stabilization of farm and wage incomes is not enough. Supplies of goods are decreasing and must decrease more every month. Purchasing power must therefore be brought down into balance with diminished supply by increased taxes and savings. The Treasury has recommended such a tax program. It is designed to insure that the cost of war is borne equitably, by each according to his capacity. It would reach incomes lowerthan have ever been reached by direct taxation. It would sharply increase the taxes levied upon high incomes and upon business profits. This is the largest tax program—and the most drastic, at both ends of the income scale—ever to be placed before Congress. But it is no larger, nor more drastic, than the situation requires, and it is fair to all.
All these measures and the other items of the President's program which will be discussed later in this series, fit together. Each is necessary for the full effectiveness of the others. But even the most complete success of these measures cannot eliminate the need for one other element of the President's program, the administration of which also falls to me—rationing.
There will be many goods the supply of which will be so short that we shall have to step in directly to insure an equitable distribution. Already we are rationing automobiles, tires, sugar and gasoline. Before long there will be other items. Sometimes we shall be able to share and share alike. Sometimes the shortage will be so great that distribution can be made only upon the basis of need; some of us will have to go without. All this is going to be irksome and annoying. I ask you to remember, when you are confronted with the inevitable irritations, that it is war which creates the scarcities and that rationing, however trying, is the only means by which acutely scarce goods can be distributed fairly.
We are not going to plunge into rationing all across the board. But we are prepared to move promptly where it is necessary. How far we shall have to go will depend upon public good sense and self-discipline. There will be manygoods of which the supply will be enough to go around if everyone thinks before buying and buys only what he absolutely needs. But if many who can do without go ahead and buy; and if others buy ahead of their needs, or hoard, stocks will run out and rationing will become necessary.
We in Washington have been immensely gratified by the magnificent response of the American people both to the rationing programs and to the general price ceiling. This has been a response by consumers and by producers and distributors as well. Despite personal inconvenience and actual business hardship, they have cooperated wholeheartedly.
There are, of course, some who cheat, through thoughtlessness or greed. The law is plain enough and plenty tough. We mean to enforce it, against the thoughtless and the greedy alike. I know that the great mass of the American people want us to enforce it. They are willing and eager to make the sacrifices required of them. But, I repeat, they want to be sure that their sacrifices are fair and that they count.
The President's program gives us that assurance. Under his leadership and under this program, we know that the sacrifices will be distributed fairly and that they will count toward victory. We can all march forward together to do the job—the biggest job of our lives—a job in which no one must hold back waiting for the other fellow—a job in which, thanks to the President's program, no one feels he is the loser by plunging ahead. As I said at the outset, the President has shown us our battle stations, he has given us our marching orders. From here out, it is up to us.