Price Control and the War


By LEON HENDERSON, Administrator, Office of Price Administration

Delivered before the Research Institute of America and the Sales Executive Club of New York, Waldorf-Astoria Hotel, and broadcast over National Broadcasting System, September 8, 1942

Vital Speeches of the Day, Vol. IX, pp. 25-28.

THE President has called upon the Congress and the country to provide promptly the necessary additional weapons in our fight for economic stability. All of you, I'm sure, agree with me that action directed at farm prices and wages was inevitable. Pending before the Congress is the new tax bill which extends further control over fattening corporate profits. That, too, I trust you will agree is a most necessary weapon.

All three were—and still are—essential to keeping our economic balance. The only real question has concerned the mechanics to be used to achieve that end. The President has offered a choice. Today we begin a new offensive in the fight against inflation and for stability. Whether or not we achieve it now depends upon how closely all of us, in and out of the government, work together or with a common purpose and common determination.

Some of us in the government have earned a certain amount of public disfavor by urging action along these lines for many months. I could show you some of the scars. The idea prevailed that we, in OPA, were on the prowl for innocent sheep, that we were stalking the economic jungle with a cannon, hunting a lamb. We have been stalking—but it hasn't been for sheep. We were hunting a wolf—you know the one in sheep's clothing.

Inflation is that kind of an animal—masquerading in a false skin, glossy and rich and very tempting.

Inflation always appears in the trappings of prosperity. Employment is up. Wages are booming. Farm prices are good. Factories hum day and night. New acres are plowed. Pockets are full and buying is frantic.

It's really a masquerade and our masks are a good-time Charley's grin. But when midnight comes and the masks come off we recognize ourselves for what we really have been—dupes of our own making.

The time-today-is midnight. There is no time left for masquerading. The world we live in today is grim and bloody. It is a world of hard reality and of hard fact. It will grow grimmer and more bloody. We better count on itsgrowing harder before it grows easier. It will grow far more so unless we check ourselves quickly—unless we are more realistic about the jam we find ourselves in than we have been thus far. We must look where we're going.

Those of us charged with the responsibility of looking ahead find the going rough sometimes. I have spoken of inflation as a wolf. It can be thought of, too, as a disease— a disease that must be fought with bitter, ill-tasting medicines. This audience, particularly, knows the symptoms of the disease we are doctoring. You know that the medicine is necessary. You know that the dose now must be stronger if the disease is not to become epidemic—and fatal. Indeed, many if you have lived through epidemic inflation and have seen its ravages.

Yet there are those among us in America, defying memory and common sense, who have been insisting on tempting fate in return for easy money. They have been taking a chance here, another one there. They chisel a little on this side and a little more on that one. What is the effect? It is to weaken the very controls that we have agreed upon as necessary to protect ourselves.

We all agree that major adjustments must follow those that have already been made if victory is to be won. These adjustments aren't the other fellows'. They are adjustments which all of us must make—as a nation and as individuals. We must see clearly our peril. We must see it, understand it; then face it and lick it. When we are prepared to do that—as individuals and as a nation—the controls of which some of us so frequently complain will rest lightly upon us. The temptation to cut corners and to chisel here and there will be less compelling. But until that time, these controls will fall heavily upon our daily lives and businesses. Until we face up to our responsibilities in this desperate fight, these controls will have to be progressively tightened. Victory in this war—and victory in this fight against inflation—will eventually be determined by the individual attitude that each of us take toward both fights. As individuals, the corner-cutters I have mentioned are quite obviously notin that frame of mind which spells victory. Nor is the attitude of mind which sees in OPA nothing except the exercise of an arbitrary and capricious authority the frame of mind which we need to win.

Let's look at this matter of attitude a minute. I'll give you a couple that are more or less typical. The first involves certain violations of OPA regulations. We moved into the situation via the courts. We didn't do that to throw our weight around. We did it because we found gross violations of controls designed to fight inflation and to keep the cost of living down. In a single day investigators in one area found several hundred instances of deliberate price boosts that would take a heavy and entirely unjustified toll from the public stimulating an immediate increase in the cost of living.

The attitude behind such practices by presumably responsible members of the business community surely is not consistent with the attitude required to give us the strength and the singleness of purpose necessary to win this war. In fact, I say that such an attitude creates conditions directly contrary to the success of our military effort, yet I assume that the individuals involved never considered it from that point of view. The easy money blinded them.

In contrast to that attitude of mind, I want to read to you part of a letter that came to me last week from he chairman of one of our Local War Price and Rationing boards—a small board in a small community. This man writes:

"On January 3, 1942, when our Board was appointed, we were called to St. Joseph, 50 miles away. A terrific blizzard had been raging. We made the distance in the wake of a snow plow. We were sworn in and came home and started to work with nothing except our willingness to serve. We had no office, no equipment, no clerical help. I gave the Board my office as headquarters. I paid the rent, furnished the furniture and supplies, paid for the light, heat and telephone and paid a clerk out of my personal funds for the first month. We were then authorized to hire one clerk, which was subsequently extended to three clerks. We worked days and nights trying to keep up with the work. We have developed a most efficient and hard working staff of which we are proud. We have just been advised by the State Organization officer that our clerk help will be cut to two instead of three. We cannot possibly handle the detail of the office on that restricted force. Our clerks work every day including Saturday and many nights until 10 p. m. or later. Personally I have given more of my time than I can afford to spare from my personal business and have lost many hundreds of dollars worth of business that I might have had, if I had devoted more of my time to it. This is not a complaint, as what I have done has been done willingly and as a patriotic service to the war effort. It has been done without any thought of reward save for the approval of my own conscience."

There, I say, speaks a man—a good citizen. We will see that he keeps that third clerk. There are, I am happy to tell you, thousands more men and women on those war price and rationing boards who are doing their jobs just as this man is doing his, who are seeing that job as he is seeing it and who are making of their work a truly major contribution to the success here at home of the fight for freedom that has now taken our men and boys around the world.

In the new offensive against inflation which the President has launched, that spirit must now prevail.

In my shop—in the Office of Price Administration—from here on in we intend to fortify the President with a strengthened insistence upon compliance with regulations. We propose to enforce price regulations wherever it is necessary to enforce them—and to enforce them to the hilt.

Nearly four months have now passed since the General Maximum Price Regulation went into effect. During that time our office has tried—and I am confident—succeeded in seeing that American business has been informed of its terms and applications. We have made adjustments under those regulations when it has been established that they have caused undue and unfair hardship. We have conducted a widespread educational campaign to inform business of its rights and obligations under the Act.

The Office of Price Administration has more points of contact in the field with those affected by its regulations than any other government agency exercising regulatory powers. To these points those affected have been able to go for information and advice. These field officers have been staffed as adequately as existing funds have permitted and more will be opened for the convenience of both the customer and business interests as rapidly as conditions permit. Through them, we have been able to reach both the customer and business as a whole and to them we have urged business to turn.

Because we have been able to inform business as a whole of its obligations under the Act, we may now assume that ignorance is no longer an excuse for price, rent, and rationing violations. It never has been a legal excuse. But we have from the beginning recognized that in an economy as vast and complex as ours the task of adjustment is also difficult and complex. We have sought to be tolerant.

I think that that tolerance has paid dividends. For the great majority of those affected by our regulations have complied to the best of their knowledge and ability. When errors have occurred, they have been willing and eager to rectify them. For the cooperation of American business and the American consumer, we are grateful. It has made the burden lighter. It has immeasurably aided us in the fight to maintain our economic stability.

Yet it would be unfair to them and a menace to our effort as a whole to permit inaction now to weaken the controls.

Therefore, I say to those in business and industry who have seen violators apparently going unpunished that the time of our tolerance is past. Every willful violator of price regulations, every landlord who seeks to evade rent control, every trader in black markets of goods under rationing or under limitation—whatever his motive or station—challenges the war effort of the nation. To the limit of our ability and appropriations, we in the Office of Price Administration will meet that challenge.

We must now, I repeat, go forward on those lines. We cannot do otherwise. For the results of failure to win this battle against inflation and the high cost of living means disaster through retarding the war effort itself, in damaged civilian morale, in the effort to maintain throughout this land the kind of homes to which our soldiers want to return when the war is won.

Inflation can do all of those things. It can destroy homes as effectively as high explosives and extend its menace into the peace that is to come. Yes, it can dim today and darken tomorrow. What is that tomorrow? It is one that all free men want and for which as free men we all must fight. And what is that fight?

We are fighting for a land—and a world—which tomorrow must offer every man honest work at fair pay just as long as he is able and willing to produce.

We are fighting for a land—and a world—in which a man's honest productive efforts will assure him and his family adequate food, clothing, shelter, medical care, education and recreation.

We are fighting for a land—and a world—which tomorrow must offer freedom of enterprise, with labor free of compulsion, business and industry free of unregulated monopoly.

We are fighting for a land—and a world—of freedom for the human spirit and the human will, and for the supreme dignity of the individual.

These are our goals. They are the goals to which free men aspire. They are things which we can achieve.

But none of them can—or will—be achieved except at a price—a price of sacrifice in blood and treasure for many, a sacrifice—and how little it is in comparison—of prerogatives and privileges and the business of living as usual.

None of them can—or will—be achieved unless we here at home now assume our full share of responsibility. That is the least that is demanded. Let no man assume that this is a war for special privilege. Let no man assume that we are fighting today for any single individual or in the interest of any special group. We are all in this war—and the stakes are all or nothing. This is a people's war.

This enormous effort calls for discipline. Fortunately, this great land is quite capable of imposing a good deal of self discipline when necessary. Operations under the General Maximum Price Regulation are an example of that discipline. It was not written as a mere exercise in arbitrary public power. Our rent regulations were not designed to make life miserable for landlords. We are not rationing gasoline and sugar and tires and automobiles and typewriters just to satisfy an ambition for power.

All of these things—and those which are to come—have been made necessary by our effort to keep our economy in balance and to distribute justly and fairly those things of which there are not enough to go round under our old scheme of free buying and selling.

I am sure that there is no one in this room who now holds that these efforts have not been essential. I am sure there is no one in this room who would abolish the price ceiling on steel nor the ceiling on copper and textiles.

I do not want to pour on a lot of statistics but I can say that the ceilings now in effect both under the General Maximum Price Regulation and under the special orders which have followed have saved the Government billions on war contracts and the consumers more billions on those things which they buy and which are so well described as cost-of-living items.

It is important for us to remember from where these regulations come. None of the limitation orders; none of the rules we have adopted spring from any source except war. The impact of this war upon us has necessitated every move we have made and dictated every action we have taken. Nazism and the Fascist curse are the source of the trouble. They have made necessary the strict self-discipline we face. Upon them rests the ultimate responsibility for the dislocation, death and destruction which threaten this world. And so long as they exist upon this earth, dislocation, death and destruction will be with us. Therefore, it is imperative that we must destroy them. We must destroy everything for which they stand. It is, after all, a philosophy and not a man we are fighting. It is also a philosophy and not a man we are fighting for. Both these philosophies are dynamic. They are mutually exclusive. They cannot share the world between them. We have reached that point where, as I said a moment ago, free men's stakes are all or nothing. If we can grasp that point—grasp it clearly and without qualifications of any kind—we are a long way toward the victory we free men seek.

With such an attitude we can move ahead. We see these controls in their proper perspective. We begin to associate all of our activities with the war itself. We begin then tointerpret the controls and restrictions in terms of military necessity. The General Maximum Price Regulation and the individual regulations become just as much a war order as those which are issued to the troops upon the decision of their officers. Our perspective has been pretty foggy at times. We have not thought exclusively in terms of war. We are finding it difficult—some of us in the extreme—to make the necessary adjustments from the comparative independence of peace to the collective effort required in this total war.

You would perhaps be surprised to know how closely our efforts in this country—efforts directed at stabilizing the economic front, are observed by our enemies. They do not focus their attention exclusively on the military moves we make, nor upon the production of our weapons. They well know the importance, the vital importance of economic developments on the home front. They are looking always for a crack in our economy. They know that as that crack widens the nation's morale is weakened; production declines; the military effort suffers and they can begin to see victory for themselves—and practically by default.

Let me illustrate that. Last week I was selected by the Berlin radio for a bit of analysis. The Nazi commentator was telling the world how price control in the United States under Leon Henderson was failing. Part of the failure was ascribed to what the Nazi characterized as inner political resistance and lack of clearness in setting forth what he called the price-political objective. He was cheered by the discovery that major concessions had had to be made to special groups in the economy. This, he was confident, pointed to a continuing deterioration in the Government's effort to maintain stability at home.

Well, being the kind of people I know we are, the Nazi mouthpiece will ultimately have to change his tune. He will have to change it because this country is finally beginning to see what we must do to perfect the controls we have established. It becomes increasingly demonstrable—it is no longer a theory—that we can't have part of our economic forces controlled while other powerful elements remain uncontrolled. We face an increasing menace to our whole society if prices, wages and profits are not held in balance and under certain restraints straight across the board. Without such uniform controls and without a willingness generally to comply with the requirements of those controls, the Nazi commentator would be right and the title of his talk—"Henderson's Hopeless Fight"—would have been most appropriately prophetic.

I mentioned a moment ago the necessity for willingness to comply with regulations. What does the lack of that willingness imply and where may it lead? Let me give you an example.

This example happens to be in the field of rent control. It involves a tenant and a chiseler—and there are harsher words that would do as well. This landlord told his tenant, a war production worker, that he was going to sell the house the war worker was occupying, and that the tenant would, therefore, have to move. The tenant was offered a chance to buy the house. He didn't have the money, however, and so he moved. But in order to find a house he had to take off three days from his job as a war producer. And when he found the house, a chain of moves began. The man in the house he found had to move. He, too, had to take time off from a war job. He, too, had to find a house. And when he found it, still another tenant had to move. The chain finally built up to eight links—eight war production workers and their families forced to move in a dislocation created by a single landlord.

And mark this well. The purpose for offering the housefor sale was to cash in on the war boom—to make money and to evade or avoid rent control.

Because of this one landlord, eight men lost time from war production. They were subjected to the strain of looking for new quarters in the midst of an emergency; under circumstances where their bargaining power was at a minimum. They lost a substantial amount in wages. Their efficiency on the job was impaired. Did the original landlord consider the consequence of his actions before he ordered the first man to move? I doubt it. I'll give him that much credit. He was able to disassociate himself entirely from the war. I regret to say that his case can be multiplied a hundredfold on the rent front. Such people are exercising the greatest ingenuity in trying to nullify rent control. These men, whose attitudes show clearly why rent control is necessary, are in the front ranks of fighters against it—the only kind of fighting, by the way, they are doing. To them, I also say, that our tolerance is exhausted. They are interfering directly with war production. We have letters from war production plant managers telling us that workers forced to seek new quarters have lost more time than has been lost to the plants by strikes. I repeat that from here on in these Hitler helpers must expect the limit we can inflict by way of discipline.

And right here, I would like to take up for a moment a question that frequently comes to us in OPA—and an answer, entirely false, that is frequently given. The question usually comes in a letter that runs something like this: "Dear Mr. Henderson: I have been told that you have more than 100,000 detectives in the field who are hired to investigate sugar and other rationed articles. This is ridiculous. Why don't you do something about it?"

It often happens, as in this instance, that the writer not only asks the question but answers it himself. It is ridiculous, and it isn't so. We don't have 100,000 detectives in the field. As a matter of fact, we don't have any detectives in that sense of the word. We in OPA are not engaged in the business of spying on our fellow citizens. We are not a Gestapo. We do not snoop. Such investigations as we make when evidence of violations is sought, are conducted according to the established customs for handling such matters under a democratic system of government.

No, we are not administering a prohibition amendment. We are not trying to trap people into violations. We operate under a statute passed by the Congress of the United States. As the administrator of that law, I have very definite responsibilities. One of these is to see that such regulations to carry out the will of the Congress are made to stick.

There are certain things we can do—all of us—to help with this job. To the consumer in general, I have recommended—and I recommend again—that in the case of merchants operating under General Maximum Price Regulation, for example, you patronize only those who are complying. You should trade only where prices are posted and where the store is trying its best to be a good soldier in this fight against economic disaster.

It may seem to you as a consumer that there is little you can do in this battle. As a matter of fact, there is a lot. It really isn't hard to resist the urge to buy something you don't need. Somebody else may need it and there may not be enough to go around. It shouldn't come hard to resist being wasteful. We can't afford waste at this point. We've had great orgies of it in the past. We have been the most wasteful folk on earth. But let's cut it out now. Pull it your belt. It's good for you to deny yourselves some of the things to which you have been accustomed. Make the things you wear, the equipment around the house last longer. Take care of it. Conserve those important resources. You won't be able to replace the lawn mower; the egg beater; the vacuum cleaner for a long time to come.

Don't patronize the gasoline and tire bootleggers. We'll attend to them. It isn't smart to dodge any of the regulations. Besides it will be expensive, dangerous, painful, and mortifying. They are designed to protect all of us. If they are to succeed, they must be observed in spirit as well as in fact. As I said, this is not an 18th Amendment game we're playing. This is life and death. There is blood on the sands of the Solomon Islands—American blood—and on the coast of France, and in the desert of Africa. American sailors are dying on the Atlantic and on the Pacific. Many heroic merchant seamen, whose magnificent contribution to this war will some day be adequately written, have died to get you gasoline. Others are dying to carry around the world the weapons and supplies our forces need to fight.

Perhaps if we had seen the blood on the Solomons sand; death in the desert—perhaps if we had been at Midway, or maybe if we had seen an oil-covered scorched body of a merchant seaman, we could more easily make that final plunge into the realities of this war and what brave men and women around this world are doing on the action fronts. If we can't actually see them, we must visualize clearly just these things and act with the spirit that motivates the man who dies in those foreign lands that his country and all it means may live. Measured by those standards what kind of a man is he who refuses to be summoned to action—to the all-out effort here at home? I'll skip the answer to that one.

No, as the President said last night, we haven't quite gotten to the point of it all thus far. We're still living pretty much on the fat of the land with all that that implies. What sacrifice have we made who have sent no son, no father, no brother, or sweetheart to war? Is there sacrifice involved in national income of 113 billions of dollars? Is there sacrifice in four hundred per cent increases in profits; in 71 per cent increases in wages and salaries; in 75 per cent increases in farm income? No, I think not. We have little cause to complain about what the war has done to most of us here at home. That is not to say that these increases in many aspects were not justified. It is not to say that in factories and on farms they were not needed. It is not to say that the re-employment of millions was not greatly to be desired. But it is to say that the luxury of free spending cannot be continued without disaster. That is why we as a nation have imposed controls. That is why we have insisted that there should be more. We cannot do with less than the things we have to do to keep our house at least in minimum order and ready for normal occupancy when this war is won.

Of course the wage earner is against restriction on a steadily increasing pay check. Naturally, the farmer resists action that would limit his part of a growing share in the national income. Of course, the sight of fattening profits being trimmed is not welcome to the beneficiary of those profits. But are we fighting this war for Victory or for personal profit?

But look at the other side of the coin. Do you think that John Brown from down the block went into the army, or the navy, or became a flyer merely for the fun of it; just to be in a uniform? No, John Brown is made of the same kind of stuff as the rest of us in this country. He submerged a great many of his desires. He willingly accepted infinitely greater restraints on his freedom than we at home have had to accept. John Brown knows his duty more clearly than Johnny's father sometimes does. And Johnny has placed his very life at the disposal of his country and he didn't file a law suit to try and restrain that country from using it. Could Johnny do more? He could not. Ask yourself if you can do more to help at home and I suspect the answer down deep in your heart will be "Yes."