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Jack Ranger

Tapping the Wall St. Wire

(16 May 1949)

From Labor Action, Vol. 13 No. 20, 16 May 1949, p. 3.
Transcribed & marked up by Einde O’ Callaghan for the Encyclopaedia of Trotskyism On-Line (ETOL).

Why Truman Worries About Inflation

A great many people have been puzzled by the persistence with which President Truman, in the midst of growing unemployment and reported widespread price reductions, has continued to assert that inflation is a very real danger. Why does the White House continue to insist about the dangers of inflation?

It is a fact that no serious analysis of Truman’s position has appeared in the public press. The daily papers (most of which are organs of the Republican Party) meet the president’s repeated warnings with remarks about ‘regimentation.’ They add that the real danger lies in the opposite direction. Apparently, few reporters suspect that there is a possible connection between the end of the boom and renewed dangers of inflation.

The situation merits more serious comment than has yet been paid it. It is more than possible that Truman knows what he is talking about when he expresses concern over possible inflation.

Should the business decline continue, at some point the administration will have to interfere drastically to halt and reverse the trend. American capitalism, neither at home nor abroad, can afford another deep depression. Some White House advisers, it is reported, believe that the time has already come for the government to act. The majority hold that any broad concerted action now would be premature.

It appears now as though the Truman administration will have to intervene drastically in the economy in an effort to stave off a depression.

I believe that the president is thinking ahead to this situation when he continues to warn of the dangers of inflation.

The indicated way in which the administration will act is along the lines of preparations for the Third World War, for the tremendous task of wrenching American industry from a peacetime to a wartime basis. The system cannot give both peace and prosperity. But it can give war and perhaps a renewal of the hopped-up economy of the early ’40s.

Such vast government spending is implied in this program as to make very real indeed the threat of great inflation. For one thing, it would mean a return to deficit spending, to the period when the government cash outlay would again exceed the tax harvest.

Even now the burden of servicing the national debt of $251 billion exceeds the total cost of government prior to 1934. A switch to production for war would involve a tapering-off of the production of consumers goods. The brief decline in prices would halt and would again turn upwards. The currency printing presses in the Treasury Department would begin working overtime. Money would be cheapened. Inflationary forces would be at work everywhere.

This, in all probability, is what Truman and some of his advisers fear, and this is why the president continues to sound the warning.

Cost of Living Rises Again in March

Despite the reported drop in the prices of a number of commodities, it is remarkable that living costs in March actually went up, rising half a point above the February level.

Though prices of basic farm commodities have fallen, retail food prices went up a full one per cent in March. Prices of fruits and vegetables, as well as of rents, contributed to the overall rise in the cost-of-living index. Retail prices for moderate income families rose 3 per cent above February levels, and were 1.6 per cent above March 1948 levels, and 72 per cent above the level of August 1939, according to the Labor Department’s consumersprice index.

This rise in living costs is being felt with unusual severity by millions of families which now have one or more breadwinners out of work.

Even where family wage-earners are still working, their wages have in some cases dropped suddenly because of the end of overtime work and work on night shifts, usually paid for at higher hourly rates. In the opinion of some economists, this drop in overtime pay and night differentials is having a more serious effect on the economy than the growth in unemployment.

Relief Cases Up Considerably

In 15 major U.S. cities, the number of public relief cases increased 9 per cent between January 1 and March 1, according to a survey by the American Public Welfare Association. This is considerable more than seasonal, and more than last year, when the increase in the same months was only 5.6 per cent. In Chicago, relief cases in February 1949 were 20 percent more than in the same month last year.

As the relief load grows, some cities are starting up the whole business that so many of us recall from the dreary 1930s. Dayton, Ohio, for instance, has reinstated its depression work relief program, and at the beginning of March had 412 men at work.

The Chicago Journal of Commerce recently demanded editorially that relief clients be put to work “on street ‘maintenance’ – meaning street-cleaning for the most part.”

American capitalism has never been able to assure employment for all those able to work, at jobs for which they are fitted and trained. So long as unemployment doesn’t go beyond a few million, however, it can still offer street-cleaning jobs to jobless tool-and-die workers, machinists, building tradesmen, etc.

And it can “spread the misery.”

Recently the president of a large company urged that every employer “assure those of his people who have been with him two years or more that they should have at least three days’ work a week, no matter what happened.”

A number of plants are said to have adopted this principle. Instead of laying off workers, they are reducing the work week. This is supposed to be a very handsome gesture on the part of the “free enterprise” system, and to signify to the workers that management is thinking of them every minute. From the viewpoint of management, this step is being taken in the belief it will stem fear, and prevent depression turning into a panic.

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