On With Inflation

After two weeks, 200 cigars and thousands of words. Leon Henderson lifted his bulky body from the witness chair of the House Banking & Currency Committee at last week’s end, trudged back to his office. The committee was tired of hearing about price control (TIME. Aug. 11), was going home for a vacation.

There was no vacation in prospect for Leon. He left the committee room with the same powers over prices he had when he entered: none at all except those he could exercise through OPM’s priorities section. But prices were still shooting up and it was still his job to keep them down. He was supposed to slay the dragon of inflation with a rubber sword.

The committee’s recess meant at least a full month’s delay before any action would be taken on the price bill. Moreover, the committee’s two-week needling of Leon & bill made clear that there were further delays ahead. Members would return with enough questions to last till Christmas. Only thing likely to hasten them: a price rise so steep that the entire nation yelled in pain. Then a law might be too late.

Politics-as-Usual. Like many another defense project, price control got lost somewhere in Washington’s maze of politics-as-usual. When Henderson sat down with the committee fortnight ago, the job of talking the bill through Congress looked easy. His thesis that the nation was “on the brink of inflation” could be substantiated by simple charts: wholesale prices of 28 basic commodities were up 50% since the beginning of the war; from the pre-war level food costs were up 13%, house furnishings 4.7%, clothing 3%. Without the price bill, the U.S. would repeat its experience of World War I, when (according to a Baruch estimate) inflation increased the Government’s cost of war by $15,000,000,000, led to the disastrous panic of ’21. It was that simple.

Or was it? Once Henderson finished, questions and fun began. Although the bill permitted farm prices to go to 110% of parity, farm-bloc Congressmen wanted the figure raised to 120%. Because it provided for no wage controls, right-wing Congressmen thought they saw a New Deal plot to squeeze manufacturers. Republicans and conservative Democrats alike objected to putting control in Leon’s New Dealish hands, wanted to create instead a five-man board.

As introduced, the bill was a muddled compromise with which Henderson himself was privately dissatisfied. And he had to defend it against attacks which had nothing to do with the issue.

Comic-Opera Finish. One day red-hunting Martin Dies charged on the floor of the House that Henderson had sponsored Communist-controlled organizations. At the next committee hearing Leon jumped to his feet, blurted that Dies was “not a responsible member of Congress.” When Georgia’s Edward Eugene Cox described him as “a man operating under the alias Leon Henderson,” Leon angrily cited his family tree back to 1800 to prove that he was no alien with an Anglicized name. Winding up like a badly written comic opera, the hearings proved only that politics and economics cannot speak the same language, even in a crisis.

Thus blocked, the Administration moved along other lines to try to keep prices down. One step was the Federal Reserve Board’s installment-sales regulations. Meanwhile Congress sped inflation further on its way by passing H.R. 5306, which freezes Government cotton and wheat stocks (TIME, Aug. 11). The President was expected to veto it this week.

As for Leon Henderson, all he could do was go back to his office, announce more price ceilings, hope that by some miracle they would be obeyed. Last week he put ceilings on raw sugar, burlap, copper, pig tin, pine lumber. But bootlegging has put holes in Leon’s previous ceilings and doubtless will continue to riddle his new ones.