National Affairs: The Comet’s Tail

The fate of the world most assuredly depended on the U.S. economy. That freewheeling, capitalist machine whizzed along raucously. But even the most inexpert mechanic could detect portentous coughs and burps. Was the machine overheating? Last week the machine’s most sensitive gauge—prices—continued to creep up the dial.

Prices terrified the Administration, which urged consumers to curtail their buying. Prices chilled some Republicans, who feared for their political necks. Prices had the average housewife mumbling like a woman in a bad dream.

The Happy Farmer. The dream was real. And the prices of food were the most haunting of all. Butter in New York sold for 87¢ (59¢ last September). Prime ribs of beef sold for 77¢ (50¢ last September). Eggs sold for 90¢ (65¢ last September).

And no one, not even the harassed consumer, according to a Gallup poll, expected those levels to hold. As wholesale food prices continued to soar (the price index was already up 14% since a year ago), as corn and steers reached new alltime highs, as wheat hit a seasonal price record, retail prices would follow like a comet’s tail. Butter, dealers said, would soon reach $1 a pound (it already had, on the Pacific coast). Eggs would reach $1 a dozen. Steak was already $1 a pound in New York, where restaurateurs discussed taking most meat off their menus.

The only people who were happy about it were the farmers, whose cash receipts were $17.4 billion in the first eight months of this year, 21% higher than the same period last year, when their income was at a record. But even for the farmers happiness might be mostly a delusion. In Iowa they were having to pay as high as $2,900 for a Chevrolet in an automobile black market which had also skyrocketed.

A Brief Relief. The inflationary pressures came from all sides. Wages were still on the rise. Last week’s biggest raise —15½¢ an hour— went to one million non-operating railroad workers(clerks, shopmen, etc.) and 75,000 Railway Express Agency workers. The railroads, which had asked for a 16% boost in freight rates, promptly raised their request to 27%. Another inflationary factor was the Administration food-export program. According to Washington economists, the index of food prices rises 17 points every time the U.S. sends $500 million worth of food abroad.

One segment of U.S. society saw a chance for some brief relief. The day came last week when World War II veterans could cash their terminal leave bonds. They stormed the banks, which cashed about $100 million the first day. The veterans wanted money, they said, chiefly to pay their bills. The first stampede dwindled off, but by week’s end the veterans had cashed more than 23% of the $1.8 billion in bonds which the Government is holding for them. The conversion of $420 million into spending money would of itself increase the inflationary pressure.