JULY 15, 1946
HYDE PARK, Sunday—I was particularly glad yesterday to learn of the forming of the new Council of American Business, Inc. This seems to be a group of progressive businessmen, from all over the United States, who want OPA controls primarily to prevent inflation. They seem to remember history, and in the letter which I received they quote facts going back to the period after World War I, when we tried combating inflationary pressures with a free price system.
They remind us that, in 1920 and thereafter, we did not achieve a balance between supply and demand because the demand did not hold up to the supply, since the public could not buy goods at the peak to which inflation had carried prices. A so-called balance was finally achieved by the falling off of demand to such a point that a third of our factory workers lost their jobs and the farmers were producing far more than they were able to sell. The annual average farm income dropped from $1,360 a year to $460 a year, and 453,000 farmers lost their farms through mortgage foreclosures. By 1921 the manufacturers of the nation went into the red to the extent of $55,000,000—after making, in 1919, $5,896,000,000.
These are some figures we had better think about. Sometimes history is instructive.
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As I listened over the radio yesterday morning to the provisions of the new OPA bill, it seemed as though it would have less meaning than before. Under this new bill, for example, rent control would be exercised only in such states as had not set up state machinery to control rents. Since there are very few states that have passed their own rent control legislation, it would seem more sensible for the whole problem to be handled on a federal basis.
I was glad to see that as ceilings were being taken off dairy products and meat, they were also going to be taken off grain. It would be impossible to ship grain to the famine countries if we control the price of grain, yet remove all price control on meat and livestock and dairy products. The demand for grain to be diverted for food would be greater, and the prices in the United States will promptly go up and translate themselves into higher prices for meat and dairy products. The balance between the supply of all products and prices and our real needs is essential to prevent world famine.