BRIDGING THE GAP

Otago Daily Times, Issue 26622, 19 November 1947, Page 5

BRIDGING THE GAP

MR TRUMAN’S APPEAL INTERNAL ECONOMIC READJUSTMENTS WASHINGTON. Nov. 17. Authority to ration scarce commodities and to reimpose control of prices, wages and rents was sought by President Truman in his speech at the opening special session of Congress to-day. He said such authority was essential to halt “ alarming ” inflation. He coupled his appeal with a formal request for 597,000,000 dollai's for stopgap aid to Europe in the next four and a-half months. The importance of the occasion was emphasised by the fact that it was only the twenty-sixth special session of Congress since the Federal Government was established in 1789. The most recent one was that convened on September 21, 1939, by President Roosevelt to repeat the Neutrality Act at the outbreak of the Second World War.

President Truman began by saying: “ The future of the world’s free nations hangs in the balance. The future of our own Economy is in jeopardy. The action which you take will be written large in the history of this nation and of the world.”

After describing the steps taken in drawing up plans for interim aid for Europe the President said Austria needed 42,000,000 dollars, Italy 227,000.000, and France 328,000.000 to buy food, fuel and other essential goods during the next four and a-half months. Additional funds would also be required to maintain the American position in occupied areas. “ Emergency assistance by itself will not solve the European problems,” he said. “ Emergency aid is not a substitute for a long-range recovery programme, but it is a vital prerequisite to such a programme.” The President continued: “If the Western European nations should collapse this winter as a result of our failure to bridge the gap between their resources and their needs there would be no chance for them—or for us—to look forward to their economic recovery. Provision of interim aid will give us time to plan our part in an economic recovery programme. I shall shortly submit to Congress my recomvmendations concerning the long-range programme.

“It is a tribute to the strength of our democracy that we are able to make so great a contribution to the freedom and welfare of other nations We are assisting free nations who have sought our aid in niaintaining their independence; we ha\?e contributed large sums to help rebuild countries devastated by the war; we have taken the lead in breaking down the barriers to world trade.

“On several occasions during the past year,” he said, “I have reported to. Congress on our general economic situation. These reports have told of' new high levels of production and employment. Farmers are producing 37 per cent, more than in 1929, and industry is producing 65 per cent. more. In terms of actual purchasing power the average income of individuals, after the deduction of taxes, has risen 39 per cent.

“In each of my reports, however, I have had to warm of the dangers which lie ahead. To-day inflation stands as an ominous threat to the prosperity which we have achieved. We already have an alarming degree of inflation, and even more alarming, it is getting worse.

“Since the middle of 1946 fuel has gone up 13 per cent., clothing prices 19 per cent., and retail food prices 40 per cent. The average for all cost-of-living items has risen 23 per cent., and the cost of living is still climbing. In the past four months it has risen at the rate of 16 per cent, a year. “ Wholesale prices are r ising, too. They affect every industry and trade, anck are soon translated into retail prices. Since the middle of 1946 wholesale textile prices have gone up 32 per cent., metals 36, building materials 42, and the average increase has been 40 per cent.” After '.referring to the disastrous effects of price inflation on every section of the community, the President said it also threatened the American foreign aid programme. “We cannot abandon foreign aid, nor can we abandon our own people to the ravages of unchecked inflation,” he said. “We cannot allow this nation’s strength to be wasted and our people's confidence in our free institutions to be shaken by economic catastrophe. We shall be inviting that catastrophe unless we take steps now to halt runaway prices. “ Our immediate approach to the problems of high prices and inflation should consist of three types of measures —to relieve monetary pressures, to channel scarce goods into the most essential . uses, to v deal directly with specific high prices.” President Truman then outlined the following Legislative programme:— 1. Restoration of control over hirepurchase and restraint of inflationary bank credit. 2. Regulation of speculative trading on grain and other commodity exchanges. 3. Extension and strengthening of export controls, which, under the present legislation, are due to expire in March. 1948. 4. Extension of the Government’s authority to allocate transport facilities and equipment to ensure delivery of goods for export. 5. Measures to control marketing of livestock and poultry -to conserve grain.

6. The empowering of the Department of Agriculture to expand the programme for encouraging conservation practices, and authorising measures “ designed to increase the production of foods in foreign countries.” 7. Control of allocations and inventories and controls of scarce commodities basically affecting the cost of living and industrial production. 8. The extension and . strengthening of rent control. 9. Consumer rationing of scarce products basically affecting the cost of living.

10. The reimposition of price and wage ceilings. The President said he believed there should be few occasions in which wage ceilings would be necessary.