Why Price Controls Stopped Working
Samuelson, Robert
Why Price Controls Stopped Working... by Robert Samuelson “I don’t want to brag about how dumb I am, but this job is plain as astronomy to me. I understand everything about it except what...
...Also, trot over to the Federal Reserve Board and see what the Committee on Interest and Dividends did last winter...
...A lot of fertilizer was already tied up in longterm export contracts, but the Council didn’t know how much...
...Exempting the fertilizer industry would inevitably stimulate exemption requests from other industries...
...It hadn’t always been so...
...As chairman of the CID and the Fed, Burns was moving in opposite directions simultaneously...
...This lecture left me unimpressed...
...Institutional sluggishness...
...People wanted inflation down and employment up...
...The explosion of loans occurred precisely when economists recognized that the U. S. economy was in the midst of a demand boom and was desperately in need of some restraint...
...People would accuse the controllers of sabotaging their own program without any good reason...
...Some have even called it plodding...
...The gamble backfited...
...You take a look at the fertilizer industry, then try plastics...
...Burns apparently thought this impossible to do, disastrous to try...
...Never turn down a free meal...
...Rates were pushed ahead, then rolled back...
...Of course, some trivia sells newspapers, but I doubt you’ll stir up much interest with productivity statistics, or the peculiarities of the cement industry...
...Consider rents...
...That was disappointing...
...All this, of course, undermined competition...
...Second, competition in the plastics industry became more political and less economic...
...There would be mistakes...
...The results were mixed...
...by Robert Samuelson “I don’t want to brag about how dumb I am, but this job is plain as astronomy to me...
...Burns’ primary motivation in standing up to the banks was not so much to hold interest rates down as to head off legislation that might place interest rates under mandatory con- , trols...
...Take them to lavish restaurants...
...A very predictable thing soon happened: with U. S. prices held down by controls, fertilizer fms began shipping their supplies abroad...
...He was engrossed in what he was doing, which was playing wadball...
...Of course, the controls hadn’t seemed to work just right this time, but I suspected that we hadn’t seen the last of them...
...The wads came from a computer print-out sitting open on his desk...
...And what do you say to that...
...He stared at me blankly...
...Controls didn’t operate in a vacuum...
...Plants need nitrogen...
...Sure, there is a simple solution: just throw on an export ban...
...Most citizens, in my view, are likely to be surprised at the small impact estimated for controls, since Aug...
...Prices have been artificially restrained...
...Finally, people tried to get around the price ceilings...
...His swivel chair, with him in it, faced...
...At the same time that Bums was arm wrestling with the banks, Congress was considering extension of the Economic Stabilization Act, which finally expired ’ last April...
...But rent is a highly visible and emotional symbol of inflation...
...There are some things, like oil and a lot of other minerals, we have to import...
...The days of Fortress America are over...
...Competition is supposed to be a good thing...
...Everybody makes a mistake now and then...
...The possibilities aren’t hard to imagine...
...6, 1974...
...I told him what I had found and asked him what it proved...
...If controls hadn’t been lifted, more fertilizer would have been sold abroad...
...Contemptuously, he handed it to me...
...If your interest survives, come back and see me in a couple of weeks...
...hog farmers, confronting the same costprice squeeze, limited expansion of output...
...Because the petrochemical companies were still selling considerable amounts of supplies in the U. s., you could stay in production if you knew the petrochemical company’s marketing vice president better than your competitor did...
...No one will ever really know...
...Wage-price controllers were constantly being tugged between the two realities, but, with their eyes glued to the monthly price indexes, they were always tempted to do anything that might give them instant success, minimizing the possible ill aftereffects-which might take years to surface...
...Some thing like what happened in Britain...
...In fact, there are a lot of people who think that the only sure way of curing inflation is to create more competition: competition keeps prices down, but when concentrated industries are freed from the checks of competition, they can raise their prices at will...
...Ultimately the Council exempted both the fertilizer and the explosives industries...
...And what about Burns’ dance with the prime rate...
...He was getting bored...
...one by ex-Price Commission Czar Grayson...
...Bureaucracies habitually react to problems, rather than anticipating them...
...The Japanese were just as angry at us when we cut off their soybean exports last year as we are at the Arabs...
...Everybody loses at that game...
...They knew that the cost of money-that is, the interest rate-would be higher later, so why not take advantage of a bargain while it lasted...
...Those were my three rules of life...
...So, in Phase 11, the Price Commission tried to control rents...
...You don’t want to do that...
...Suddenly, there were a lot more brokers,” says John English, executive director of TOPP...
...Over the years the prime rate had become a media superstar, attracting enormous attentionwell beyond its real importanceany time it changed...
...Nor, I found, did many people dispute the fact that economic controls had contributed to the shortage...
...Controls or no controls, there would have been a shortage...
...How much damage did it do...
...Rent was only five per cent of the Consumer Price Index, but explaining and enforcing the rent rules took 50 per cent of the IRS’s time...
...The rules were monstrously complicated...
...Rive Gauche...
...If you want to be totally cynical about it, imagine the following scenario...
...And when you’re finished, you’ll know why controls don’t work, but you won’t be able to explain it to anybody, and, even if you could, no one would listen...
...We weren’t selling to Japan...
...Not because Bums was head of the CID, but because he is chairman of the Fed...
...It was war spirit...
...The controls fell apart because of the world market...
...No one knew quite how many small plastics firms had been forced out of business, whether they had been forced out permanently, or whether they might have gone bust under any circumstances...
...If people keep thinking that controls failed only because of Nixon, then we’ll throw them on again and maybe next time we’ll have ourselves a national economic show-down like the one in England...
...In my business, the best news is bad news...
...Wright Patman, the formidable chairman of the House Banking and Currency Committee -were agitating to require Burns (or someone) to regulate all rates...
...There were risks...
...These items hadn’t been included in the coverage of the original Economic Stabilization Act, but, to give the appearance of being even-handed with business and labor, the Administration believed it couldn’t ignore them...
...The CID, as it was called, maintained a “voluntary” system of controls over interest rates and dividends...
...We found them difficult to explain, and the general public couldn’t understand them...
...It was Statement of John T. Dunlop, Director, Cost of Living Council, Before the Subcommittee of Production and Stabilization of the Senate Committee on Ban king, Housing and Urban Affairs, Feb...
...Demand had risen spectacularly because the government had freed nearly 60 million acres of land for production...
...The greater the supply, the lower the price...
...Everyone agreed that, temporarily, controls could arbitrarily keep prices down...
...The final analysis said that controls had generally kept non-food prices down 2.3 per cent...
...But it isn’t...
...To give but one example: the domestic price of polystyrene was effectively frozen at 18 cents per pound, while the world price was more than three times as high...
...But this might be an exception due to an unusual political situation...
...Under Phase IV rules, the broker could probably sell at a free price, because, being a “small businessman,” he would have been exempted from price rules...
...I understand everything about it except what you have done and why, and what you’re trying to do and how...
...He reached into his desk drawer and pulled out another thick, softcovered, brown book...
...There was another problem...
...He wasn’t encouraging me...
...I like to pamper my sources...
...Then there was Phase 111, Phase IV, and, now, Phase-Out...
...If the controls were perceived to be succeeding-that is, if inflation was low-the pressures would be to keep them...
...That’s the picture the press painted...
...Even after the industry’s appeal, the Cost of Living Council hesitated...
...It was not a very satisfactory experience...
...Page 24 reminded me that the Cost of Living Council had commissioned a number of reputable economists to try to figure out the overall impact of controls on prices...
...But if inflation picked up, people naturally would think they needed more, not fewer, controls...
...You couldn’t buy new cars or tires...
...Prices soar...
...You had to wait for the reason to develop...
...The world was complicated...
...You could blame it on stupidity, or ignorance, but, in the case of government bureaucracies, there was a more fundamental reason: a problem has to exist before it can be solved...
...There’s nothing very special about it...
...After all, Phase I had seemed to do a pretty good job, before it was called off...
...Human nature...
...Economists deluded themselves if they thought they could skillfully manipulate the controls to avoid all the pitfalls...
...It did succeed in neutralizing pressure for mandatory interest rate controls, but its economic consequences may have been less benign...
...Like most economic reporters, I had a graduate degree from the Great Yawn School of Journalism: if you can’t put ’em to sleep after three paragraphs, you can’t write economics...
...Most of the companies are relatively small, with fewer than 200 workers and annual revenues ranging from $500,000 to $20 million...
...Issues get publicized, and positions get polarized...
...The artificiality of prices created enormous gaps between firms...
...Nobody did care...
...Some of the big plastics companies had a natural advantage over the smaller firms because they made their own petrochemicals...
...The experiment with direct food controls had failed conspicuously...
...He’d been there from the beginning...
...I knew the problem...
...It’s 18 months before a national election...
...At that time, major commercial banks began to raise their so-called “prime rate”-the rate of interest they charge to their very best business customers (less trustworthy borrowers usually received loans at a fixed level above prime which rose and fell with fluctuations in the prime...
...There’s a lot of press coverage...
...But people were generally willing to accept these things...
...Oh, sure...
...People are capable of sacrifice, but you have to give them a reason...
...Consider fertilizer...
...Well, maybe not...
...Every 20 seconds or so, he ripped off the top page, methodically crumpled it up, and arched it toward a metallic wastebasket 30 feet away...
...The future, then, looks comfortably chaotic...
...Think back on your illustrations-fertilizer, plastics, lumber...
...It’s the American obsession with ‘getting on with the job.’ We like to think we’re moving, even if it’s in the wrong direction...
...But what program didn’t have risks...
...World prices of petrochemicals (the essential raw ingredient for plastics processing) soared above domestic prices, tempting major petrochemical manufacturers (about 25 giants, including DuPont, Dow Chemical, and Exxon Chemical, supply about half the country’s plastic resins) to export their product...
...It was a frustratingly ambiguous conclusion...
...The more widespread pressures were of a subtler variety...
...The fertilizer industry had argued that it needed higher prices to help build new factories, but the controllers hadn’t been too impressed with that argument...
...His work inspired similar torpor...
...But it is not, alas, what happened...
...In fact, none of our manufacturers were selling on the world market, or at least they weren’t selling unless the government wanted them to...
...If land costs rose, if labor costs rose, and if local taxes rose, it followed that rents would have to rise...
...The time lag was no surprise...
...You couldn’t take the price ceilings off fertilizer to avoid the problem...
...At worst, he was pouring the proverbial oil onto the fire...
...the more they advertised, the more paper you needed...
...The economists fed the statistics into their computers, ran the numbers forward and backward, subjecting them to -all sorts of generally incomprehensible , but respectable, forms of analysis...
...It was called Longterm Economic Growth, 1860-1970, published by the Census Bureau...
...Of course, no one really wants to know what happened,” he said, pawing at his barbecued beef platter, which I’d bought for him for $1.75...
...We’ve had enough bitter municipal strikes to prove that...
...But what good would all the books be...
...As chairman of the CID, he fired off telegrams to big banks, demanding that they justify the higher rates and declaring that the increases threatened the Administration’s anti-inflation program...
...Remember, World War I1 was no bed of roses...
...If company A bought its petrochemicals at the fixed price, but company B bought its supply at a free price, three or four times as high, it wasn’t hard to figure out which f m would prosper...
...Burns realized this...
...The explosives industry complained that if it weren’t exempted, it wouldn’t be able to compete with fertilizer manufacturers for ammonia nitrate, which is used in the manufacturing of both fertilizer and explosives...
...If that was all he was going to tell me, I figured I’d be better off reclaiming the barbecue and taking it home...
...Souci...
...The Arabs can play the game to win, because they have enough of the world’s oil to set the rules...
...Never work unnecessarily...
...As long as inflation persisted, the thought would come to mind: “Let’s try some controls again...
...Politics demanded instant and simple solutions...
...Lawyers in the Price Commission and the Internal Revenue Service found them difficult to write,” C. Jackson Grayson, chairman of the Price Commission, would recall later...
...If controls had a good chance of succeeding, the risks might be worth taking...
...Sans Robert Samuelson is a Washington writer...
...Even before 1973, as the econometric studies tended to show, controls hadn’t been the dominant influence on the rate of inflation...
...The puzzlement on his face told the story: he’d figured that any one of the items he’d given me would poison my curiosity...
...You couldn’t turn the controls on and off like a light switch...
...The price controls are added to make wage controls politically palatable and give the impression of impartiality...
...Dunlop summarized anticlimactically : This hearing is not the place to appraise such econometric studies, but it is important to report the range of effects of controls on wages and prices estimated by these professional simulations...
...We tried revision after revision to clarify and simplify, and each time we seemed to generate more confusion...
...Controls were being dismantled...
...We can’t play the game that way...
...Fertilizer gives them nitrogen...
...Before reverting to that, though, I decided to reinterrogate my Source...
...All that could be said was that the controls had made a bad situation worse...
...Inflation is unacceptable...
...Maybe plastics would yield a more dramatic moral...
...Brokers are waving their greenbacks...
...The party wins big, but, after the elections, the problems of the controls become increasingly apparent...
...Or, as one trade publication put it: “A black market is thriving...
...III...
...Given the oil shortage, there would have been a scarcity of petrochemicals anyway...
...landlords would cut back on service and maintenance, and, ultimately, new construction might decline...
...His door was open...
...What does he do...
...It loosens their tongues...
...During the war no one cared if the world price of fertilizer was rising...
...The Fed is keeper of the nation’s credit supply...
...He went back to his play and put six wads into the can...
...But we’ve learned a little lesson from King Faisal lately...
...Maybe they would work if this were World War 11...
...You dig up the unattractive details, expose them to the light .of day, and then use them as a trampoline ’to jump to Sweeping Generalizations...
...Copper and scrap steel supplies also had flowed abroad because domestic prices were held artificially low...
...There was still an annoying detail in the back of my mind...
...Years later, of course...
...Stop them...
...The same thing that happened in fertilizer happened in plastics...
...I figured I might get my money’s worth for the barbecued beef...
...The bigger the crop, the greater the supply...
...First, business success-indeed survival-became a matter of who you knew, not how well you ran your business...
...Lumber had been withheld from the market...
...Housing conditions varied too greatly from city to city...
...But he was probably right...
...It is, almost certainly, the picture that Burns sought to project...
...there were lots of landlords and lots of builders...
...The industry hadn’t expanded in the last few years, because it was just emerging from the economic slump in the late sixties...
...One analysis concluded that controls had had no impact at all...
...The confrontation with the banks was designed to undercut that campaign by demonstrating that Bums was already fighting to hold down the key rates...
...And hadn’t controls done the trick in World War II...
...Did he expect to see them back...
...The story was simple...
...1 watched him sink 10 straight before interrupting...
...Anyway, housing was generally very competitive...
...Unemployment is high...
...Never stand when you can sit...
...OEP, with nothing better to do, was switched to economic controls...
...While Bums was busy sitting on the prime rate, big businesses were stumbling all over each other to take out new bank loans...
...The plastics industry was awash with stories of slick deals, says English...
...The process works in reverse, so less fertilizer will probably mean higher food prices...
...Take a kickback from a grateful buyer, desperate for petrochemicals to keep his plant running...
...Well, Lesson Number One was about political reality and economic reality...
...Both producers and consumers were unhappy...
...You could select your reason from a gallery of possibilities: to keep people’s minds off Watergate...
...There have always been numerous “brokers” in the petrochemical business, buying large supplies of petrochemicals from major firms and reselling to smaller plastics processors...
...But fertilizer was no freak breakdown of controls...
...Not many economists believed rents could be effectively controlled on a nationwide basis...
...Okay, so there were a lot of problems...
...The potential for political abuse is enormous...
...Much of the business borrowing would probably have occurred anyway...
...Not all these could be cavalierly ignored...
...Hence the CID...
...I had seen this one before...
...The record of‘ government in bargaining situations isn’t too good...
...Controls are a natural target for strike or protest...
...Why couldn’t they work again...
...In effect, the government bargains with big unions...
...to restore “credibility” in his economic program...
...It was like chocolate: you could eat a lot of chocolate, but you might get cavities...
...By this time, he was beginning to warm to the sour sounds of his own voice...
...The incident which interested me occurred in early 1973...
...Worried about rising prices and climbing interest rates, congressmen-particularly Rep...
...The lesson in all of this, he said, is simple: controls involve large risks, but promise small rewards...
...a young detective in Dashiell Hammett’s “Red Harvest,” 1929 I. Every investigator has his own style, and I have mine...
...He got up...
...If you want to know, you’ve got to talk to cattle ranchers, so you understand meat prices...
...Act honestly...
...But the stories were prone to exaggeration...
...Prices were going up...
...You just ordered them to stay down...
...They were selling at home, and at home the price could be controlled...
...He was a senior economist for the Cost of Living Council...
...To pay for them we have to keep exporting...
...Its upward movements in early 1973 drew the customary page one stories...
...This was his last day...
...Controls had worked then, and they’d worked longer than they’d even been tried now...
...There are a few essentials to know about fertilizers...
...Remember fertilizer...
...He must sell the chemicals at prices fixed by government ceilings...
...He was an awesome talent...
...The exhilaration lasted about threequarters of the way through Phase 11, which would be about September, 1972...
...Look what the independent truckers did to the oil allocations, and they were weak and unorganized...
...To the average man, it’s just a lot of trivia...
...Farmers, faced with rising feed costs-which hadn’t been controlledsmothered baby chicks and sent their breeder chickens off to slaughter...
...Gasoline was rationed...
...Many of the small independent companies soon ‘realized that their problems lay in Washington: if they could ease the Phase IV rules, allowing domestic prices to rise to world levels, then some of the chemicals would stay in the U. S., and American firms could bid for supplies...
...It was an intriguing picture: Arthur Burns holding the big, greedy banks in line, battling to keep inflation under control, and protecting the interests of the common man...
...Eventually, the Cost of Living Council partially decontrolled petrochemical prices...
...Removing the price ceilings, of course, would allow U. S. buyers to bid for the scarce supplies on an equal footing with foreign purchasers...
...What is certain is that a lot of petrochemicals weren’t being sold in the open market...
...After all, it took three years to build a new fertilizer plant...
...They worked until the moment they were taken apart by the Republican Congress...
...He watched them drift slowly across the room, and, as they disintegrated, he continued : “Look, if you still want to do this story, you’re going to have to do the work yourself...
...the triple dose of arsenic was guaranteed to do the job...
...What about World War II...
...I doubted it would...
...He seemed surprised to see me...
...Back in 1971, he was the government’s expert on titanium stockpiles, working anonymously in the recesses of ihe Office of Emergency Planning...
...He pulled out a cigarette and blew six of the most perfect smoke rings I’d ever seen...
...This, however, requires money, and, lately, my income and expenses have been running wildly in the wrong directions...
...People forget that wage-price controls are fundamentally aimed at labor, not business...
...It is hard to believe that John T. Dunlop, once he returned to Harvard, wouldn’t add another volume to the shelf...
...Flatter their sense of self-importance...
...If you had to give the government a lot more power to do the job, what was wrong with that...
...Of course, the stories might or might not prove the generalizations, but they usually make your point with the reader...
...I left for the Fed in search of simplicity...
...I told him what I was about: a post-mortem on wage-price controls...
...Another estimated that without controls prices would be one per cent higher than they are...
...And you’ve got to bum your brains out with steel costs, and then ruin what’s left on lumber prices...
...He was quickly caught up in the excitement, thankful to be rid of titanium, and flattered to be called by reporters...
...The banks grew cautious...
...Or if soybeans would bring a higher price in Japan...
...I sure didn’t, but I didn’t say so...
...I could live with that...
...But again, I ran into maddening ambiguity...
...And back in 1944, a billion dollars meant a lot more than it does today...
...Economic reality didn’t work quite that way...
...So we got a two-percent reduction in the cost of living, at best, for the controls, and we got a lot of trouble in a lot of industries...
...A shortage of tomato paste had developed, in part because the price had been held too low and encouraged a depletion of stock...
...But I like to begin every case the same way: a long lunch with a knowledgeable Source who feeds me reliable information and well-informed interpretation...
...The GNP was only one-seventh the size it is now...
...There were dozens of stories in dozens of industries about how controls had misfired...
...Total failure was the only way out: then and only then would enough people be alienated to insure that they wouldn’t try controls again...
...So, the small plastic companies formed a Washington-based trade association, gave it a name (The Organization for Plastic ProcessorsTOPP), hired a Washington executive director, engaged a lawyer who had formerly worked in one of the control agencies, and started making the rounds to the Cost of Living Council, the Federal Energy Office, and Capitol Hill to plead their cause...
...The more fertilizer, generally speaking, the bigger the crop...
...I don’t like the idea of a really powerful union trying the same trick...
...In the control subculture, it was a best-seller...
...Unfortunately, the experience of the plastics industry suggests that controls may sometimes stifle, not stimulate, competition...
...There is a fertilizer shortage in the U. S. now...
...Longshoremen and steelworkers and autoworkers can make things pretty messy, too...
...One newspaper executive claimed, for example, that controls had aggravated the newsprint shortage: you held down advertising rates and people advertised more...
...He had a foundation grant for 18 months to write a book about controls...
...There were choices-unpleasant choices-to be made...
...By the next summer, things are looking fine, Unemployment has come down...
...It was the vacant look of a man who’d sat through the same movie six times, but couldn’t rouse enough energy to leave the theater...
...The cycle repeated itself...
...Why had the President done it...
...There are a lot of unions that can tie this country up pretty quickly: the Teamsters, the railroad unions, the coal miners...
...The Federal Reserve building is a white-marbled temple on Constitution Avenue that’s rarely visited by anyone who doesn’t work there...
...the window...
...He looked tired...
...The Fed was attempting to tighten credit, which normally would raise interest rates, choke off some borrowing, and help slow down the economy...
...Maybe we’re lucky, though, because we avoided the biggest risk...
...At the free market (world) price, the same stock might be worth three or .four times as much...
...All this upset Bums...
...A political smash-up, caused by a confrontation between big labor and government...
...Then there would be a shortage of explosives for coal mines, which would eventually lead to a scarcity of coal...
...He went back to his wadball...
...Some wouldn’t have...
...It’s not Big Picture Journalism...
...If nothing else, the control program would produce a small book explosion...
...People prefer a bad solution to no solution at all...
...It showed that between 1940 and 1944, consumer savings increased ten-fold, from $3.8 billion to $37.3 billion...
...The result was “black markets,” “distortions,” or whatever label you want to attach to intricate, suspicious transactions designed to beat the government rules...
...Page 24,” he said...
...The prospect was troubling...
...But then the government, lulled into thinking that inflatior had abated, would be tempted to pump up the economy excessively, creating the very inflationary pressures that would destroy the controls and murder the price indexes...
...You may or may not think that plastics are good or essential for society, but, whatever else you say about the plastics industry, it’s competitive: there are from 4,000 to 8,000 plastics firms turning out everything from plastic bags to casings for ballpoint pens, to toy soldiers, to food containers...
...So I met my Source in a more modest establishment: Hungry Herman’s, a quick-lunch place on the first floor of the building where he worked...
...There was something else to remember, too, my Source said...
...Inside the building is Arthur Bums, chairman of the Federal Reserve Board and also chairman of the Committee on Interest and Dividends...
...Sell to a broker friend and split the profit...
...Prices might rise without producing much additional supply for U. S. farmers...
...and another by Arnold Weber, a former member of the Pay Board...
...It didn’t take much research to turn up a few more examples of politics getting in the way of economics...
...In 1972 the world price of key fertilizers rose significantly50 to 75 per cent-above U. S. prices...
...That seemed the least dull of his suggestions, though not by much...
...Horror stories” are the joumalist’s stock in trade...
...Of course, that’s precisely what had happened in 1972...
...While the diversion of fertilizer supplies overseas undoubtedly hurt U. S. food production, the escape of petrochemcials abroad had more curious consequences...
...The Freeze had rescued him from titanium...
...No one disputed this logic...
...For starters, it might be a good idea to figure out what had happened this time...
...I started with fertilizer...
...a ceiling on prices, therefore, wouldn’t interfere with the complicated food markets, but would be an invaluable public relations gesture for the Administration...
...A lot of consumer goods were short...
...The classic case, of course, was the freeze on food prices in March and June of 1973...
...And because there was a general scarcity of goods, families were forced to save more of their money...
...You had a national consensus you won’t find now...
...The incentives to do so were powerful...
...Damn the torpedos, full speed ahead...
...It’s the banker’s Vatican, and Bums is the Pope...
...to help persuade major unions to be “moderate” in wage demands by being “tough” on prices...
...He decided to stopor at least slow-the rise of the prime...
...There’s something else...
...The party in power, though it’s skeptical about the lasting value of controls, puts controls on the economy...
...To try to hold them back would, in the long run, probably be self-defeating...
...It gives them hope...
...You had to wait for the fertilizer to be exported...
...1971...
...Consider this situation: a marketing vice president of a large petrochemical firm has a huge supply to sell...
...Everything was proving unwholesomely complicated...
...In the first half of 1973, business loans at commercial banks rose at an astounding annual rate of about 30 per cent...
...Was that simply a harmless exercise in politics and public relations...
...You couldn’t begrudge him the pleasure...
...They were sure that the government could do the trick, and they didn’t much care how...
...That’s when I first knew him...
...There were some complaints, but it wasn’t until September, 1973-after the industry, through its trade associqtion, the Fertilizer Institute, officially asked for exemption-that the Cost of Living Council began seriously considering the removal of controls on U. S. fertilizer prices...
...One had already appeared, and 1 knew of three others in the worksone by Marvin Kosters, the Cost of Living Council’s head of policy planning...
...Part of the problem was ignorance: the inevitable absence of the answers to today’s questions today...
...He pulled a book out of his desk, one I hadn’t seen before...
...Many people believed they hadn’t been given a fair chance to work before Nixon pulled them off...
...Bankers are loathe to quarrel too openly with Bums...
...But, at best, Burns was fighting inflation with press releases...
...It was, at best, a gamble: a gamble that food prices had already reached their natural peak...
Vol. 6 • May 1974 • No. 3
