The issue of Price controls – one which has been an issue throughout U.S. history, was especially prevalent during World War 2.
Controls hold out the promise of protecting groups of consumers, especially those having difficulty adjusting to price changes. While controls on prices normally distort allocation of resources, economists usually know how to produce a surplus or a shortage in order to fight inflation and eventually establish a stable economy.
Following the bombing of Pearl Harbor in 1941 and with the onset of World War II, the federal government set out to impose new or expanded controls over the country`s economy. On January 6, 1942, President Franklin D. Roosevelt announced some ambitious production goals to support the war. As a result, all of the country’s economic sectors were then under increased government control. While economists usually oppose price controls, it was a state of emergency.
With war came the rationing of food and more price controls. For example, in 1945 the food situation had improved slightly and the statutory price of rice was reduced. In 1946, however, harvest difficulties and inflationary conditions created a widespread demand for an increase in prices. When there was no longer a shortage of food grains, there was no further need for price controls. Unfortunately in some cases, that created artificial scarcity and people under the system suffered substantially.
With the adoption of the Employment Act of 1946, the federal government for the first time acknowledged an ongoing responsibility for formulating budgets that would help maintain high levels of employment. Fringe benefits became more common during the late 1940s as part of the settlements reached in collective bargaining.
This episode of the popular radio discussion program, People’s Platform, debated the issue of whether to maintain existing price controls or abandon them altogether. As is evidence by this broadcast, it got pretty heated for a time. The fear of economic insecurity was rampant, but there were still shortages to deal with, considering we were about to take a much more active role in the reconstruction and rehabilitation of post-war Europe.
To get a better idea of what the issues were at the time, here is that broadcast of People’s Platform from March 2, 1946.