The Pittsburgh Press (February 14, 1946)
Background of news –
The price trend
By Bertram Benedict
Conditions today are even more conducive to dangerous inflation than after the end of World War I, a gathering in Detroit was told on Sunday by Dr. Isador Lubin, for almost 13 years chief of the U.S. Bureau of Labor Statistics.
The price index to watch on inflation is that of wholesale (commodity) prices. The retail prices in effect today reflect the wholesale prices of yesterday or the day before yesterday; higher wholesale prices today would be reflected in the retail prices of tomorrow or the day after tomorrow.
After World War I the average of farm prices – that is, wholesale prices of foodstuffs – began to fall in June 1920, but in that month the average of retail food prices continued to rise. In the following month the farm price average fell all of 10 points, but retail food prices remained unchanged.
It was not until August 1920 that the average of retail food prices began to decline sharply.
The worst of the inflation of World War I occurred after the end of hostilities. Wholesale prices reached their peak 19 months after the Armistice. By that time Europe was beginning to get on its feet, and the decline in demand from abroad was accompanied by a decline in domestic purchasing power due to considerable unemployment.
Unchanged for seven months
Wholesale prices did remain practically unchanged for seven months after the end of hostilities in World War I. A similar trend has been in effect since the end of hostilities in World War II. During the week ending February 2, 1946, the wholesale price index of the U.S. Bureau of Labor Statistics was only one percent higher than the average of August 1945.
Wholesale Price Index Numbers
| After World War II | |
|---|---|
| August 1945 (V-J Day) | 100.0 |
| September 1945 | 99.5 |
| October 1945 | 100.2 |
| November 1945 | 101.4 |
| December 1945 | 101.3 |
| January 1946 | 101.3 |
| February 1946 | 101.0 |
| After World War I | |
|---|---|
| November 1918 (Armistice) | 100 |
| December 1918 | 100 |
| January, 1919 | 98 |
| February 1919 | 95 |
| March 1919 | 96.5 |
| April 1919 | 98 |
| May 1919 | 100 |
During and after World War I, there was little to correspond to the elaborate price-fixing machinery in effect during and after World War I by the War Industries Board, but compliance was largely voluntary inasmuch as the Board’s legal powers over prices were indefinite.
The Lever Act of August 10, 1917, authorized control of wheat and fuel prices and also set up machinery for control of food prices generally.
The 1919 Industrial Board
In March 1919, the Wilson administration created an Industrial Board in the Commerce Department to confer with management on reductions in the prices of basic commodities. The government would buy for its own use at what the board considered “fair” prices, which were expected then to become the ruling prices in the markets generally.
But Director General Hines of the Railroad Administration, still operating the railroads under the wartime control, rejected as too high a price suggested for steel rails, and thereupon the whole Industrial Board project foundered.
In August 1919, President Wilson asked Congress for extensive legislation to keep down the cost of living, but Congress refused to give the President most of the authority for which he asked.