Eisenhower So Far

August 24, 1953

The most important economic achievement of the Eisenhower Administration so far has been the abolition of price control. The Truman Administration had imposed price control on the excuse that it was needed to “fight inflation.” All that it really did was to unbalance and curtail production, bring on shortages, enable partisan bureaucrats to exercise life-and-death powers over particular industries and firms, and encourage the continuance of inflation by diverting public attention away from its real cause, which was the creation of more money and credit by the government itself. Spokesmen for the Truman Administration kept shouting that to allow price controls to lapse would be to turn over the country to “the profiteers” and to let loose the floodgates of an uncontrollable inflation.

President Eisenhower nevertheless moved boldly ahead and dismantled price control within a comparatively few weeks. The predicted “inflation” never came. On the contrary, the wholesale price level fell from an index number of 109.9 in January to 109.4 in June, while the cost-of-living index remained about stationary. Once more a complete demonstration had been made of the fraudulence of price control as a cure for inflation. But if any New Dealer has acknowledged the folly of his prediction, I have yet to hear of it. Instead we have the comic spectacle of Sam Rayburn, for example, simultaneously complaining about a rise in prices and about a fall in prices: “Prices of many commodities are rising. . . . Farm income is down 14 percent.” But farm income is down only because farm prices are down. City workers are paying less for foodstuffs.

What really brought inflation to a halt was the courage of the Eisenhower Administration and its monetary managers in halting the policy of cheap money. But the government suddenly took fright at the complete success of its own hard-money program and threw it into reverse. On June 24 it reduced reserve requirements in order to give the country’s banks some $5,780,000,000 in additional lending power.

This sudden reversal of the anti-inflationary policy was symptomatic partly of a loss of political nerve on the part of the Eisenhower Administration and partly of acceptance of the New Deal economic philosophy. The same performance was repeated in farm policy. Secretary Benson made one bold speech against the fantastic farm-price supports and ran away from it as soon as the bricks began to fly. Mr. Eisenhower in his campaign talked boldly of economy and tax reduction. He has ended by setting up a spending budget for fiscal 1954 of $74,000,000,000—higher than in any full Truman year. He has insisted on a huge foreign-aid program of $6,652,000,000 a year. He has asked for authority to raise the debt ceiling to $290,000,000,000 (though his recent economy order gives renewed grounds for hope).

Finally, and most ominous, he has allowed officials in his Administration to prepare amendments to the Taft-Hartley Act that would scuttle practically every reform brought about by that law and put individual workers, employers, and the country at the mercy of irresponsible union bosses.

It is surely not without good grounds that the Democratic National Committee boasts that most of the Eisenhower achievements in office so far “are merely continuations of Democratic programs.” I happen to agree that one or two of these “Democratic” policies—such as extension of the reciprocal-trade program and the simplification of customs regulations—were sound and praiseworthy. But if Mr. Eisenhower decides to continue the bulk of the New Deal spending, taxing, deficit, inflation, foreign and domestic handout, and pro-union-boss policies, he is not only likely to head the country into economic crises but to lead his party into defeat in 1954 and 1956. The American people in the last election voted for a change. There is still plenty of time for Mr. Eisenhower to renew the courage and convictions of his original start.