To the Gallows; V. Royster

VERMONT ROYSTER ws NEXT ITEM on the agenda: Price controls.; You don't have to have an in side pipeline to White House se crets or Jeanne Dixon's mystic gift of precognition to be tempted to tha t prophecy. All you need is a bit of perception and a good mem ory. As a matter of fact, being privy to Administration councils might be a hindrance to foresight.· Quite possibly the phrase has never been mentioned, and almost surely, if it has, the idea of resorting to the paraphernalia of coercive economic controls has been rejected as politically undesirable and eco nomically unnecessary. President Johnson, having lived through two periods when the government tried to decide the wages of every plumber and the price of every handkerchief, is hardly eager to rush back into that maelstrom. His economic ad visers, whatever else they may be lacking, are full of confidence in their ability to manage the econo my with such a deft touch that in flation can be kept upon a perfect and joyous balance.

34 THE JI'REEMAN March So an inquiry as to intent would bring a sincere denial of plans for government fiats to fix prices, wages, interest rates, import quotas, foreign exchange rules, tourist allowances, or any other part of the panoply of economic controls. All the same, mark it down. Barring the unlikely event of a complete reversal in the Admin istration's economic policy, we shall likely soon see one or more of these put forward. And before vve're through, we may see them all. The portents aren't obscure. For years now, under several Adminis trations, the Government has been steadily counterfeiting money. In effect - although modern tech niques are much more sophisticat ed - it has been simply running the printing presses to "create" dollars out of pieces of paper. The process is in no wise different from the ancient one of alloying talents or clipping coins. There is nothing obscure, either, about the historic results of that counterfeiting. Examples abound from the distant days of Dio cletian to the modern times of Brazil.

With each depreciation of the currency, the prices of goods and labor rise; that is, the sovereign's solemnly issued money is worth less today than it was· yesterday. At first the change is slow and to the apparent prosperity of all. Then it proceeds more rapidly as the authorities find they must print more money to redress the imbalance from the higher prices caused by the earlier inflation. Finally, there is so much dis turbance that these same authori ties feel they must try to quash the consequences of what they have done. In Diocletian's day they cut off the hands of "profiteers" who asked a dozen denarii for a loaf of bread. In eighteenth cen tury France they hung the butcher. But of course all this happened in ancient times or in distant climes. Things are different now, we are assured. Noone denies that we are en joying the first stage of the tra ditional inflationary process. On the contrary, everyone in author ity boasts of it. To inflation, and to their perspicacity in managing it, they attribute all our pros perity.

Their perspicacity was also to keep it in hand so that we would not have to pay any of the his toric penalties for our happy rev els. For a time they could point with pride, and quite accurately, that 10 years or so of inflation had brought only imperceptible in creases in the cost-of-living index.

1966 TO THE GALLOWS 35 Some prices, in fact, declined. Even now such things as house hold appliances and many food items cost less than a year ago. However, not everything has been coming up roses. In the past five years that "slow" increase in the cost of living has raised the index from 103.3 to 110.4, a total rise that's quite perceptible. In the last year alone there have been some spectacular increases in many areas, notably in clothes, meat, education, and medical care. And in key areas elsewhere the pressures are mounting, the most publicized being steel, aluminum, and interest rates. The last item, incidentally, is especially signifi cant because it is the price of bor rowing today's dollars to be paid back 'with tomorrow's dollars and so closely reflects the effects of currency. depreciation. So now what are we told? Why, the whole trouble is caused by those wicked steel makers, alumi num makers, and bankers. All that's necessary to put everything right as rain is for them to volun tarily agree to restrain them selves. If they won't, by Lyndon, they'll just get bashed over the head.

We have already, then, the first efforts at price control. The fact that it is selective, and doesn't yet touch the butcher and candlestick maker, or that the coercion is not by fiat but by threat, doesn't alter the fact that the government is undertaking to control prices. The government is also, by the same device, trying to control other economic activity, such as deci sions on foreign investment. In short, we are right on sched ule. The country has passed through the primary stage of in flation, in which the cheapening of the money has only happy ef fects, and into the second stage where those effects appear less happy and even begin to threaten other economic desires and objec tives. The response of the authori ties is also right out of the book. It's true enough that the proc ess could stop at this point. All the government needs to do is stop clipping the coins. But quite apart from the normal difficulties of kicking the habit, we have now an added factor. The peril of im prudent men is always the unex pected, and in this case it's a war - a long and costly war. This year's deficit will be billions big ger than anticipated, and after that in unknown figures.

How long it will take to reach the tertiary stage is anybody's guess. But don't be surprised when the agenda includes a debate on hanging the butcher. ~ This article is reprinted by permission from the December 3, 1965 issue of The Wall Street Journal, of which Mr. Royster is editor, rb Ifforb's gocy EDMUND A. OPITZ THE MOST DISTINGUISHED lecture ship in the English-speaking world is sponsored in turn by the four Scottish universities - Edinburgh, Glasgow, Aberdeen, and St. An drews - according to the terms laid down in the will of Adam Gifford. Lord Gifford drew up his will in 1885, died in 1887 at the age of 67, and the first series of Gifford Lectures was delivered in 1888. At regular intervals ever since a fat and solid volume has dropped from the presses. Taken together, this more-than-five-foot shelf of books - still growing represents a monumental achieve ment of the mind in our time.