‘If wages were pegged to prices, so that any rise in prices would automatically be accompanied by an equal rise in wages, there would then be no inflation for the great masses of the people…’
SEVEN months into the Pacific War, while Australian troops were engaged in some of the “most desperate and vicious” combat against the fascist Japanese (Kokoda Trail Campaign; https://www.awm.gov.au/collection/E84663), the Americans on the home front were exercised by heavy economic issues: “Dr. Gallup’s investigations have revealed that ‘in the battle against inflation, the people are ahead of the Government’… In May, Dr. Gallup’s poll revealed that 74 percent of the people favored federal control of wages and prices… Inflation has been known to make the poor poorer and the rich richer. It shifts the economic burdens upon those least able to bear them… It is the patriotic duty of every American citizen to urge Congress to get down to the business of winning the war… Without petty politics, without undue regard to narrow sectional or class interests they must rise to their responsibilities as the leaders of a great democratic Cause.” [Mark Eisner (Member of the New York Bar and former Collector of Internal Revenue), “Inflation and Federal Taxes: The Attitude Of The American Public,” Radio address, Municipal Broadcasting System, WNYC, July 16, 1942]
As for Filipinos, the Commonwealth government in exile in the United States was similarly mired: https://www.officialgazette.gov.ph/1942/07/21/salaries-of-pensionados-and-employees-in-the-philippines-july-21-1942/. Much more so in Rizal’s Archipelago bearing the brunt of Japanese Occupation: “Due to the increasing cost of living, the following salary readjustment has been made: 1. From ₱50 down, increase to ₱50 for permanent employees, one year in the service, regardless of merit. 2. From ₱50 to ₱100 varying increases according to merit. 3. ₱100 to ₱150–stationary. But ‘dead wood’ will be reduced.
4. Above ₱150, definitely no increase, except to very exceptional and meritorious cases. 5. Total percentage of increase of permanent employees, 7%. ₱20,000 is calculated monthly salary of permanent employees. About ₱50,000 is total monthly salary of Manila and provincial, permanent and temporary employees. Not more than 300 employees will get an increase. 6. Provincial men. Reduce salary by 20% but give a per diem of ₱1.00 a day. 7.
Reasons for increase: (a) hard work, including Saturday afternoons and Sundays; (b) lowest paid corporation, comparatively, (c) conducive to efficiency. There’s nothing like getting a raise!” [Diary of Victor Buencamino, July 17, 1942]
Solution? “(OPA Administrator) Henderson’s half-truth that inflation is a ‘race’ between wages and prices conceals the truth that inflation is the victory of prices in that race.
Inflation is a condition where prices rise while wages lag behind. In itself the rise of prices is not inflation. If wages were pegged to prices, so that any rise in prices would automatically be accompanied by an equal rise in wages, there would then be no inflation for the great masses of the people who live on wages (including salaries of white collar workers and government employees and the pay of the men in the armed forces).” [Felix Morrow, “Inflation,” May 1942]
The general rise in prices can have and did have deadly political overtones: “The fear of inflation prevented the adoption of radical counter—cyclical policies before 1933. However, it did not prevent voters from turning to Hitler; despite the fact that, on numerous occasions in 1931 and 1932, he was accused of advocating inflationary policies. For example, Bruning used the fear of inflation as a stick with which to beat Hitler during the Presidential elections; while labor leaders like Aufhauser and Stegerwald alleged that Hitler was attracting big business support by offering a ‘second inflation.’ This was partly because Hitler had long since established his credentials as an opponent of inflation. As early as 1922, he had decried ‘this weak republic [which] throws its pieces of paper about wildly in order to enable its party functionaries… to feed at the trough’ and NSDAP election propaganda repeatedly cited the inflation as evidence of the Weimar Republic’s economic incompetence. Contrary to the predictions of Hitler’s opponents, the Nazis continued to stress their commitment to price stability once they had come to power.” [https://www.cambridge.org/core/books/abs/paper-and-iron/epilogue-hitlers-inflation/E28A310B1E4FD1BCC791FDEBE95D1A77]
In fact, in his first “Regierungserklaerung” (State of the Union address) after being appointed Reich Chancellor, February 10, 1933, Hitler railed: “Then they committed the crime of inflation, and after this rampage on the part of their Minister Hilferding, a ruinous usury set in.” It was a Nazi attack from which the Weimar parties never recovered.
Hitler sustained this rhetoric: “The German nation was, thanks to the inflation instigated and carried through by Jews, deprived of the entire savings which it had accumulated in years of honest work.” (January 30, 1939) [https://www.yadvashem.org/docs/extract-from-hitler-speech.html] “I need only remember the year 1923. The enemy stood in the Ruhr district, Germany was in inflation, the whole German people ruined, and seemed to be going under in unparalleled misery. And the Jews triumphed over everything. They ruined our country and they profited by our misfortune.” (January 30, 1942) [https://www.worldfuturefund.org/wffmaster/Reading/Hitler%20Speeches/Hitler%20Speech%201942.01.30.htm]
Hitler’s focus on the economic issue seemed to stick. “It is in the sphere of price control that the Nazis make their greatest claims to success. The need for price control in war time rises out of the state’s position as almost sole buyer on the unusual market. Demand outstrips supply and if the state’s financing is not to be thrown completely out of kilter by inflation, price controls must be utilized. The idea that price control is for the purpose of cutting profits that go to the capitalists, and is therefore anti-capitalist, ignores its true meaning. Its sole purpose is to keep the war machine functioning smoothly…Even the Nazis claim no more for price control than that it has prevented a too rapid rise in prices.” [L. Howard, “Capitalist Economy Under Fascism,” Fourth International, Vol. 3, No.1, January 1942, pp.14-16]
Back to 21st century Philippines: “The country’s inflation for the bottom 30% income households increased to 5.0 percent in June 2022, from 4.3 percent in May 2022…Average inflation for this income group of consumers for January to June 2022 was registered at 3.7 percent.” [https://psa.gov.ph/content/summary-inflation-report-consumer-price-index-bottom-30-income-households-2012100-june-2022]
Do the math.
