The Battle Against Rising Prices
Publication:
The Empire Club of Canada Addresses (Toronto, Canada), 12 Mar 1942, p. 310-325


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Wilson, Kenneth R., Speaker
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Text
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Speeches
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The issue of price control. First reactions to the new policy. Success of the programme. The essential reasons for the programme. The pseudo-controls instituted hours after the outbreak of war in September, 1939. Why it was felt by midsummer, 1941, that more drastic action must be taken. The nub of the problem: too much money for too few goods. An explanation of the dangerous inflationary spiral which was developing. The costs of war and how that translates for the man in the street into a full pay envelope and more spending money. The relationship between too much money and too few goods. The broad steps which the Government planned to meet the contingencies of such a financial situation. Five chief weapons in the Government's anti-inflation programme: fiscal policy; supply control; labour policy; agricultural policy; price policy. A brief explanation of each, and a look at the interdependency of these controls. Learning from the lessons of the first World War. Choosing between a "selective" ceiling on individual items where pressure of increased prices is particularly great, or an "overall" ceiling on almost all commodities and services everywhere. The Government's choice of an overall ceiling, a "retail freeze" which freezes most prices individually at retail. The placement of responsibility for "rolling back the squeeze" on business. The speaker's belief that it is still an open and debatable question whether or not we are going to be able to hold this kind of price ceiling. Difficulties and successes with the programme. A detailed explanation of how the "squeeze" works and the three reasons why there has been success: Big Volume; Big Business; Big Subsidies. How the subsidy issue looms as a very vital factor in future development. The need to draw the line between essential and non-essential goods. The speaker's belief that the extent to which the Government is prepared to continue paying very substantial subsidies is one of the most important gauges of how long we can continue to operate under this sort of prices ceiling. Some of the dividends which this price control programme is already beginning to pay. The halt which has taken place in the cost of living index. Canada's war industry bill. The enforced standardization and simplification of products. The real testing time that lies ahead. The effect on our war effort.
Date of Original:
12 Mar 1942
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English
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Full Text
THE BATTLE AGAINST RISING PRICES
AN ADDRESS BY KENNETH R WILSON
Chairman: Mr. W. Eason Humphreys, Vice-President.
Thursday, March 12, 1942

MR. W. EASON HUMPHREYS: Gentlemen of The. Empire Club: The President, Mr. Sanderson, is absent from the Chair today for the first time this season, I believe, but I think he is serving The Empire Club in another capacity by addressing a large audience in Buffalo, the organizers of which have been very gracious to The Empire Club in the past. Mr. Sanderson has requested me to apologize to you for his absence today.

When, Gentlemen, one afternoon last year, the Price Ceiling regulations were announced, most of us were at first startled and then skeptical. Perhaps we went to bed shaking our heads or even talking to ourselves. Next morning we read or heard more about them, and by lunch time we temporarily dismissed the subject by saying that the best we were prepared to do was to accept the scheme with reservations. But, from the first, critics and others were disinclined to dismiss these newly announced regulations as fantastic. In the minds of most, it was not long before the boldness of the scheme resolved itself into a feeling of protection from evils which history, as well as recent reviews, told us were to be avoided at nearly any cost. Since then we have seen the unfolding of these Price Ceiling regulations which are intended to provide security for the health of Canadian economy in wartime.

So, today, Gentlemen, The Empire Club is pleased to welcome Mr. Kenneth R. Wilson, who has been so closely associated with The Wartime Prices and Trade Board in the study of a subject which affects every one of us.

Mr. Wilson knows his subject well. He studied it in Washington and elsewhere and many of us have read his writings on this vital matter.

Mr. Kenneth Wilson is the chief correspondent in Ottawa for The Financial Post and MacLean's Magazine. As a matter of fact, he is really in charge of the MacLean Bureau in Ottawa and has been with the MacLean organization for the past seventeen years. He is a graduate of The University of Toronto (Victoria College) and he has an intimate knowledge of Canada through intensive travel to all parts of this great land. It is because of Mr. Wilson's reputation for accuracy and his grasp of Canadian business problems that we all look forward with so much interest to his talk to us today. Here, in The Royal York Hotel, Mr. Wilson addresses himself to business men. This microphone, however, will carry his voice to hundreds, perhaps thousands, of other business people, including women in the business of household management.

So, Ladies and Gentlemen, I present to you Mr. Kenneth R. Wilson, who will speak on the subject, "The Battle Against Rising Prices". Mr. Wilson.

MR. KENNETH R. WILSON: Mr. Chairman and Members of The Empire Club of Canada: It is most kind of you to invite me here to meet with you today, and I thank you, Sir, for the very gracious way in which you have introduced me. When a friend of mine sent me a card announcing this meeting, my wife read it and very aptly remarked, "Who is this Wilson? I don't recognize him".

It is very appropriate, too, I think, that you in Toronto should invite someone from Ottawa to come and speak to you. I think there is perhaps an erroneous impression at Ottawa that this matter of information and advice is a one way street, a feeling that Toronto likes to express its views at Ottawa but isn't so keen on having the role reversed.

I think that most of us, casting our minds back to August or September of last year, would have scoffed at the idea that a man named Donald Gordon would (for all his solid, Scotch bulk) be sitting, at this particular moment, on top of the most gargantuan price lid ever clapped over free peoples anywhere, at any time.

When price control first came under public notice, and particularly into business discussion, most of us "pooh-poohed" the idea that such a thing as an "over all" price ceiling was even remotely possible. When we did tune our dials on Saturday, October 18th, to hear Prime Minister King announce the new policy, there were even more of us who, while wishing the plan Godspeed, again shook our heads and said with loud acclaim, "It can't be done".

Well, we all of us know, it is being done.

It is being done, not perfectly, to be sure, but with, perhaps, an even greater degree of success than any but the boldest were willing to foretell.

As business men, many of you are contributing day by day to the administration of the price ceiling. It is your problems, your business experience, and your co-operation, which form the very warp and woof of this far-reaching programme.

And let me explain that I am here today purely as a layman. I am a humble consumer, interested first in seeing how this battle against rising prices can help to win the war, can help stretch my pay cheque, and keep my income taxes from soaring completely out of sight.

Professionally, I am interested, of course, in observing and reporting on new developments as they occur, and anxious, as I believe all Canadians citizens should be anxious, to see this experiment work.

It may help our discussion here today if I review very briefly the essential reasons for this programme. As you know, Canada instituted a price control mechanism a few hours after the outbreak of war in September, 1939. This proved not a moment too soon, as we found very quickly, when housewives with long memories started a nation-wide run on sugar.

For almost two years this first Prices Board kept an increasingly active finger on the controls. But, for the most part, these controls had to do with removing bottle necks of supply rather than with the administration of a price control mechanism. There was very little recourse to price fixing, except of rentals in certain war-congested areas, a temporary price lid on butter, and so forth. Most of the Board's powers were used to channel the supply and distribution of wool, hides, sugar, coal, and other "necessaries of life".

By midsummer, 1941, it was felt that more drastic action must be taken.

The nub of the problem was this: too much money for too few goods. Let us enlarge on this valid though, perhaps, over-simplified explanation of the dangerous inflationary spiral which was developing.

(I) Too much money: The cost to the Government, of the last war (including demobilization) was something less than $1.7 billions. In this war we have already spent $3.4 billions--exactly twice as much as in the entire conflict of 1914-18. Furthermore, in the next fiscal year alone, we plan to spend on war costs alone, another $3 billions--within twelve months.

On this basis, a five-year war will cost Canada not less than $15 to $20 billions, or ten times what seemed a gigantic expenditure in 1914-18.

Most of this money is being spent in Canada. To the Government it represents war costs. To the man in the street it means a full pay envelope and more spending money than at any other time in history.

Including the armed services, there are well over a million more men and women employed than at the beginning of the war. Our annual wage bill has risen between $I.5 and $2 billions. Our purchases of materials are colossal. Thus we are now pouring billions of dollars into the manufacture and purchase of war goods, the payment of troops, etc.

(2) Too few goods: But war purchasing power, while putting more money into the pockets of most Canadians, has diverted more and more manpower and materials into war production. At the very moment when many of us have more money to spend than ever before, we find considerably less to spend it on.

Finance Minister Honourable J. L. Ilsley described this last November when he said

"If the total work done by the people of the nation is represented by eight hours, and three hours of that work are devoted to war purposes, and only five hours to the production of peacetime goods and civilian supplies, then there are eight hours' wages to be spent on the products of five hours' labour".

In the last war, only about ten percent of our national income was actually directed into war production. In this war, the ratio is said to be as high as thirty to forty per cent, and must go higher if we are to overcome the efforts of nations which are devoting probably seventy per cent of their production to this purpose.

The more manpower and materials we divert to war production, the fewer the goods and services that are left for civilians. Yet the greater our war costs, the more spending power there is throughout the country. As wages of wage-earners rise, consumers bid for diminishing supplies of goods. Prices rise. This is what happened in alarming degree last summer and autumn.

Fortunately the Government's economists and financial advisers had been preparing for a long time for such a contingency. As early as the first month of the war, Finance Minister Ilsley predicted the economic and financial pattern which it was believed the war would take. He also indicated the broad steps which the Government planned, to meet these contingencies.

Actually there are five chief weapons in the Government's anti-inflation programme. These weapons may be described as: (I) fiscal policy, (2) supply control, (3) labour policy, (4) agricultural policy, and (5) price policy.

By fiscal policy we mean the heavier taxes and increased sale of Victory Loans and War Savings Certificates, whereby the Government hopes not only to raise money to help pay the costs of war, but also to channel away a considerable portion of excess purchasing power created by the war effort.

Supply control means increasing pressure on priorities and rationing necessary to ensure adequate material and supplies for war needs.

Labour policy involves the stabilizing of wages and salaries and has its genesis originally in Order-in-Council P.C. 7440. agricultural policy involves the supplementing of agricultural income in order to maintain supplies of essential farm products in face of the ceiling on all consumer prices. The lifting of the ceiling on flax the other day was an example. We need an increasing amount of flax to secure the vegetable oil. The Government has pushed aside the ceiling and taken control of the whole flax crop at a considerably higher price, in order to encourage substantial production.

And, finally, the price ceiling: the most revolutionary step ever taken by a free people.

Obviously, these controls are interdependent, or at least closely related. You cannot, for example, successfully freeze wages unless you prevent prices from rising.

You cannot hope to administer a price ceiling unless you impose high taxation or find some means of funnelling excess purchasing power into war loans and savings.

Even in the last war, with only a fraction of the inflationary elements which are present today, the cost of living rose about 90 per cent. In this war, since it is impossible to channel away this purchasing power as fast as it is created, the possibilities of a fantastic and probably a catastrophic wage and price spiral are very real.

So the question really boils down to this: what shall we do about it? Should we impose a "selective" ceiling on ten, fifty, or hundreds, of individual items where pressure of increased prices is particularly great? Or should we attempt to impose an "overall" ceiling on almost all commodities and services everywhere?

We know, of course, that the Government made the latter choice. It even rejected the advice of competent business men who urged what is called a "progressive" ceiling--that is, a price ceiling which would be introduced first at the primary producing end of the business assembly line and then, progressively, at the other stages.

What we have instead is what is called a "retail freeze" or a price ceiling which freezes most prices individually at retail. It is a ceiling which places on business the responsibility for "rolling back the squeeze" which must inevitably develop where there is a time lag between production and sale, and where the retail or "frozen" price is less than the price at which this same merchandise can be replaced.

I think we should face also the fact that the price ceiling we now have is not the price ceiling which Prime Minister King announced on October I8. If you read that speech closely, you will find that Mr. King outlined a price control programme which would have frozen all prices at every level of production. It soon became apparent that this was unworkable, and in its place was substituted the "retail freeze".

Even this programme was intended as a rigid ceiling on the individual prices of every item of merchandise. But this has also been modified, and individual administrators are now clothed with power to permit the smoothing of price inequalities even at the retail level.

Quite frankly, I think it is still an open and a debatable question, whether or not we are going to be able to hold this kind of price ceiling. And let us make no mistake about it-the degree to which it can be held is, I think, everybody's business.

Only a few days ago, a writer in the Wall Street Journal estimated that, in the month of January alone, the American consumer paid $600,000,000 for inflation through higher costs of goods and services. Proportionately our stakes are just as high.

Most of the difficulties in holding down an overall price ceiling are linked with what might be called our new national pastime: "Rolling Back The Squeeze". So far, what success we have achieved in playing this game, has been due, I think, to three reasons: (1) Big Volume; (2) Big Business; (3) Big Subsidies.

Let me elaborate briefly on each of these

First, Big Volume: it has not been too hard to "roll back the squeeze" so long as business volume or turnover is being maintained at the same or a higher lever than 1941. It will be a very different story when scarcity of raw materials, or other war shortages, dry up sales to the point where business is cut to one-half or even one-third of last year's turnover. For example: the manufacturer who is asked by the Board, or by the trade, to absorb a 4 percent "squeeze" on a turnover of $109,000, is in a very different position when his volume of business shrinks to $50,000 or less.

Second, Big Business: most of this "rolling back the squeeze" has been, so far, either in Big Business or in areas where relatively few firms have been involved. The harder task yet to be accomplished is to roll back this "squeeze" through the hundreds of thousands of individual transactions of smaller merchants and general storekeepers who honeycomb rural and small town Canada.

Let us try to explain the way this "squeeze play" is actually being worked out. It is worth elaborating, because this problem strikes at the heart of the price ceiling mechanism as it affects tens of thousands of merchants and business men in every part of Canada. Suppose Mr. General Merchant, in Pleasantville, B.C., is now replenishing his stock of spring merchandise. He sends in his order for boots, axes, groceries, hats, and a score of staple and special lines which he is accustomed to buy and sell. But he finds that the merchandise-most of which he buys perhaps only once or twice a year, at most-costs him more than he paid the last time he bought. He himself cannot legally increase his selling price, yet manufacturers and wholesalers are within their rights in charging him a higher price because their higher costs have been established during the base period. Anxious to co-operate in the ceiling policy and knowing as well that he faces the threat of a jail sentence for selling these goods above his "ceiling" price, our general merchant writes to his Regional Prices and Supply Representative in Vancouver and lists his problems. This official writes in turn to Edgar G. Burton, Retail Trade Administrator in Toronto. Mr. Burton passes the correspondence along to various trade administrators--some of whom may be off in the Maritimes or, perhaps, out in Western Canada trying to solve some of these very matters. Since the average general store carries 1,500 to 3,000 different kinds of merchandise, you can visualize the colossal job which faces the Board and its Administrators as they attempt to roll back this "squeeze" for 150,000 or 200,000 storekeepers. You must remember, too, that many grocery lines, for instance, sell (at retail) for about 10 cents each. If a manufacturer has, during the base period, established a higher cost of say, one cent, this may mean an actual loss on this particular item in a field where margins are very close-a loss which may have to be absorbed for the duration of the war, unless the Board gives relief either by means of puncturing the ceiling or by subsidy.

I am told that, in one recent test study of 150 retail grocery prices, the bulk of the items were found to be now selling at or within one or two cents of actual cost. No average retailer could afford to carry on under such conditions. In this particular case the "squeeze" was being absorbed voluntarily by a big organization in the belief that eventually an adjustment would be made. I understand, in fact, that the Board may issue shortly a ruling ordering the payment of a public subsidy on a considerable list of grocery items of domestic manufacture, simply to enable the general merchants and other to keep in business and sell merchandise within the price ceiling.

That brings me to the third reason why business has so far been able to keep within the ceiling: Big Subsidies. I use the word "big" advisedly. Actually, the number of claims paid or payable is not yet large. This is partly because the mechanism for clearing subsidy payments is only now beginning to function, partly because many lines of business are still negotiating for ways and means of rolling back the "squeeze" without recourse to subsidy. The sudsidy problem is, therefore, only now assuming a critical importance in the administration of the ceiling. It looms as a very vital factor in future development.

In the early days of the price ceiling, subsidy payments were thought of largely as going to importers. Subsidies were to be the price of isolating Canada from the rest of the world. If foreign coal prices were 50 cents a ton, the Government would contribute $7 millions to enable Canadian dealers to carry on within the Canadian price ceiling.

Today, the larger claims to subsidy seem to be coming from domestic manufacturers and distributors. Milk producers, shoe manufacturers, and an increasing list of essential and non-essential groups, are demonstrating their inability to operate under the ceiling unless they receive some aid from the public purse.

One possible alternative is to have recourse to a modified form of progressive ceiling as in the case of meats where, according to press reports, the Board is considering a plan to freeze prices for packers, wholesalers, and processors, and permit puncturing of the retail ceiling so long as the butcher uses a normal cost-plus markup not to exceed the level of his previous profit.

So far, the Board has not drawn a line very clearly between essential and non-essential goods. I think the distinction will have to be made much more sharply in the future.

May I here make a point in defence of the subsidy payment which the Board uses very strongly in its argument, and which, potentially, is a very strong point: on a list of goods which were studied it was estimated by the Board, that, in order to keep within the ceiling, the cost of the subsidy would be about $15 millions. However, if on the same list of goods, prices were to be allowed to rise, the cost to the public, by the time the prices had pyramided through the sales tax and similar imposts, would be about $25 millions. By reason of the higher prices, there would have been an increase in the cost of living index of one point, which would mean a bonus payment to workers of something like $30 millions.

Thus, the Board argues, it is much cheaper to pay the $15 millions direct from the Treasury than to have the indirect costs of an extension of the price ceiling mounting up.

My guess would be that the public will not take kindly to subsidizing $100 china plates, grapefruit juice, and hundreds upon hundreds of domestic and imported goods, irrespective of whether they are necessary to maintain life.

Just here, I was interested in an editorial in one of the Newfoundland papers the other day, in which the Editor had listed the prices of various necessaries of life in his country and in Canada. The comparison was so favourable to Canada that he simply wrote at the bottom of the editorial, "Almost thou persuadest me to be a Confederate".

In short, I believe that the extent to which the Government is prepared to continue paying very substantial subsidies is one of the most important gauges, if not the most important, of how long we can continue to operate under this sort of prices ceiling. Certainly, more changes and adjustments are inevitable to adapt this economic strait jacket to the common sense needs of everyday business. The willingness of the Prices Board to make these adjustments rather than to hold blindly to a preconceived economic theory is, I think, a tribute to, rather than a criticism of, the men who are administering this control. It is also fair comment to say that business men, by and large, have so far been generous in withholding criticism of the price ceiling, pending a clearer understanding of just how this and similar problems will be resolved.

Just here I would like to raise a personal protest against what seems to me an indefensible order of one of the Administrators, decreeing that henceforth there shall be no extra pants to a suit of clothes. I feel very strongly (from personal experience) that there is a decided economy in having two pairs of pants with a suit of clothes. If my research in Ottawa in the last day or two is correct, I think few things have stirred the Capital so much as the implication that an extra pair of pants is a luxury and not an economy. I think that, if we added our voices to those at Ottawa, it might effect a change that would be very beneficial. I think also that, probably, we could get considerable support from the womenfolk if we protested against the ban on extra patches on knees and elbows and seats of boys' pants.

Having discussed some of the difficulties and problems of administering the price ceiling, I should like to draw your attention today to some of the "dividends" which this price control programme is already beginning to pay.

First, there is the very tangible evidence of the halt which has taken place in the cost of living index. This index rose almost 9 points between February and November, 1941, but, since the ceiling was introduced, it actually declined in two consecutive months.

Without being deceived into thinking that all price increases have been stopped for the duration (I can assure you they have not) it is nevertheless interesting to attempt an estimate of what it means to hold the cost of living index at or near its present level, compared to what might happen during, say, another 10-point rise.

Speaking now very generally, a 10-point rise in the cost of living index would mean an increase in living costs of about $140 per year for the average Canadian family. This is the amount of the annual "dividend" which would be received through any price ceiling which checked rising prices to that extent.

For this saving to be fully realized, one would have to assume that the income of his family did not rise proportionately. This, of course, is true for many people. For example, one important group whose income would not increase along with a rise in living costs is the men in our armed forces and their dependents. Let us be conservative and assume that a 10-point rise in the index would raise the living costs for a soldier's family not by $140, but by $100, each year. Since 40 per cent of soldiers draw pay for dependents, any price ceiling which prevented such a rise would net these families a "dividend" of about $16 millions a year. Then, as a taxpayer, I am interested in another form of price ceiling "dividend". A price ceiling which prevented a 10-point rise in the cost of living would save the federal government $10.5 millions a year in cost of living bonuses. This is the saving merely on the so-called civil service list apart from government-owned corporations and similar enterprises. In the same category is the dividend which would be found in economies on Canada's war industry bill. At the present tune this wage bill amounts to something close to $900 millions annually. Under the price and wage control measures announced last October by the Prime Minister, this wage bill has been stabilized for the duration and will fluctuate only with changes in the cost of living index. Each 10-point rise in the cost of living index would add $78 millions annually to war costs on the basis of 25 cents per week for each of 600,000 workers.

The final "dividend" which all of us are going to experience, and which will accrue to business and merchants not only for the duration of the war but perhaps for many years after, is the enforced standardization and simplification of products.

Already the list of "little" things that have been accomplished or are contemplated is quite impressive. We start in the morning with fewer kinds of cream for breakfast and with unsliced bread. Our socks, suits, hats, underwear, garters, are being streamlined to weed out costly styles and unnecessary packaging. Tomorrow's shirt will be without pockets and wrapped up with only one pin instead of seven. To the consumer, this means that we can get similar quality merchandise at "ceiling" prices in spite of rising costs. To the manufacturer and the distributor, it means an opportunity to cut out frills and costly competitive practices so that costs may be adjusted to absorb the price "squeeze".

Almost immediately, hundreds of costly containers of tin, glass, and other materials, will disappear, partly to enable business to keep within the price ceiling and partly to conserve essential raw materials.

One simple example of what can be done may interest you: a 10 ounce tin requires six square inches of tin for every ounce of food; a 26 ounce tin needs only three square inches per ounce.

The war would normally bring many such changes through shortages of material and supply, but unquestionably the price ceiling is playing an important role in demanding more economical merchandising methods, and simpler, more standardized, business practices.

Let us not think for a moment that our price control problems have been licked. There is room for some satisfaction in what has been achieved, but no cause for complacency. Indeed, the real testing time still lies ahead as we face increasing shortages in agricultural goods and in manufactured products, and increasing demand on the public purse as the alternative to "puncturing" of the retail ceiling. Some students of the ceiling policy even incline to the view that, having permitted wholesalers, manufacturers, and others, to adjust their prices in line with base period costs, it is inevitable that a gradual upward lifting of the retail ceiling must take place sooner or later.

Just here, I think, it might be worth making this point: what we are now trying to do is almost to improve on perfection. I think many people felt, when we embarked on this programme, that if, in a six months period, we could hold the price index within five or six points of where it is now, we would have achieved an almost perfect result. Actually we are now considerably ahead of any such programme.

The final test is not what price control does to profits or even to our personal standard of living. What matters supremely is the effect on our war effort. Already, the stabilization programme has had an extraordinary effect on the morale and general attitude of Canadian wage-earners. It has undoubtedly allayed the fears of consumers against a run-away wage-price spiral. I believe it deserves whole-hearted support and co-operation as a courageous, imaginative programme worthy in every respect of the Canadian people. (Applause.)

MR. W. EASON HUMPHREYS: Gentlemen, Mr. Stirrett of The Canadian Manufacturers Association will respond to Mr. Wilson.

MR. J. T. STIRRETT: Mr. President and Gentlemen For many years we have been reading with pleasure and " benefit the admirable articles by Mr. Kenneth Wilson in The Financial Post and other national publications. Today, we have had the additional privilege of hearing Mr. Wilson speak in a very clear and convincing manner on a subject of national importance and also of vital interest to every one of us. I gather that you think that Mr. Wilson's standard of speaking compares favourably with his stand and of writing--and that is meant for very high praise. (Applause.) On your behalf I tender to Mr. Wilson our very sincere thanks for his excellent address. (Applause.)

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The Battle Against Rising Prices


The issue of price control. First reactions to the new policy. Success of the programme. The essential reasons for the programme. The pseudo-controls instituted hours after the outbreak of war in September, 1939. Why it was felt by midsummer, 1941, that more drastic action must be taken. The nub of the problem: too much money for too few goods. An explanation of the dangerous inflationary spiral which was developing. The costs of war and how that translates for the man in the street into a full pay envelope and more spending money. The relationship between too much money and too few goods. The broad steps which the Government planned to meet the contingencies of such a financial situation. Five chief weapons in the Government's anti-inflation programme: fiscal policy; supply control; labour policy; agricultural policy; price policy. A brief explanation of each, and a look at the interdependency of these controls. Learning from the lessons of the first World War. Choosing between a "selective" ceiling on individual items where pressure of increased prices is particularly great, or an "overall" ceiling on almost all commodities and services everywhere. The Government's choice of an overall ceiling, a "retail freeze" which freezes most prices individually at retail. The placement of responsibility for "rolling back the squeeze" on business. The speaker's belief that it is still an open and debatable question whether or not we are going to be able to hold this kind of price ceiling. Difficulties and successes with the programme. A detailed explanation of how the "squeeze" works and the three reasons why there has been success: Big Volume; Big Business; Big Subsidies. How the subsidy issue looms as a very vital factor in future development. The need to draw the line between essential and non-essential goods. The speaker's belief that the extent to which the Government is prepared to continue paying very substantial subsidies is one of the most important gauges of how long we can continue to operate under this sort of prices ceiling. Some of the dividends which this price control programme is already beginning to pay. The halt which has taken place in the cost of living index. Canada's war industry bill. The enforced standardization and simplification of products. The real testing time that lies ahead. The effect on our war effort.