Popular Mobilization and Progressive Policy Making:
Lessons from World War II Price Control Struggles in the United States

By Martin Hart-Landsberg

A revised version of this article was published in Science and Society , Vol 67, No 4 (2003).

ABSTRACT

Holding down prices was one of the U.S. government's important economic achievements during World War II. A major reason for its success was that the Office of Price Administration “deputized” tens of thousands of volunteers to administer and ensure compliance with its system of price control. In this paper I analyze the class forces and struggles that shaped the government's recruitment and use of volunteers, the business offensive that ended their use, and the negative post-war consequences of that defeat for working people. I conclude by discussing the relevance of this volunteer experience for activists involved in contemporary struggles for social transformation.

Those committed to building worker-community movements capable of transforming the U.S. political economy face enormous challenges.[1] One of them is the challenge of developing and fighting for economic policies that both defend immediate popular interests and advance new social visions. Although the progressive potential of a given policy will differ according to the political conditions of the time, we can learn important lessons about how best to meet this challenge by examining past efforts at progressive policy making.

Many progressives have looked to the 1941-45 wartime years in the United States for lessons on the workings of industrial policy, in particular, the process and institutional structures by which the U.S. government planned and directed economic activity and secured full employment. In this paper I examine a different aspect of wartime public policy: the government's recruitment and use of tens of thousands of volunteers to administer and ensure business compliance with its price control system.

Although rarely discussed, the government's success in containing inflation during World War II was one of its most important economic accomplishments. As the economic historian Harold Vatter noted:

There were surely at least three outstanding economic performance achievements by the United States in World War II. The first was the elimination of unemployment. . . . The second was an enormous increase in the production of military goods both for the American armed forces and for the Allies. The third was holding down prices, mainly by general government controls. (1985: 21)

In fact, the government's achievement of price stability was, in many ways, absolutely essential to its achievement of full employment and expanded military production. Prices began rising rapidly as business shifted production from civilian to military goods at the same time that growing employment boosted domestic purchasing power. The inflation eroded worker earnings, triggering strikes and other workplace actions that threatened to disrupt military production. Rising prices also increased the cost of war production to the government, potentially threatening its ability to finance the needed economic activity.

Most economists credit the government's introduction of strict controls on the prices of many consumer goods, especially food items, for the success of its anti-inflation efforts. However, this explanation masks a critical fact: price controls proved effective only when the Office of Price Administration encouraged popular participation in the operation of its price control system. Tens of thousands of volunteers were formally authorized to visit retail locations to monitor business compliance with the controls and tens of thousands of additional volunteers served on price boards that were empowered to fine retailers who were found to be in violation of the controls.

I do not mean to romanticize the price control experience. The extent of popular participation was always limited by opponents within the government and business community. There is also no indication that those who volunteered developed a more critical understanding of U.S. capitalism. Moreover, the business community proved able to gut the program quickly once the war came to a conclusion.

Yet, it still remains true that this experience represents a unique case of nationally coordinated and popularly implemented social regulation of one important aspect of economic activity. I believe that by studying the class forces and struggles that shaped the government's recruitment and use of volunteers to implement its price control policy, we can gain valuable insights into the interrelated dynamics of economic policy making, social mobilization and economic transformation.

In Section I, I discuss the inflationary consequences of the growth of the U.S. war economy. In Section II, I examine the economic and social pressures that led the government to pursue ever more stringent price controls. In Section III, I describe the struggle for popular participation in the implementation and enforcement of the controls. In Section IV, I describe the role played by volunteers in successfully containing inflation during the last two years of the war as well as the business-led offensive that ended their participation. In Section V, I discuss the negative consequences of the business victory for the labor movement in the immediate post-war period. In Section VI, I highlight some of the important lessons of this period and their relevance for contemporary efforts at social transformation.

I. THE WAR ECONOMY AND INFLATION

The growth of the war economy brought the depression era to a close. However, the response of major business leaders to the increased demand for military production intensified inflationary pressures, thereby placing great strains on the sustainability of the expansion and war effort.

Although the U.S. economy began a business cycle recovery in mid-1938, two years later economic conditions remained far from satisfactory. Unemployment in 1940 was still 14.6 percent. Real gross private investment remained 18 percent below what it had been in 1929, and industrial production only 16 percent above its 1929 level (Vatter, 1985: 3). It was sustained military spending, beginning in mid-1941, which finally produced the conditions necessary for a rapid decline in unemployment and rise in production.

The resulting transformation of the U.S. economy into a war economy is perhaps best highlighted by the fact that although civilian production rose along with military production in the transition year of 1941, it declined thereafter; civilian production facilities were either shutdown or converted to military production. While overall U.S. industrial production rose rapidly over the years 1941 to 1943, by 9.9%, 21.8%, and 19.8% respectively, civilian industrial production declined every year in dollar terms from 1941 to 1944. Civilian industrial production as a percent of total industrial production fell from approximately 80% in 1941, to 40% in 1942, and to 35% in both 1943 and 1944 (Vatter, 1985: 16).

The steep decline in non-defense production during the war years was largely the result of business decision-making. Major business leaders were generally reluctant to increase investment and production to meet the demands of the growing civilian workforce; they feared that the end of the war would bring a new recession and a renewal of excess capacity problems. They preferred to meet government demands for military production through conversion, rather than expansion. Thus, business investment fell to a “low in 1943 that was only 37 percent of the 1940 level (and much below replacement requirements)” at the same time that “total civilian consumption, even of goods, in 1943 was higher than it had been in 1940” (Vatter, 1985: 20).

Government planners did not share the business preference for conversion. They correctly worried that this policy would lead to shortages of key materials. But, given the structural dependence of the state on capital, which was reflected in the placement of key business leaders on critical policy-planning bodies, government planners were generally powerless to overrule business interests. As a result, raw steel production rose only 8 percent from 1941 to its 1944 wartime peak, and the civilian sector was forced to reduce its use of steel. A similar situation existed with crude petroleum refining capacity, which rose only 12 percent between 1941 and 45 (Vatter, 1985: 28).

This business strategy, which placed limits on the production of consumer goods at the same time that civilian employment and purchasing power were rapidly expanding, greatly intensified inflationary pressures. Leon Henderson, the first director of the Office of Price Administration (OPA), described the structural pressures as follows: “As a result of the decrease in consumers' goods and the increase in income payments, purchasing power in 1942 will be from 14 to 17 billion dollars greater than the value of the goods and services available . . . This is the so-called ‘inflationary gap'” (1942:18).

II. INFLATION, WAGE STRUGGLES AND PRICE CONTROLS

Inflation quickly became a problem for workers, who engaged in strikes and other workplace actions to defend their interests. Because these actions threatened military production, the government took steps to restrict them. It also tried to contain future price increases by placing limits on worker wage increases. When such steps proved unable to halt either inflation or worker activism, the government was forced to introduce a series of increasingly restrictive price controls.

The September 1939 start of World War II brought a sharp spike in US prices, with food prices rising by five percent in a single month. Although prices fell back by the end of 1940, they soon began rising again the next year. Workers' experience with the devastating consequences of inflation during World War I made them understandably concerned about the negative consequences this war might have on their real wages.

Even without the war-induced inflationary threat, workers were determined to win meaningful wage increases to overcome the depression era collapse in their earnings. Many also sought to take advantage of the growing economy (and demand for labor) to secure union recognition. Beginning in 1940, there was a small but significant increase in the number of work stoppages and workdays lost to strikes. These increased the following year: there were more than 4,000 work stoppages in 1941, with 2,360,000 workers involved. Equally important, a number of strikes hit plants involved in the production of military goods—for example machinery production needed for navel vessels and aviation (Bernstein, 1983: 176).

The December 7 attack on Pearl Harbor and the US entry into the war brought new urgency to labor and inflation issues. The government decided to take immediate steps to halt any actions that might disrupt production; labor was its prime target. Roosevelt convened a labor-management conference on December 12 at which the participants agreed on two basic policies: strikes and lockouts were to be prohibited during the war, and labor disputes were to be submitted to a government board for resolution.

In January 1942, Roosevelt issued an executive order establishing the National War Labor Board (NWLB)—a tripartite agency with public, industry, and labor representatives. The NWLB was given jurisdiction over all disputes that might, in the opinion of the Secretary of Labor, interrupt work that “contributed to the effective prosecution of the war.” It was also given the authority to issue final orders or directives that were binding on all parties.

The NWLB's July 1942 “Little Steel” decision was perhaps its most significant act. Steel workers, through their Steel Workers Organizing Committee, had finalized contracts with the major, but not the smaller, steel companies before the attack on Pearl Harbor . Differences over wages were one of the main stumbling blocks to an agreement with Little Steel, and the Steel Workers Organizing Committee continued to press the companies for an acceptable contract. It sought an increase of 12 ½ cents an hour or a dollar a day, which it felt was justified because of the rise in the cost of living. The steel companies refused; their stated rationale was that such an increase would be inflationary and therefore contrary to the public interest.

The dispute came before the NWLB, and its industry and public representatives rejected the steel workers' demand in favor of maintaining pre-war real wages. The board argued that living costs, based on the government's cost of living index, had risen by only 15 percent between January 1, 1941 and May 1, 1942 . Because steel workers had already received an 11.8 percent increase in their hourly wages, it concluded that the steel workers were entitled to an increase of only 3.2 percent more. The board softened the outcome slightly by granting the steel workers an additional 2.3 percent increase in hourly wages because of their determination that the cost of living had gone up more in steel towns then the national average. Thus, the board awarded the steel workers an increase of 5.5 percent or an additional 44 cents a day.

The Little Steel decision not only placed a cap on steel worker wages, its standard of a maximum 15 percent increase in hourly wages above those existing on January 1, 1941 , would soon become the basis for the government's wartime wage policy. This policy reflected the government's determination that inflation would be easier to contain if business was protected from worker demands for higher wages.[2]

The success of this policy, which greatly depended on the willingness of workers to accept its terms, in turn depended on the government's ability to limit price increases. This ensured a high visibility role for the Office of Price Administration, which served as the key government agency in charge of achieving price stability. It also made organized labor a strong supporter of tough price controls.

In April 1941, Roosevelt used an executive order to create the Office of Price Administration and Civilian Supply (OPACS). Four months later, he transferred responsibilities for the supply of civilian goods to the Office of Production Management, thereby converting the OPACS into the OPA. In January 1942, the Congress passed the Emergency Price Control Act to give the OPA secure legal standing.

This act established that the OPA would be run by a single administrator. While it specified that prices were to be fixed with reference to the prices prevailing between October 1 and October 15, 1941 , it also gave the administrator authority to set any price at any level he deemed “generally fair and equitable” as well as to make price adjustments for individual firms.[3] The administrator was also given compliance powers: he could sue violators for triple damages, seek court injunctions and criminal penalties for willful violators, and issue and revoke licenses of firms dealing in controlled commodities.

Before the passage of the Emergency Price Control Act, price control had largely consisted of OPACS and then OPA issuing price schedules with maximum prices and negotiating voluntary agreements with producers of major industrial commodities and goods. However, this industry-by-industry approach was proving increasingly unworkable as the military build-up proceeded, and its effects rippled through the economy. Prices were rapidly rising and polls conducted in late 1941 and early 1942 showed a strong public desire for government action to stop their rise (Rockoff, 1984: 92).

In response to public pressure, Roosevelt announced a seven point anti-inflationary program in late April 1942, which called for increasing taxes, across the board ceilings on agricultural goods, wage controls, rationing, war bonds sales, and credit controls. The next day the OPA issued the General Maximum Price Regulation (GMPR), which ordered that prices be frozen at the highest level reached in March 1942, effective as of May 15.

The GMPR was an across the board effort at price control, covering “all commodities and services not specifically excluded or not covered by another regulation office.” As part of that effort, retailers were required to keep a record of all their March prices at their place of business. They were also required to file with the OPA, and post on-site, a list showing their March prices for a specified group of “cost-of-living” items. It was the promise of the GMPR that encouraged the NWLB to issue its Little Steel decision, limiting worker wage “catch-up” to the time period bounded by May 1, 1942 .

While the GMPR appeared comprehensive, it proved difficult to administer as well as enforce. Businesses were constantly modifying existing products or introducing new ones. When that happened, the regulation called for businesses to price their products at a price that was comparable to similar products that were sold in March. If a particular business had not previously produced or sold similar products, it could use the price charged by a competitive firm.

If a business felt that this procedure was unworkable, then the OPA offered yet another method for calculating prices. If the business was a wholesaler or retailer, it was authorized to take its “highest March percentage mark-up on the line of commodities to which the new item belonged, using current replacement costs and March ceilings to calculate the mark-up.” If the business was a manufacturer, it “was to apply to the OPA for a ceiling before selling the new item” (Mansfield, 1948: 43).

This was a system fraught with ambiguity and vulnerable to manipulation. Changes in grade, style, or product line created uncertainties even for sellers who wanted to follow the regulations. Often these sellers resolved the uncertainty by calculating their highest March 1942 mark-up and then applying it to their current costs. This encouraged constant product makeovers and of course, higher prices and profits (Mansfield, 1948: 44).

The OPA also found itself flooded with requests by individual manufacturers of new products looking for assistance in determining a ceiling price for their product. To minimize the paper work, it created new price-determining methods based on wage rates and material prices during a base period. The resulting new formulas were often in conflict with the original basic guidelines of the GMPR.

Not surprisingly, consumers found the GMPR wanting. There was no way for them to determine whether businesses were complying with the regulation. Prices changed regularly and, if challenged, sellers had little trouble in justifying their actions.

With weak price controls doing little to prevent price increases, especially those for food items, working people became increasingly dissatisfied with government policy. The Congress, with the president's encouragement, responded by passing the Economic Stabilization Act on October 2, 1942 . It called upon the president to ensure that prices, wages, and salaries remained at their September 15, 1942 levels. Once again the President's first response was to tighten wage restrictions. On October 3, Roosevelt issued orders that greatly expanded the jurisdiction of the NWLB.

Previously, the NWLB had been empowered to act only when there was a certified industrial dispute in those sectors of the economy covered by collective bargaining. In many cases, businesses had granted wage increases exceeding the 15% limit to avoid strikes or reduce quit rates. The president now gave the NWLB authority over virtually all wage and salary negotiations for workers earning less than $5000.

Roosevelt also directed the NWLB to limit all increases in hourly wages to a maximum 15 percent above their level on January 1, 1941 , as specified in the Little Steel ruling. The only allowable exceptions were in cases where substandard or highly inequitable wages prevailed or when higher wages were deemed necessary to ensure uninterrupted war production. According to Irving Bernstein, “From that time forward, organized labor conducted a massive campaign to exploit, outflank, and shatter the wage stabilization program” (1983: 181).

Along with these new restrictions on labor, Roosevelt also directed the OPA to immediately place ceilings on a number of food items, including eggs, chicken, butter, cheese, potatoes, and flour. Within days,

OPA had covered all the commodities listed by the President under a temporary freeze regulation, soon to be replaced by permanent orders, and in addition had extended control to evaporated milk, corn meal, onions, navy beans, and oranges. This placed 90 percent of the typical consumers' food budget under price control at retail, as compared with only 60 percent under the GMPR. The only major food items not under control were fresh fruits and vegetables. (Mansfield, 1948: 53)

The price rise slowed in the months following this initiative, but then began accelerating again in early 1943. “Between February and April [1943] the increase was more than 3 percent or better than 1.5 percent a month, and another crisis was precipitated” (Mansfield, 1948: 53).

The President responded with yet another initiative. His “Hold the Line” order, issued on April 8, 1943 , further restricted the authority of the NWLB. It had previously granted some wage increases based on its determination that they were necessary to ensure war production. This new order denied the NWLB use of this exemption.

The AFL and CIO joined forces to attack the Little Steel formula on the grounds that while hourly wage gains were limited to 15 percent, prices had risen far more. Even the BLS Cost of Living Index (which was the official measure of inflation) showed a rise of 23.4 percent between January 1941 and December 1943. And, as the two unions correctly point out, that index was flawed, leading to a serious underestimation of the rise in cost of living. For example, many low cost items such as shoes and clothing had disappeared from stores, forcing working people to buy more expensive ones. Prices in restaurants and cafeterias had doubled, yet more people were forced to eat in them because of their work schedules. The unions calculated that costs over this period had actually increased by 43.5 percent (Bernstein, 1983: 182).

Workers also directly challenged the authority of the NWLB and the government through strikes. Although most were short-lived, there were many of them. In 1943, “2,000,000 workers became involved in strikes; 13,000,000 [person] days of labor were lost, as compared to 4,800,000 in 1942—one seventh of 1 per cent of the total working time” (Rayback, 1966: 380). The miners offered the most serious challenge. Seeking a wage increase beyond that allowable according to the Little Steel formula, they struck several times. The President ordered the mines taken over and threatened to draft the striking miners.[4] Eventually the government was forced into negotiations that resulted in miners winning more money. But, the government was able to secure this outcome without directly violating the Little Steel formula. Rather than increase hourly wages, the mine owners agreed to pay miners for their travel time between the mine entrance and the underground work area.

Adding fuel to worker anger over inflation was the fact that in sharp contrast to their situation, corporate executive salaries and profits were soaring to record heights. For example, from 1940-42, the salary of the top executive at Aviation Corporation rose from $25,000 to $88,917; at Goodyear Tire and Rubber Company from $91,937 to $120,000; at Lima Locomotive Works from $31, 680 to $63,150; at J.C. Penney from $47,975 to $81,155; at Phelps Dodge Corporation from $100,520 to $151,350; at Standard Oil Company (Ohio) from $90,000 to $120,000; and at Willys-Overland Motors from $60,000 to $123,184 (Robertson, 1943a: 26). Corporate profits also soared: profits before taxes rose by a factor of four between 1939 and 1943; after tax corporate profits more than doubled over the same period (Robertson, 1943b: 3).

Roosevelt 's “Hold the Line” order also included yet another demand that OPA take tougher action on prices. With a new urgency brought on by labor's growing activism, the OPA significantly toughened its regulatory structure.

Roosevelt 's order ruled out any price increase affecting the cost of living unless it was determined to be “necessary to aid in the effective prosecution of the war.” The OPA ruled that what was “necessary” would be based on determination of what was an acceptable level of profit. For manufacturing, it decided that an industry would not be able to raise its prices as long as it was earning at least the same dollar amount of profits before taxes (adjusted for changes in investment) that it had earned on average in the period 1936-39, and that this profit level was enough to cover out of pocket expenses on all major product lines. A similar standard was developed for retailers.

In effect, OPA was now building its price controls on the basis of the principle of absorption. According to that principle,

so long as an industry's earnings remained satisfactory, it was expected to ‘absorb' cost increases out of profits. That is to say, when an industry experienced a rise in costs, whether as a consequence of an OPA-authorized price increase to its suppliers, or of an approved wage increase, or for any other reason, no price relief would be granted by OPA unless the rise in costs threw the industry into a hardship position as measured by regular OPA standards. (Mansfield, 1948: 68-69)

The business community strongly opposed this new policy.[5] One reason is that its implementation required firms to fill out questionnaires detailing their current and pre-war costs, sales, and profits. Business did not like sharing this information with the government. Even more importantly, business feared that this policy would lead to the creation of politically determined standards for acceptable profits, with profit controls replacing price controls.

Spurred to action by popular criticisms of its past efforts, the OPA decided to take an especially aggressive stance towards food prices, introducing dollars and cents ceiling prices for critical food items. In contrast to its past approach, which relied on adjustable price ceilings tied to base period prices, dollars and cents ceiling prices could easily be understood and monitored by consumers. Some of the new ceiling prices, such as for meat, were set by the national office. The great majority—for a community price list of 300 designated grocery products—were be set by the district offices.

More specifically, all grocery stores were divided into one of four categories based on their size and service; each category was then assigned its own nationally determined percentage mark-up. To calculate community price ceilings, OPA district offices first calculated the local production costs of each product on the list using information supplied by local suppliers. Then they applied the national mark-up to the local costs. The result was a dollars and cents ceiling price for each commodity, that varied by type of store and community. District offices regularly adjusted these ceiling prices—weekly for perishables and monthly for dry groceries.

Equally important, the OPA also mobilized tens of thousands of volunteers to administer and ensure retail compliance with its new system of dollars and cents ceiling prices. The combination of new controls and popular participation in their application proved to be a success. “Between the spring of 1943 and April 1945 . . . the BLS Index of Consumer Prices rose less than 2 percent, or at one-sixth the rate which had characterized the preceding 2 years. By means of subsidies, roll-backs, and drastic simplification of controls, food prices actually declined at retail by more than 4 percent” (Mansfield, 1948: 56). This was an especially noteworthy achievement in that it occurred during the last few years of the war economy, a time when employment was at a maximum and consumer goods production highly restricted.[6]

III. STRUGGLES OVER POPULAR PARTICIPATION IN PRICE CONTROL

Popular participation in price control did not come quickly or easily. The OPA initially refused to use volunteers in price control, even though they had proven essential to its rationing work. This position reflected OPA efforts to win business support for its price control efforts. The OPA eventually changed its position, primarily because of the combination of working class pressure and the exigencies of the war. However, the continued opposition by business to volunteer participation in price control ensured that OPA's use of volunteers would remain contested even within the agency.

Although the OPA's initial charge was price control, its first real administrative responsibilities involved coordinating the government's rationing program. The Japanese attack on Pearl Harbor initiated a war in the Pacific with the United States that cut off America 's main source of rubber. To conserve the existing stock of rubber, the Office of Production Management decided to stop the sale of tires. On December 11 it ordered OPA to ration them.

The OPA decided to carry out its mandate by establishing tire ration boards in every political subdivision in the county and staff them with volunteers. Toward that end, Governors in each state were contacted and asked to mobilize their state defense councils (which had been formed in May 1941 to recruit volunteers for national service) to generate board members. Over 7000 tire-rationing boards (varying in size from 3 to 7 members) were quickly created, and tire rationing began on January 5, 1942 . Board members were “sworn representatives of the Government” and had the responsibility of explaining the rationing program and passing on all applications for rationed goods. On January 27, OPA was designated the official rationing agency, and the work of the rationing boards soon expanded to include typewriters, automobiles, sugar, gasoline, bicycles, rubber footwear, fuel oil, coffee, stoves, shoes, processed foods, and meats and fats.

Sugar rationing (which began in May 1942) illustrates the enormity of what was involved. Every member of every family in the country, as well as every food store and institutional user had to be registered. The OPA, by arrangement with the Office of Education and school authorities “borrowed the public school system of America .” Teachers and parents (mostly mothers) handled the registration at their schools. “It has been estimated that over 100,000 people volunteered their services for War Ration Book I. For each succeeding peak-load job during the next 4 years the school teachers worked overtime to contribute to OPA as ‘peak-load' volunteers” (Putnam, 1947: 18).

In addition to the volunteer board members, the rationing program also used what the OPA called “regular” rationing volunteers. These included receptionists, file clerks, telephone clerks, and counter clerks. At its peak, the program relied on approximately 125,000 regular volunteers (Putnam, 1947: 21). Although far from perfect, the ration system generally enjoyed community support. Most Americans were willing to accept its inefficiencies because those administering it were unpaid volunteers, many of who gave more than 40 hours a week in service.

Significantly, OPA's embrace of volunteer participation in rationing was not extended to its primary mission, price control. This was because the OPA wanted to be responsive to the desires of the business community. Most businesses were willing to accept rationing, including volunteer participation in the rationing program, because they did not see it as a threat to their independence or profitability. Price controls were a different matter. The business community not only opposed strict controls, it was even more adamantly opposed to popular participation in their enforcement. Therefore, to maintain good working relations with the business community, the OPA was initially responsive to its perspective.

For example: in preparation for the introduction of the GMPR, the OPA policy committee issued its own internal plan for ensuring the program's success. Imogene H. Putnam, in an officially sanctioned history of volunteer participation in the OPA, critically described the committee's views on popular involvement in price control as follows:

[The policy committee's] plan anticipated “a powerful urge on the part of the consuming public to participate in making the plan work.” The urge must be channeled, consumers must be made to realize that “novel and difficult burdens” had been placed on the retailer but that “no corresponding burden” had been placed on the consumers. Consumers must be lenient and patient. The necessary price checking would be done by “professional shoppers,” and any “self-appointed price policemen should be identified as fifth wheels and trouble makers.” (1947: 29)

In June 1942, one month after the GMPR went into effect, prices were still rising. This was not what the OPA expected, since by law no retailer could charge more for a given article than its selling price in March 1942. Under pressure to produce results, the OPA decided to carry out a survey of retailers to check their compliance.

This decision raised the question of who would actually visit the country's two million retail outlets. Echoing the position of the OPA policy committee, John Kenneth Galbraith, Deputy Administrator for Price, argued that the survey should be done by eight to ten thousand paid inspectors. He publicly pledged to the business community that “no Gestapo of volunteer housewives” would be used (Putnam, 1947: 32). Members of Congress and the business community began openly referring to shoppers or volunteers who wanted to help check compliance as “trouble makers” and “snoopers.” This was strong language in the context of the war; it also helped to establish a sense that it was un-American to investigate or challenge business decisions.

Despite the popularity of this anti-consumer sentiment in Congress, it refused to appropriate the money needed to hire paid inspectors. Therefore, the OPA was forced to seek volunteers for its price survey. Not surprisingly, this proved difficult. Many civic organizations were reluctant to mobilize their members for volunteer price work given the negative public comments that had been made about the activity. Even though some OPA leaders, including Galbraith, eventually changed their position on this issue, these early attacks on volunteer participation in the price program had long lasting negative effects on recruitment and retention.

The OPA's reluctance to involve volunteers in its price control program also led it to downplay the importance of establishing price panels, despite their proven value in the rationing program. Thus, although OPA director Leon Henderson announced in May 1942 that existing rationing boards would be renamed War Price and Rationing Boards, he did nothing to encourage recruitment of new volunteers with responsibilities for price control. Price material was sent to the existing boards but, busy with rationing, most board members ignored it.

Despite the lack of leadership coming from Washington , some states (mostly in New England ) did move ahead on their own to create functioning price panels. Maine , for example, had a separate price panel operating in each of its 50 War Price and Rationing Boards by the summer. Similarly, Vermont had price panels in each of its 40 boards (Putnam, 1947: 45-46). In general, the newly recruited panel members distributed price materials to retailers, received required price lists from them, supplied applications for price ceilings, and forwarded complaints to the proper OPA office.

Labor, in particular, was not happy with OPA's reluctance to establish strong price panels. It believed that the agency's lack of commitment to a popular mobilization in support of price controls was a major reason for the lack of progress in the anti-inflation fight. As Boris Shishkin, chief economist with the AFL, wrote:

The cost of living cannot be held down by remote price control. Every housewife must be mobilized to insure price compliance. Workers must be given an opportunity to enter into an effective partnership with the government in the enforcement of price ceilings. Workers must be given the opportunity to do their part in providing for effective rationing. They should be permitted to serve on every War Price and Rationing Board and on every price and rationing panel. Only complete mobilization of labor's organized strength can assure formulation of equitable policies and their full enforcement. (1943: 6)

There were those within OPA who agreed, producing a series of internal struggles within the organization over the speed and process of selecting new board members. The original ration board members had been chosen in each state by its Governor from a list created by state and local defense councils. Most of those chosen were attorneys and businesspeople.

Recognizing that most boards were not representative of their communities, beginning in late May 1942, the OPA transferred responsibility for board appointments from the Governor to the OPA state or district director. While new members still had to be nominated by defense councils, new qualifications were added in an attempt to diversify the boards. These mandated that “membership of the individual boards should include members from labor and, where appropriate, members from agriculture. In the selection of labor and farmer members the nominating body should consult the recognized state and local organizations of labor and farmers” (Putnam, 1947: 23).

While the principle was sound, the process of ensuring representative boards was far from smooth, largely because of opposition from state and local defense councils, existing board chairpeople, and even regional and local OPA officials. In response to union complaints, the OPA created a national advisory Labor Policy Committee in June, which included representatives from the AFL, CIO, and the Railway Brotherhoods.

At the July 1942 meeting of the Labor Policy Committee, the chairperson of the subcommittee on local boards reported that fewer than 10 of the existing 5000 boards had any labor representatives. The reality was that “in very many cases the committees are appointed by the anti-labor segment of the community” (Afros, 1946: 473). In August the chairperson reported that there were still probably fewer than 50 boards with labor representation (Afros, 1946: 474).

Finally, desperate to maintain labor's support in the face of growing worker strikes, the OPA established district Labor Policy Committees in March 1943. These made a difference; by January 1945 there were approximately 6000 trade unionists serving on the 5500 local War Price and Rationing Boards (Afros, 1946: 478-79).

The OPA was caught in a crossfire. Labor was critical of the OPA because it was not doing enough to halt the inflation-driven decline in real wages. Business was critical of the OPA because it was slowly moving (or being pushed) towards adoption of an effective price control system.

Business opposition to OPA's policy direction finally led to Leon Henderson's forced resignation in January 1943; he was replaced by Prentiss Brown. Galbraith, who as noted above eventually endorsed a strong volunteer component in the price program, was also distrusted by business and eventually forced to resign in May. Business leaders especially distrusted academics, believing that they were not strongly enough committed to free-market capitalism.[7] They used their influence to ensure that the 1944 extension of the Emergency Price Act included a provision that “required people in policymaking positions at OPA to have five years of business experience. As a result, a number of administrators drawn from academic backgrounds were forced out of their jobs” (Rockoff, 1984: 96).

This struggle for control over the OPA did little to improve the agency's effectiveness. Thus, until Roosevelt 's April 1943 Hold the Line order, prices continued to rise, labor unrest continued to grow, and popular participation in price control remained limited.

IV. POPULAR PARTICIPATION AND THE SUCCESS OF PRICE CONTROL

The Hold the Line order finally strengthened OPA's resolve to take strong action to control prices. This involved not only the introduction of dollars and cents price ceilings but also the use of volunteers to ensure business compliance. Despite business opposition, the work of the price boards, and perhaps even more importantly price panel assistants, succeeded in forcing down prices of key consumer goods, resulting in an actual decline of the cost of living for working people.

Threatened by the populist nature of the OPA control program, business leaders concentrated their efforts on curtailing the role of volunteers and shoppers in the direct monitoring of prices. As a result of behind the scenes negotiations with OPA leaders, their efforts were eventually rewarded. Their victory lead to a loss of popular involvement in and support for price controls.

In March 1943, Prentiss Brown, the newly appointed head of the OPA, called for price panels to be established on every War Price and Rationing Board and for volunteer price assistants to be recruited to assist the panels in their work. According to Putnam, Brown's call for price assistants “put OPA on record for the first time as inviting the active participation of the women of the county, not merely as shoppers, nor even merely as complainers, but as full-fledged volunteer workers within the OPA price structure” (Putnam, 1947: 56). At the time, Brown did not intend for these price assistants to play a major role in price control; he saw them primarily helping to distribute and explain OPA materials to retailers. But, after Roosevelt 's Hold the Line order, he had little choice but to greatly increase their responsibilities.

Reflecting the urgency of Roosevelt 's order, the OPA, on May 7, sent out instructions to its boards to carry out a national grocery survey over the period May 12-13 to check for compliance with the newly created community price lists. This survey effort immediately forced a rethinking and elevating of the role of the price assistants. They were assigned the job of checking that every grocery store displayed a poster showing its assigned category, a separate poster showing the dollars and cents price ceilings for stores in its category, and clear signs posted near each product on the community price list showing its selling price. The assistants were also to check that the selling prices were no higher then the mandated ceiling prices. If a store was found to be out of compliance the assistants were to inform the store manager and request that the problems be corrected.

This first survey was far from complete or satisfactory. The boards were not given enough time to prepare for it. Moreover, less than one-third of the 5,500 boards had price panels, and fewer then 10 percent of those boards had price panel assistants (Putnam, 1947: 58).

Brown called for another, more complete, survey of grocery stores no later than June 28. By then, many more boards had formed price panels and recruited price assistants. The assistants were instructed to examine 12 designated food items, comparing their selling price with OPA's ceiling price. They found a large number of violations. For example, in Washington D.C. “the record showed that on the 12 basic food items almost 1 in every 4 was being sold over the ceiling and only 46 percent of the stores in Washington were correctly pricing on all 12 items” (Putnam, 1947: 64-5). As required, panel assistants returned for follow-up visits the next week to determine whether corrections had been made. The program proved to be a success; in June, for the first time in 30 months, the national cost of living index fell.

Despite the program's overall success, there were still many areas without well functioning price panels. Therefore, in July, Chester Bowles, the Connecticut OPA director, was brought to the national office to assist local boards in establishing effective price panels and recruiting and training price panel assistants.

Bowles pressured the OPA's nine regional administrators to work with their 93 district offices to quickly increase the number and diversity of volunteers working on price control. No longer required to work exclusively with defense councils, the district offices began selecting new volunteers from lists drawn up by unions, women's clubs, and consumer groups. In reporting on the Connecticut experience, Bowles described the composition of that state's board members in late 1943 as follows: “There are 156 farmers, 209 housewives, 43 insurance men, 20 doctors and 8 dentists, 47 nurses, 97 school teachers, 237 industrial workers, 32 attorneys, 53 engineers, 127 storekeepers and store clerks, 21 clergymen, 15 carpenters, 11 electricians, and 10 plumbers” (Putnam, 1947: 83-4).

The price panels had tremendous responsibilities. For example, they were supposed to educate all retail businesses, not just those selling food, about the government's price relations. This meant that price panel members had to be informed about price regulations for laundries, department stores, grocery stores, restaurants, and many other establishments. To carry out their educational responsibilities, panel members generally held meetings with the various retailers in their area to explain the rules and answer questions.

Price panels were also charged with investigating cases of alleged business non-compliance. The panels were instructed to investigate all consumer complaints. If the panel felt that it was likely a violation had occurred, panel members would hold a conference, normally in the evening, where both the consumer and retailer could argue their respective positions. If the panel concluded that a violation had taken place, the consumer had the right to collect any overcharge due, or sue in court for three times the overcharge or $50, which ever was larger.

Most of the time, the retailer, if found guilty by the panel, would sign a pledge acknowledging that a mistake had been made, promise to correct it, and pay the overcharge to the consumer. In the case of overcharges on food items, which were the majority of cases, the amounts involved were small. But since the panels also regulated prices for large consumer durable goods such as refrigerators, washing machines, and automobiles, sometime the refunds could be substantial.

If retailers refused to acknowledge their guilt or change their pricing habits, the board's only recourse was to send a letter to the offending business threatening it with loss of license (but only after gaining approval from the district office) and then, if there was no response, ask its local Legal Division to take action. Unfortunately, in many cases, the Legal Divisions proved unwilling to act.

Conferences were also held after surveys to follow up on violations discovered by price assistants that were not corrected. If the board determined that a retailer had violated the law, its only recourse was to collect the overcharge for the benefit of the U.S. Treasury. Boards were barred from suing for damages; only consumers were given this right.

The legal sanctions available to the local boards were greatly strengthened by the 1944 legislation renewing the authority of the OPA. Since few consumers used their legal right to sue, most retailers faced relative small penalties for violating ceiling prices. However, according to the terms of the new legislation, if a consumer did not sue within 30 days, then the local board, acting for the OPA Administrator, could assert the “Administrator's claim” for damages. This new legislation also allowed local boards to sue for damages when violations were discovered by price assistants.

Although some boards were reluctant to use their new power, most were not. The national record was impressive: from January 1945 to June 1946, a total of 71,050 sellers were required to pay over $5.1 million to the US Treasury (Putnam, 1947: 119).

According to Putnam, “the neighborly, informal, but purposeful atmosphere of the panel conference was ideal for handling consumer complaints. The panels satisfied consumer and retailer in thousands upon thousands of cases. In the first 6 months of 1944 alone they successfully mediated 127,529 cases which otherwise might have clogged the dockets of the 93 district offices” (1947: 80).

The volunteer price panel assistants were also critical to the success of OPA price control efforts. OPA studies clearly established that business compliance rose substantially the more frequently enterprises were surveyed. But, at the beginning of 1944, there were only 28,000 price assistants, not enough for the desired monthly surveys of the country's 600,000 food stores (Putnam, 1947: 89). Moreover, the OPA was determined to undertake similar but less frequent surveys of restaurants and service outlets. There, Chester Bowles, who became head of the OPA in November 1943, called for expanding the number of price assistants to 125,000, each of whom was expected to work from 3-4 hours a day, 2 to 3 days a week (Putnam, 1947: 157).

The OPA never came close to meeting its goal. Businessmen and their allies who held positions of authority within the OPA blocked its efforts to launch a national recruiting campaign for new price panel assistants and fund the hiring of paid supervisors to work with those who did volunteer. In addition, influential members of Congress and the media continued to discourage volunteers by loudly voicing their opinion that price assistants were nothing but despicable snoopers and troublemakers.

With the national office paralyzed, regions tended to make their own decisions about recruitment and use of volunteer price assistants. There were some great successes thanks to the ingenuity and commitments of local officials. Region VII, which covered Colorado , Montana , Utah , Idaho , Wyoming , and New Mexico , was among the most successful. According to Putnam, one of the main reasons for its success was that the “regional volunteer specialist and four of the six district specialists were women with wide backgrounds in organizational work.” They, in turn, selected experienced and well-connected women to serve as volunteer supervisors. One of those chosen in Montana was Mrs. Fred Lively:

She recruited a corps of 75 women and was apparently able to keep her ranks filled by the simple expedient of putting responsibility on a volunteer organization by asking it for a replacement whenever one of its members became inactive. But she did not depend upon the organization for keeping her volunteers interested in the program. She wrote each one a personal note with the monthly survey instructions; she thanked each price panel assistant for her work of the month before and told her of the general results. The loyalty and responsibility of this group was demonstrated in July 1946 during the weeks when OPA was legally “nonexistent.” Not only the active but also inactive former volunteers crowded into the local board to see whether they could help. This loyalty to the program seems to have been typical of volunteers throughout the State. Recruits were gained through women's organizations and she educated them so thoroughly that they became not only price panel assistants but representatives of OPA in their communities. In this way she achieved one of the primary goals of community participation. (Putnam, 1947: 130)

As a result of such efforts, the number of price panel assistants in the region grew from 570 in March 1944 to 2,142 in July 1945. However, this kind of increase was not duplicated across the country; the number of price panel assistants nationwide rose to 40,757 in March 1944, and 46,000 in June 1944, but then began a slow decline (Putnam, 1947: 132-3).

In an attempt to promote and unify the survey effort, the OPA ordered an emergency price check of every food store in the country during a one-week period in March 1944.[8] It was impressive: 5,108 boards participated and 434,812 food stores were visited, 3 times the number covered in any previous month. A board-by-board examination of the survey results yielded “convincing evidence of the effect of continued store checking. In areas where there were enough volunteers to make weekly visits the number of stores in violation dropped to 4 percent, and where there were no regular visits as many as 75 percent of the stores were found to be overcharging” (Putnam, 1947: 99).

In April 1944, Bowles sent a letter to the President summarizing the success of OPA's community pricing efforts. He noted that while the prices of some items had continued to rise over the last year, in particular clothing, those of other items, in particular foods, had fallen. In fact, “the cost of living as a whole is slightly lower than it was a year ago today. This record—1 year of stable living costs—is unprecedented either in this war or the last war” (Putnam, 1947: 100).

This success only intensified business opposition to OPA's price control program. Business leaders feared that the combination of the absorption principle, dollars and cents ceiling prices, and direct popular monitoring of their operations could easily lead to new and more direct challenges to their freedom of operation. Some used the newspapers to promote stories and cartoons that painted OPA as a communist front organization and a threat to democracy and the Bill of Rights (Winston, 1943: 46).

Business efforts to undermine the price control program focused on the use of volunteers to monitor prices. Business desperately wanted an end to volunteer price checking, not only because it was critical to the effectiveness of price control but also because it represented the politically most threatening aspect of the program.

The Grocers' Association, whose member stores were the main focus of OPA survey work, organized and led the fight against the use of volunteer price checkers. In fact, it was its “Grocer-Consumer Anti-inflation Campaign” that proved to be the critical turning point in the struggle over popular participation in price control.

OPA surveys of grocery stores revealed that its price posters were often not displayed properly or at all. Unable to achieve his target of 125,000 price assistants to force compliance, Bowles decided to outmaneuver the grocers by printing pocket-sized posters with the ceiling prices, and distributing them directly to consumers so that they could do their own checking.

The OPA printed up 2.5 million posters in March 1944 and sent them to the regions for a test distribution. For the most part, the regional directors quickly distributed them by enlisting the efforts of various civic organizations. However, one regional director resisted, claiming that distribution of the lists was an affront to the grocers.

Grocers and some OPA officials took up the charge and began pressing Bowles to drop his project. Bowles refused. He ordered the OPA to print 10 million price lists and send them to the regions along with a national educational campaign.

The lists were sent, but they came with no instructions for distribution or accompanying national campaign. Although it remains unclear who orchestrated it or how it was accomplished, a deal was struck between the grocers and the OPA without the knowledge of Bowles. In a July 3, 1944 staff memo, Bowles was told that the OPA had agreed not to promote its June consumer price lists or print any new price lists for public distribution. In return, the Grocers' Association agreed to launch its own Grocer-Consumer Anti-inflation Campaign, which included a commitment by the association to ensure that grocers would display highly visible ceiling price posters of their own making (Putnam, 1947: 112).

The grocers did as they had promised. Grocer committees were established in most cities and stores hung huge banners touting the campaign and colorful posters with ceiling prices. But, while posting compliance rose noticeably, price compliance did not. More importantly, the agreement further weakened OPA resolve to recruit price panel assistants and marginalized the role of consumers. As a result, popular interest in and support for the price control program sharply declined.

The Grocer-Consumer Anti-Inflation Campaign succeeded, as the Grocers' Association intended, in destroying the tenuous but critical connection between the OPA and working people. The OPA's own surveys revealed that the campaign had caused shoppers to feel uncomfortable checking prices, afraid to report violations out of fear of retaliation by store owners, and ignorant about OPA pricing policies and their potential role in enforcing them. Regardless, the OPA continued to support the Grocer-Consumer Anti-Inflation Campaign throughout 1945, with only minor changes, despite a rise in food prices and staff protests (Putnam, 1947: 114-15).

V. LOST OPPORTUNITIES

With the war coming to a close, OPA quickly dismantled its price boards and volunteer programs, although price controls remained in place. Almost immediately after the war's conclusion, President Truman ended restrictions on wage bargaining.

Eager to restore earnings lost under wartime wage restrictions, labor demanded higher wages. And, in line with the principles of wartime price control, a number of unions demanded that businesses absorb the costs of the higher wages out of their record profits and not pass them on to other working people through higher prices. Business refused, and labor responded with a massive strike wave.

Had popular support for and involvement in price control been sustained, it might have been possible to create a worker-community alliance powerful enough to force business to yield. Such a victory would have represented a significant restructuring of class relations. Unfortunately, labor launched its struggle after the demobilization of community participation in price control.

Truman finally acted to end the strike wave by allowing businesses to raise prices to compensate for paying higher wages. The result was that union efforts to increase wages became pitted against the broader anti-inflation interests of the majority of working people. While unionized workers did win substantial wage gains, their success proved short-lived. The resulting inflation eventually erased their gains, leaving all working people worse off.

The OPA had long warned that inflation could easily explode with the end of the war. Yet, in the months before its August 1945 conclusion, the national office did nothing to reinvigorate its volunteer effort in preparation for the next stage in price control. In fact, it did quite the opposite; “the Volunteer Section and the positions of all the volunteer specialists were abolished. The price panel division was abolished and the price surveys suspended. . . . Announcement was made that the local boards would be ‘consolidated,' and their number reduced from the 5,100 then existing to about 2,000 by the end of the year” (Putnam, 1947: 135).

The OPA national office made no attempt to communicate with its volunteers to explain its plans. As a result, their numbers declined by 50% between June and October, 1945. Some OPA officials even argued that the boards should be completely dissolved and replaced by a paid staff of enforcement specialists.

Progressive forces within and without the OPA had unsuccessfully fought against this capitulation to business interests. However, their political position within the agency was greatly improved when price increases once again began threatening economic stability. In December, the national office approved a new plan for rebuilding OPA's volunteer network. Volunteer specialists were rehired and a new call was issued for volunteers. But, it was too late; the number of volunteers working with the OPA continued to decline.

Paralleling this change in the price control structure was a change in the policies that regulated wages and prices. The federal government had repeatedly presented its wage and price control policies as wartime measures that would not be continued during peacetime; in short, as necessary evils. Thus, with the end of the war, Truman felt pressure to begin relaxing them.

On August 18 1945 , Truman issued an executive order altering Roosevelt 's “Hold the Line” policy. It ended direct wage controls, thereby giving unions and owners the freedom to determine wages through collective bargaining. This freedom was somewhat curtailed by the fact that firms were not allowed to raise prices to compensate for any new wage agreement unless the National War Labor Board and the Director of Economic Stabilization first approved the proposed wage increase.

Since both the NWLB and the director remained under pressure to fight inflation, they rejected most proposed wage increases. Most firms found this an acceptable outcome. They resisted wage increases without price increases, and then used the government's fear of inflation to resist worker demands for higher wages.

Most workers did not find the situation acceptable. They were becoming increasingly concerned about economic trends and determined to raise their hourly wage rates. While worker earnings and consumption had grown during the war, this was primarily due to the growth of the workforce and higher pay due to overtime work and special bonuses, not higher hourly wage rates.

With the end of the war, these earnings props began to disappear. For example, between May 8, 1945 (the end of the war in Europe : V-E Day) and August 14, 1945 (the end of the war against Japan : V-J Day), the number of unemployed increased from half a million to a million. After Japan's surrender, the War and Navy departments canceled 100,000 contracts totaling over $20 billion, and unemployment jumped to 3 million (Rayback, 1966: 388). Workers were also now facing an end to wartime overtime and bonus payments.

No longer bound by their wartime no-strike pledge, workers increasingly turned to strikes to overcome owner resistance to wage increases. Between V-E and V-J days, the number of worker days of idleness due to strikes averaged less than 2,000,000 a month. In September, the total rose to 4,300,000. In October, it jumped again to nearly 9,000,000. In November, 180,000 autoworkers in GM plants went out, and over the next three months, so did many other workers, including those employed in meatpacking, electrical and steel. As a result, in January 1946, the number of worker days of idleness due to strikes was nearly 20,000,000. In February, it reached 23,000,000. This was greater than the total for the years 1943 and 1944 combined (Rayback, 1966: 389-90).

In an effort to halt the strike wave without opposing worker demands for higher wages, Truman decided to relax price controls. He issued a new executive order in October 1945 that made it easier for businesses to cover wage increases through higher prices. It liberalized the terms and process under which the NWLB could approve wage increases. And, if the wage increase pushed business profits below OPA profit standards, it authorized the agency to allow the affected business to raise prices. It also gave the OPA freedom to raise price ceilings for firms that agreed to higher wages without NWLB authorization, but only after waiting a “reasonable test period.”

In November, Truman organized a National Labor-Management Conference in an attempt to get unions and owners to agree to settle labor issues without disruption of production. The conference participants agreed that grievances under existing contracts should be settled by voluntary arbitration not strikes and lockouts. But they did not agree on the relationship between wage increases and higher prices.

The unions argued that business had made record profits during the war and should accommodate higher wages without increasing prices. This position was supported by the work of the Office of War Mobilization and Reconversion, which “estimated that industry in general could maintain its prewar profit level and raise wages 24 per cent without affecting prices” (Rayback, 1966: 389). Unions also argued that these higher wages were necessary to ensure sufficient purchasing power to ward off recession. The owners rejected these arguments. They opposed paying higher wages without higher prices. And, proclaiming their desire to fight inflation, they also opposed most worker demands for higher wages.

As strikes continued, the government set up fact-finding boards and promoted mediation efforts. One of the most important strikes was that waged by the UAW against General Motors. It lasted for 113 days. Walter P. Reuther, representing the UAW, asked for a 30 percent increase in wages and no increase in the prices of GM automobiles. When the company refused, citing limited profits, Reuther demanded that it open its books so that everyone could see whether it was capable of meeting UAW demands. In reply, General Motors offered only a 10 percent wage increase and refused to discuss its ability to pay.

Truman appointed a fact-finding board to study the GM situation, but the company representative walked out of the hearings and refused further cooperation. “The board then recommended a 19 ½-cent hourly increase, asserting its opinion that General Motors could raise wages without increasing prices. General Motors rejected the recommendation” (Rayback, 1966: 390).

In January 1946, while the GM strike continued, steel workers struck United States Steel to press their demand for higher wages. The government established another fact-finding board, but United States Steel followed the example of General Motors and rejected its recommendation for higher wages with no price increase.

Truman was under growing pressure to settle the strikes and sustain growth. One of his options was to adopt the position of his appointed boards, whose work was consistent with the absorption principle that underpinned wartime price controls, and aggressively pressure the business community to grant higher wages with no offsetting price increase. This response would have benefited working people, while no doubt leading to ever more contentious government-business relations. Another option was to further weaken price controls and allow businesses to compensate for higher wages with increased prices. This response would give the business community what it wanted while also appearing to be responsive to union demands.

Truman chose the latter option. In mid-February, he issued an executive order that included a further liberalization of both wage and price restraints. These changes gave the green light for organized workers to press their wage demands and their employers to raise prices in return. Both General Motors and United States Steel quickly negotiated contracts granting wage increases similar to those that government fact-finders had recommended. Then, both companies raised prices. One result: while the consumer price index rose at an annual rate of only 0.5 percent from VJ day to February 1946, it rose at an annual rate of 8.4 percent from February to June 1946 (when the price control law expired) (Rockoff, 1984: 100).

This outcome proved fatal to working class unity and interests. If popular involvement in price control had been sustained into the post war period, it might have been possible for unions to advance a powerful worker-community alliance for higher wages and price stability. At its best, this involvement encouraged working people to support active community participation in economic affairs, challenges to corporate freedom of action, and social regulation of profits. Activists might well have been able to engage the hundreds of thousands of working people (union and non-union) who served as formal and informal volunteers in rationing and price control and forge alliances between them and union members engaged in direct actions for higher wages and price stability. The resulting political dynamics might well have forced Truman to choose the first option, leading to the creation of a political environment favorable to the promotion of a broad-based, anti-capitalist, worker-community movement.

Sadly, union efforts to defend working class interests came after the OPA had already demobilized its volunteers and largely terminated their involvement in price control. As a result, Truman found it easiest to choose the second option. Union efforts to increase wages for their members quickly became pitted against broader working class interest in combating inflation. Thus, an important opportunity to strengthen working class unity and power was lost.

The OPA wanted, but did not get, an extension of the Emergency Price Control Act for one year beyond its June 30 termination date. Legislation approving its renewal was passed, but it contained so many amendments weakening price control, that even the OPA recommended that Truman veto it. Among the most destructive was one that ordered OPA to set prices at a level that covered business costs plus a “reasonable” profit for producers, wholesalers, and retailers. This amendment was intended to force OPA to discontinue using its absorption principle.

Truman did veto the bill and his veto was sustained. Without controls, prices soared. From June to July, prices rose at an annual rate of 67.4%. A new, slightly improved price control bill was passed. Truman reluctantly signed it into law on July 25, 1946 . From July to October, prices rose at an annual rate of 21% (Rockoff, 1984: 109). Price controls came to an official end on November 10, 1946 .

Highlighting the short-term nature of post-war union gains, the new inflationary spiral more than canceled the wage increases won during the strike wave of 1945-46. “Real wages dropped from $32.50 a week in July to less than $30.00 a week in September, the lowest figure since American entry into the war. In the meantime corporate net profits soared to the highest point in history, reaching $12,500,000,000—20 percent higher than in the best war year” (Rayback, 1966: 393).

VI. LESSONS

Hundreds of thousands of working people served as volunteers in OPA's price control program. They worked on tasks that were essential to the government's ability to manage the economy, and their efforts were largely successful. Yet, this history of government reliance on volunteers for the implementation, monitoring, and enforcement of price controls is generally unknown. This is unfortunate, regardless of the reason.

It would be a mistake to dismiss this history of volunteer participation as a unique wartime phenomenon of no contemporary relevance. Of course, the war years were a period of great national emergency, which encouraged working people to generously offer their time in service to the nation. However, it is also clear from the history of the period that working people were not mindless captives of wartime psychology. A case in point: many workers struck for higher wages despite wartime pleas by the President not to do so.

To the extent that working people volunteered their time to participate in OPA's price control program, it was because they believed that this program was in their interest. Therefore, the events of this period have much to teach us about the possibilities for, as well as the challenges involved in, creating new economic arrangements based on, and structured by, meaningful popular participation.

One important lesson we should draw from the events of this period is that under the “right” political conditions, working people are willing and able to work collectively, with minimal national supervision, to regulate critical economic activities.

A second lesson is that social regulation of economic activity can be effective in traditional economic terms. For example, labor productivity soared over the same period that price controls successfully limited the rate of inflation (Rockoff, 1984: 136-8).

A third lesson is that our criteria for evaluating public policies should include an assessment of their compatibility with, and potential to encourage, popular participation. Those who supported OPA's price control efforts, even those in the progressive community, tended to focus their praise or criticism on OPA's system of price regulation. Decades later, the Hold the Line period is still defined by the introduction of dollars and cents price ceilings. However, what ensured the success of this control program was the administrative and monitoring work of volunteers. In other words, the success of OPA's price controls was the result of two complementary developments: the creation of a control system that allowed for popular participation and the mobilization of volunteers to enforce it.

A fourth lesson is that activists seeking to promote progressive public policies should incorporate a critical understanding of both class interest and the contested nature of the state into their organizing work. As the history of the war period makes clear, the business community was unwilling to surrender its privileges even during a time of “national” emergency. A case in point was its strong opposition to meaningful price control. Thus, we must be careful not to encourage working people to think about policies or strategies of transformation in terms of a national interest that would promote uncritical alliances with the business community.

Similarly, while many working people looked to the OPA for leadership in the fight against inflation, the OPA was itself internally divided and weakened because of the presence of business-friendly administrators. Popular awareness of the structural advantages enjoyed by business in a capitalist society, including their projection into the state policy-making process, needs to be encouraged. However, acknowledging this reality should not lead us to conclude that state policy is unimportant or that state agencies are structurally unable to play an important role in social transformation. The evolution of OPA's price control program reveals that state policy can be influenced by the political strength of the working class.

The last, and perhaps most important lesson from the history of this period, is that our organizing efforts for social transformation should be guided by a broad, class-based, worker-community perspective. An examination of writings in the New Republic , The Nation , The Daily Worker and AFL and CIO publications leaves no doubt that the progressive and labor communities of the time strongly supported the OPA and its efforts at price control. In fact, these publications printed articles that openly discussed the ways in which the business community worked to undermine the OPA and called for the agency to purge its internal opponents and actively recruit working people to its cause as price panel members and price panel assistants.

At the same time, I found nothing written that considered or debated the broader political potential of the volunteer experience. For example, there was no call for activists to work with those volunteering to help them develop a more radical perspective on the nature of the anti-inflation struggle or workings of capitalism. This is unfortunate, because such efforts might have produced important results, including strengthened links between various working class constituencies; greater political activism and new leadership skills among people not normally reached through the traditional activist channels of the time, especially women; and new thinking about economic alternatives.

It is difficult to know why there was no strategic discussion about the volunteer experience. Perhaps, it took place out of public view. Or perhaps those writing did not see the price control struggle as offering significant potential for radicalization. Or given the ongoing union and workplace struggles, they did not believe that activists had the organizational capacities necessary to extend their reach. Or perhaps the lack of discussion was a result of sexism, with those writing dismissing the volunteer experience because the great majority of volunteers were women.

Regardless of the reason, as we saw above, separating worker from community struggles proved disastrous. Union efforts to win better wages and workplace conditions were eventually undermined, in large part because of the prior demobilization of the broader community interest and involvement in price control.

If we are going to build the social vision and capacities necessary for the creation of a new democratic-cooperative society we must use history to enhance our ability to think strategically about the process of social transformation. While there is much more to be rediscovered about the World War II price control experience, especially about the actual volunteer experience, hopefully the work presented in this paper is sufficient to encourage a new appreciation for the class and institutional challenges involved in progressive policy making, as well more creative thinking about how to overcome them.

REFERENCES

Afros, John L. 1946. “Labor Participation in the Office of Price Administration.” American Political Science Review . June.

Bernstein, Irving . 1983. “Americans in Depression and War.” in Richard M. Morris, editor, A History of the American Worker . Princeton , New Jersey : Princeton University Press.

Craft, John R. 1947. A Survey of the American Economy, 1940-1946 . New York : North River Press.

Galbraith, John Kenneth Galbraith. 1981. A Life in Our Times . Boston : Houghton Mifflin Company.

Henderson , Leon . 1942. “Price Control, Rationing and Organized Labor.” American Federationist . June.

Lipsitz, George. 1981. Class and Culture in Cold War America , “A Rainbow at Midnight ” . New York : Praeger Publishers.

Mansfield, Harvey C. 1948. A Short History of OPA . Washington D.C. : Office of Price Administration.

Putnam, Imogene H. 1947. Volunteers in OPA . Washington D.C. : Office of Price Administration.

Rayback, Joseph G. 1959, 1966. A History of American Labor (expanded and updated). New York : The Free Press.

Robertson, Nathan. 1943a. “Equality of Sacrifice.” American Federationist . June.

-----------------------. 1943b. “Business Does Nicely.” American Federationist . December.

Rockoff, Hugh. 1984. Drastic Measures, A History of Wage and Price Controls in the United States . Cambridge : Cambridge University Press.

Shishkin, Boris. 1943. “Inflation Crisis,” American Federationist . April.

Vatter, Harold G. 1985. The U.S. Economy in World War II . New York : Columbia University Press.

Winston, B.L. 1943. “The OPA Must Fight,” The New Republic . January 11.

NOTES

[1]I wish to thank Paul Burkett, Norm Diamond, Eban Goodstein, Sylvia Hart-Landsberg, and anonymous reviewers for their helpful comments on an earlier draft, and Jeff Thompson for his research assistance.

[2] For example, “President Roosevelt wired the Shipbuilding Wage Stabilization Conference at Chicago on May 2, 1942, requesting removal of the clauses in collective bargaining agreements in the shipbuilding industry providing for automatic wage adjustments to keep pace with the increase in the Bureau of Labor Statistics cost-of-living index….[In his message, he said] ‘The situation that now confronts you is that the full percentage wage increase for which contracts call and to which by the letter of the law you are entitled, is irreconcilable with the national policy to control the cost of living'” (Craft, 1947: 145-6).

[3] However, the OPA was denied jurisdiction over wages, fees for professional services, insurance rates, public utility rates, prices charged by the media, and agricultural prices (until they reached certain levels).

[4] One of the government's most powerful weapons in its fight against wage increases was its right to seize firms that threatened to grant “unapproved” wage increases. As one measure of labor's resistance, there were sixty-three seizures between 1941-46. They rose to a peak of two per month in 1945 (Rockoff, 1984: 119).

[5] This policy had significant loopholes and was therefore not as restrictive as it appears. For example, OPA standards did not apply to prices charged for goods and services produced for the military; they only covered the civilian sector. Moreover, these loopholes disproportionately benefited the biggest capitalists because they dominated military production. Between June 1940 and September 1944 the government spent $175 billion contracting for military goods and services with the private sector. Two-thirds of this amount went to 100 companies, with the top ten receiving 30 percent of the total. “That concentration gave the largest firms enormous advantages over their competitors, particularly in view of the volume of military spending and its relation to the expansion of the economy as a whole” (Lipsitz, 1981: 3).

[6] At the same time, it is important to recognize that this success represented a holding action, not a roll back of prices to the May 1942 level that the government had initially committed itself to, and labor demanded.

[7] See Galbraith (1981: Chapter 12) for a discussion of the pressures mounted by business lobbyists to force his resignation as well as those of other academics considered hostile to free-market capitalism.

[8] Grocery stores argued that they were being singled out unfairly. In response, OPA pointed out that food costs were 40 percent of living expenses for low income families. However, after the March survey, it did develop a survey schedule for other businesses. Regions were encouraged to visit every food seller at least once a month; every restaurant at least once every two months; every outlet of one major service trade at least once a month; every consumer durable goods dealer to check a chosen item at least once a month (Putnam, 1947: 100).