"Direct" controls, notably price ceilings, drew fire for varying reasons. Professors Galbraith, Harris, and other argue that price controls should be held off as the all-out emergency measure, and Mason points out that the public would not obey them unless a real emergency existed. Slichter feels price ceilings would be particularly inappropriate "in a long-run production contest which may last for years and which the United States must win by rapidly expanding its output."

Professor Galbraith, who in the last war was a deputy price administrator and who still keeps in close touch with Washington, favors strong indirect controls today, built around high taxation. Backing current Administration policy, he points out that high taxes can and should cover all the increased governmental spending, thus wiping out the inflationary effects of the war expenditures, And he feels profits will be high enough to encourage heavy production.

Wage Measures

Again, on the subject of wage controls, no one was pressing for immediate action. "This is the stage where we can only study the problem," Professor Dunlop said, "while a lot of things work themselves out." Among these are the future Korean settlement and the resulting level of national military expenditures, as well as the November political elections.

"When we know the level of military expenditures and can more accurately appraise inflationary pressures, any stabilization program involves the three stages: voluntary self-controls, indirect fiscal controls, and direct wage and price controls," Dunlop said. "These direct controls will be used only after the others have been shown inadequate."

He added that at the moment he does not foresee any serious strike threats.

"Sooner or later," Professor Slichter warned, "collective bargaining may produce results that the country finds intolerable." At some stage, he said, "The community will probably have to insist that restraints be placed upon the freedom of unions and employers to make wage bargains that determine the price level."

Galbraith would reinforce the high taxes with indirect controls, such as those already imposed on consumer and real estate credit, as well as certain "selective" price controls on crucial materials like copper and rubber. But the "heavy artillery" of blanket price controls must by all means be held back, he said, until we have some idea of a terminal point. "Price controls become less effective the longer they remain in existence," he explained.

Not only does Professor Galbraith want to make the most of taxes and other fiscal controls now, but he wants also to be sure defense dollar are being spent efficiently. "Before Korea we were spending enough but not wisely. The Administration needs to set up a continuing civilize authority to check that our defense money is buying machines and armed units instead of just paying for a large overhead."

High tax policy drew universal support, especially from Mason and Harris, but Slichter made certain reservations about the nature of the taxes imposed. "The tax increase proposed so far produce a mixture of good and bad effects," he said. "No one knows what kind of excess profits tax will be passed, and it will be difficult to draft one that does not severely limit the capacity of industry to expand."

Opposes Pay-As-You-Go

Slichter criticized the Administration's pay-as-you-go tax policy on the grounds that it would not stimulate personal saving. If instead the government sold bonds to individuals, be said, "the economy would be in a stronger position at the end of the contest with Russia." He added that a bond would need to carry a high interest rate so that it would be attractive during the current period of rising prices.

There were a number of criticisms raised against various kinds of indirect controls, although the consensus was that the government was moving in the right direction with its moderate anti-inflation measures. Several faculty men asked for stronger indirect control now, although Professor Harris thought "a heavy dose of taxation" would almost be enough by itself to eat up any current surplus of purchasing power. Harris added that the country could still continue welfare expenditures, but pointed out that too much "would be inflation."

Professor Black, viewing the agricultural sector of the economy, said selective price controls might soon be needed on such currently high-demand items as wool and beef. "But until things are much clearer," be said, "we should continue to encourage dairy production and not rush to convert our feed reserves into meat." We may also need more farm machinery, he added, because the demand for labor will probably draw workers from the farms to the factories.