THE ADMINISTRATION: Battle of the Century

• Share

(See Cover)

One day last week Chester Bliss Bowles picked up his office telephone and heard the voice of a farm-bloc Senator: "Damn it, Chet, everyone else is getting his cut. You've got to give the farmer his."

Hulking Chet Bowles leaned back in his chair and listened patiently. Then, calmly, like a teacher going over a lesson with a backward pupil, he replied: "But, Senator, you know the farmer is doing all right. When have farm markets been so good? Or prices so high? Or mortgages so few?"

The argument ended with both unconvinced. Chester Bowles transferred his 190 Ibs. to a more comfortable chair and grinned. To a visitor he observed, with a happy air of tense excitement: "Oh, boy, are those pressures building up! We're in for it from here on in. This is the worst yet!"

The tougher the pressure gets, the better Chester Bowles seems to like it. A once-thwarted public servant and social thinker who has just come into his own, he loves his job. Where onetime Price Boss Leon Henderson let the heat frazzle his temper, where onetime Price Boss Prentiss Brown simply got out as fast as he could, Chester Bowles plows ahead with unconcealed pleasure, his big jaw jutting forward like the prow of one of the boats he used to sail in races to Bermuda.

Bowles's great delight in government may be a bad thing for the postwar U.S., as the National Association of Manufacturers has been charging (in advertisements prepared by Benton & Bowles, the firm which Bowles helped found). It may be a good thing, as a vast majority of the nation's plain people believe. At all events, it must be reckoned with.

High Pressures. The pressures under Chester Bowles—from the farm bloc, from labor, from manufacturers caught in price squeezes or just eager to make more money—were stronger last week than ever. The forces of inflation were more irresistible than even immovable Chet Bowles, as a dealer in economics, perhaps realized.

During the war, the U.S. had seemed to do a pretty fair job of avoiding the symptoms of inflation. And President Roosevelt's men boasted of their superiority to the men of World War I. But actually the Government had failed to combat the real causes of inflation. Only 41% of the cost of war was paid for by taxation; the rest was financed by selling Government bonds, almost one-half to banks. This created what Federal Reserve Board Chairman Marriner Eccles calls "monetization of the public debt": by the complex workings of modern finance, sale of a million dollars in Government bonds to a bank produces the same end result as printing a million $1 bills.

Rough Money. In the wartime economy, everything was scarce but this artificially created money. The money was poured out in high profits (before taxes) to encourage industry, high wages to encourage labor, reasonably high prices to encourage farmers. It had—and still has—no place to go.