Harry S. Truman and Price Controls:
Two Episodes of Inflation Control,
Geofrey T. Mills
Harry S. Truman is the only president to have dealt with two episodes of wartime price controls; one at the end of World War II, and the other during the Korean conflict. It is not unfair to say that his policies are recognized as successful in 1950-1952, and that they failed in 1945-1946. The reasons for this are primarily political although macroeconomic events well beyond the President's control also had a great deal to do with Truman's performance. Truman seemed to learn from his bitter World War II experiences in constructing the program for Korean price controls. He did not repeat his worst mistakes. His reactions and initiatives provide us with a good case study of presidential leadership and politics in public policy formation. An examination of these two episodes has much to tell us about economics and public policy in the middle of this century.
This paper is concerned mainly with the political economy of price controls. This is an area of government policy which involves both politics at the highest level, as well as purely economic events. As such, I concentrate on the leadership and political skills of President Truman as he attempted to guide the economy through two difficult periods of price controls.
The first section of this paper details the situation which Truman inherited upon the death of Franklin Roosevelt and focuses on the events surrounding the termination of price controls and the Office of Price Administration (OPA) in 1945-1946. Here we see a new president, thrust into a most difficult situation, ill-prepared for the presidency, both unfamiliar with the political bargains struck by the previous administration and economic policy-making. Truman ascended to his new job at a period when the demands on his time left little room for thought and reflection. In an attempt to ameliorate all sides in the price control debate, he pacified none. He was unable to educate the public on the wisdom of his program, and gave in to special interest groups all along the line. Addi