Message to Congress: RInflationary price rises and increases in the cost of living are today threatening to undermine our defense effort. I am, therefore, recommending to the Congress the adoption of measures to deal with this threat. We are now spending more than $30,000,000 a day on defence. This rate must and will increase. In June of this year we spent about $808,000,000-more than five times the $153,000,000 we spent in June, 1940. Every dollar spent for defense presses against an already limited supply of materials. This pressure is sharply accentuated by an ever-increasing civilian demand. For the first time in years many of our workers are in the market for the goods they have always wanted. This means more buyers for more products which contain steel and aluminum and other materials needed for defence. Thus a rapidly expanding civilian demand has been added to a vast and insistent demand by the government.
Those who have money to spend are willing to bid for the goods. The government must and will satisfy its defense needs. In such a situation, price advances merely determine who gets the scarce materials, without increasing the available supply. We face inflation, unless we act decisively and without delay. The consequences of inflation are well known. We have seen them before. Producers, unable to determine what their costs will be, hesitate to enter into defense contracts or otherwise to commit themselves to ventures whose outcome they cannot foresee. The whole production machinery falters. peculators, anticipating successive price advances, withhold commodities from essential military production. Costs to the government increase, and with it the public debt. Increases in the workers' cost of living, on the one hand, and excessive profits for the manufacturer on the other, lead to spiraling demands for higher wages. This means friction between employer and employed.
Great profits are reaped by some, while others, with fixed and low incomes, find their living standards drastically reduced and their life-long savings shrunken. The unskilled worker, the white-collar worker, the farmer, the small investor all find that their dollar buys ever less and less. The burden of defense is thrown haphazardly and inequitably on those with fixed income or whose bargaining power is too weak to secure increases in income commensurate with the rise in the cost of living. And over all hovers the specter of future deflation and depression, to confuse and retard the defense effort and inevitably to aggravate the dangers and difficulties of a return to a normal peacetime basis.
Economic sacrifices there will be and we shall bear them cheerfully. But we are determined that the sacrifice of one shall not be the profit of another.... Faced now with the prospect of inflationary price advances, legislative action can no longer prudently be postponed. Our national safety demands that we take steps at once to extend clarify and strengthen the authority of the government to act in the interest of the general welfare. Legislation should include authority to establish ceilings for prices and rents, to purchase materials and commodities when necessary, to assure price stability, and to deal more extensively with excesses in the field of installment credit. To be effective, such authority must be flexible and subject to exercise through license or regulations under expeditious and workable administrative procedures. Like other defense legislation, it should expire with the passing of the need, within a limited time after the end of the emergency....
I recognize that the obligation not to seek an excessive profit from the defense emergency rests with equal force on labor and on industry, and that both must assume their responsibilities if we are to avoid inflation.
I also realize that we may expect the wholehearted and voluntary cooperation of labor only when it has been assured a reasonable and stable income in terms of the things money will buy, and equal restraint or sacrifice on the part of all others who participate in the defense program. This means not only a reasonable stabilization of prices and the cost of living but the effective taxation of excess profits and purchasing power. In this way alone can the nation be protected from the evil consequences of a chaotic struggle for gains which must prove either illusory or unjust, and which must lead to the disaster of unchecked inflation.
FRANKLIN D. ROOSEVELT.
The White House, July 30, 1941.