The Corpus Christi Caller-Times from Corpus Christi, Texas on August 18, 1971 · Page 5
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The Corpus Christi Caller-Times from Corpus Christi, Texas · Page 5

Corpus Christi, Texas
Issue Date:
Wednesday, August 18, 1971
Page 5
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CORPUS CHRIST! TIMES, Wed., Aug. 18, 1971 5A Vyage-Price Catch-Up Expected When Freeze Ends By LEONARD WIENER and , DENNIS S0DOMKA '.· © CJUew Ocify N«w* When President N i x o n 's wage and. price controls are . that botfi wages and prices will make vp some of their lost ground with a vengeance. Workers will demand £ost pay; hikes, retailers will insist c?0heir missed price boosts, an4 manufacturers will claim they must improve their profitability. Economists hope however, that the government-imposed 90-day pause will have a moderating influence and lead to more stable growth after the initial flurry of reaction at the ehdflf the freeze. "Despite the general curbs on . prices, however, some goods win cost more than before the president initiated his economic plan, These are foreign-made products on which a 10 per cent special duty will be imposed. William Korsvick, v i c e president and economist at the First National Bank of Chicago, noted that after World War n controls were lifted the cost of living soared 8 to 14 per cent a year. He said that while the curt rent control program is hardly likely to last nearly as long as the wartime curbs, he would "be greatly surprised" if the controls are riot extended beyond the initial 90 days. The economic reaction after controls are lifted will depend largely on the length of time they are In effect and the degree to which the freeze is able to combat the long-lived inflation psychology. While President Nixon emphasized that the curbs are a temporary measure with an initial life span of 90 days, he reserved the right to extend them in full or in part. Under current legislation the freeze could be extended until next April. Many critics of the President's plan fear that the longer the controls stay on the more "catching up" in wages and prices there will be once they are lifted. But, Korsvick said, while catch-up \va£e and price increases will negate some of the economic gains, the inflationary cycle will have been broken. "We will have broken the syndrome of constantly rising wages and prices," he said "There will have been a pause after which we will irlove to a more moderate and restrained posture on the part of both labor unions and businessmen." Agreeing with Korsvick's assessment is Paul A. Samuelson. the Nobel prize-winning economist at the Massachusetts Institute of Technology. He told the Chicago Daily News the freeze was "the first step toward an Incomes policy" (e catch-all plirase to cover a multitude of regulatory techniques including both outright controls and the power of persuasion). Calling the program a step toward a stronger economic stance by Nixon, he added, "I can't imagine that .the plan will end after 80 days and we'll go back to where we were." Samuelson admitted that when an easing in the controls does come there will be some cases where wages and price hikes occur "with a vengeance but the inflationary mo- mentum will have been broken.",.; 1 · , , : observers also agree that the wage-price freeze will be. extended beyond the 90- day limit. · Men Stults, chairman of the American National Bank Trust Co. and president-elect of the American Bankers Association, also advocates a 3- to-6-month extension of the freeze. Treasury Secretary John Cbnnally said the follow-up procedures to be put into ef- fect when the freeze is lifted are toeing worked out by a new cabinet-level cost of living council. The prices of foreign-made goods imported after Aug. 14 are sure to increase by 10 per cent, since'importers will be allowed to pass on to consumers the cost of the tax surcharge. Exempted from the special duty are some items that now enter duty free, such as coffee, fish and certain raw materials. Also exempt are prod- ucts that enter under a quota, such as oil, -meat, sugar, cotton textiles and dairy products. But if you want to buy a Japanese television set, a German camera or a Swiss watch you had better hurry and tray- them before the stock on hand' is depleted. All such items.en-. tering the country after Aug. 14 will cost 10 per cent more: than those imported before that date. Only 200 Boys Can Be Accepted Requires Excellence Achieves Excellence MARINE Where Marine Corps Pride is Born MILITARY Last two classes placed gradsin Rice University and Service Academies andother colleges such as The Citadel, Purdue, Michigan and LSD. ACADEMY College Prep. 7-12. PG. Naval Honor School. SACS Accreditation. High academic standards. Marine Cprps JROTC. Full sports program. Scholarships. 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