Tuesday, March 6, 1973. Oil Price Controls

Oil pump jacks, Teapot Dome, 1973.

Today In Wyoming's History: March 6: 1973   President Richard Nixon imposed price controls on oil and gas.

This from our companion blog, although It's not entirely accurate the way it's stated.  Price controls had actually come in during 1971 in order to combat inflation.  On this day in 1973 the Cost of Living Council issued Special Rule No. 1, which imposed price controls after the "controls" had become voluntary.

Nixon era price controls would prove to be a spectacular failure, and this one in particular failed to grasp that petroleum supplies now included large scale importation, something well beyond American control.  This would prove to be the case in the upcoming fall, when OPEC would put in place an embargo on the export of oil to the United States, something that would have an enormous impact on the state's economy.

The fact that efforts at price controls went back to 1971 is telling.  It's common to assume now that rampant inflation in the early 70s began when the price of oil skyrocketed following the Yom Kippur War, but in fact they were already rising at the start of the decade.  In no small measure, this was due to the Johnson Administration's "guns and butter" economic strategy of the 60s, in which the United States attempted to pay for the Cold War military, the Vietnam War, and a massive increase in social spending without disrupting the economy.  Cynics would note that inflation, which started in the 60s, helped reduce the actual cost to the government of such programs, which it did, but whether somewhat intentional or not, the economy simply could not endure it.

1973 Spring Training commenced with games played in the majors with designated hitters, in the American League, played for the first time.

Famous author Pearl S. Buck died at age 80.  Her work is most famously associated with China, where she had lived for many years.

Three economists walk into a bar and. . .

spend the rest of the evening arguing on whether to adjust the thermostat from 68F to 65, or maybe 72.

By Flickr user midnightcomm - https://www.flickr.com/photos/midnightcomm/447335691/, CC BY 2.0, https://commons.wikimedia.org/w/index.php?curid=5596839

Not funny?

Neither are missing the point arguments economist out in the Twitterverse have about inflation, or elsewhere on the Internet.

Maybe we should have titled this thread "what causes inflation"?  If you are listening to economists or pundits on the topic, you probably don't actually know.

If you listen to right wing politicians, and economics is pretty political, you'll hear stuff like that put out by Dr. John Barrasso.  It's simple,  Inflation started on inauguration day when Joe Biden put his had on the Big Meter O' Gas Prices and personally shut down American oil production. All that needs to happen to fix it is to have Biden go down to the White House basement, find the Gas Thermostat, and adjust it.

Gas meters behind the White House where the President personally sets the price of natural gas.

That's nonsense.

So is "unleash American oil", or what have you. That's not what's going on.

If you listen to Robert Reich, the left wing economist, inflation is all caused by corporate greed. That's it.  Tax corporation and their heads, and it'll all drop back into price.

The cause of inflation, according to Robert Reich.

Sorry Robert, that's not correct, and I'm guessing in the middle of the night and ponder this, you know it isn't.

If you listen to NPR, and I do, it's all so complicated no mortal is capable of figuring it out.

Well, it ain't that complicated, either.

Apologist Jimmy Akin, who ponders a lot of non-apologetic topics, states that it's all caused by the government.  It isn't, but we'll start there.

Setting the inflation meter.

In normal times, and in a normal land, with a normal economy, there's a lot of truth to that.  In those circumstances, there are a lot of things that operate naturally, as long as the government doesn't mess with them.  You'll have a natural sized population, which may be stable, may be declining, or may be increasing somewhat, but it'll be in a sort of rough status in that fashion. And you have their "consumer demands". The cost of those demand is determined by supply.

The cost of government, in this scenario, is determined by its demands, which is paid for by taxes.

Pretty simple.

So how can that get off kilter?

In modern history, it got off kilter during the Great Depression.

With the Great Depression, the US turned to John Maynard Keynes.  Keynes believed that business cycles could be regulated through government spending.  If things were in the dumps, increased government spending could address it, but that spending had to be paid off in good times.

Yeah, right.

In reality, during the Great Depression, government learned how to deficit spend and liked it.  World War Two made it worse.  Ever since then, we've never really been able to reign that in, as Government likes to spend borrowed money it can't pay back.

The reason for that is simple.  People like getting money, but they don't like having to work or pay for it.  If you go from wherever you are today, in the US, and go anywhere, you're going to collide with things the Federal government bought with borrowed money.  You won't be able to avoid it.

Generally, the Federal government likes to keep the inflation rate caused by spending money it doesn't have right down around 3%.  I frankly feel this is immoral as inflation steals from people's wallets, but that's what they try to do.  It's decreasing the amount they have to pay back on their loans and gives them the extra cash to spread around without anyone really noticing inflation too much.

People should, and should, be up in arms about it, but they basically don't notice.

So, in the Jimmy Akin sense, yes, government causes inflation.

But, it's not that simple.

In the US, the government has also messed with the natural value of labor by inflating the size of hte working population through immigration. There's certainly outsized legal immigration, but there's also illegal immigration, which nobody did much about until fairly recently.  Immigrants are actually deflationary, as they work for less than native born Americans would in the same industries.  By the same token, however, if immigration is slowed, it causes wages to rise, as the labor pool shrinks.  If illegal immigration is slowed, it causes the artificially depressed wages to rise.  That's inflation, but it's also an example of wages seeking their natural level, effectively reaching the level they should have been.

This is important to keep in mind, as part of the way that the government keeps inflation down, in normal times, in spite of high borrowing, is by keeping wages down, through immigration.  Never raising the minimum wage plays into this, but the immigrant population, quite a bit of which is "off the books", plays into this.

That also serves to keep everyone in a household at work, which is a different topic we will address some other time.

So there you have normal times.

But what about abnormal times?

And we are in those.

It turns out that the Four Horsement of the Apocolpyse have a lot to do with causing inflation.

And when wars ride in, at least famine rides in with him.

In, other words, spite of what Jimmy Akin may think, a lot of current inflation has more to do with Vladimir Putin's government than our own.

Vladimir Putin, as we all know, has launched a war against Ukraine to bring it back under Moscow's heel.  Russia is failing badly at it.

A casualty of the war has been oil prices.  Oil is a globally traded commodity, and one whose value widely even in normal times.  Now the price has gone up because of the effort to take Russian hydrocarbons off the market to punish Russia.

Now, if only the price of things mattered in the world we could do what Trump probably would have done, which would have been to turn a blind eye to Ukraine's fate.  But that would have been a very dangerous thing to do.  It's still the thing that some Republicans want to do right now, but they seem to be a minority.

At any rate, this is why calls by people like Dr. John Barrasso to "unleash" American oil are wrong and won't work, which he probably knows.  The American oil industry isn't producing on all the leases it has now, in spite of the high prices.  Market instability is part of that reason.  If people like Marjorie Taylor Greene have their way, Russian oil will be back on the market, the price will drop, and having invested in American oil, which only makes sense if prices are high, would have been the wrong thing to do.

The price of oil is also high due to OPEC+, which operates to falsely set the price.  If the organization were a domestic organization, it'd get sued by the Federal government.  As it's international, it can't be, but it sets production to set the price and when it wants to raise it, it does. It recently did.

Russia is part of OPEC+

If the US really wanted to address this part of this issue, as we're always going to be subject to OPEC, we'd switch as much of the nation over to non petroleum energy as possible.  This gets into naysayers who say it can't be done, but it can be, and it's happening now naturally.  Of course, Wyomingites get up in arms about that too, as they fear that electric generation is going to omit coal, which is another topic. And on that topic, you don't just get to do what you want to do as it's good for you locally.  Most people know that, but they don't like to really believe that something that may be causing harm is doing that.  People elsewhere, however, will be deciding those things, not us.

And Putin's war has disrupted global food supplies as well.  Ukraine is often referred to as a "breadbasket", and it is. . . for much of the Third World.

Food prices, we'd note, are up in much of Africa by epic levels.

This impacts us too, as food has been a global commodity since ancient times.  If it's transportable, it will be traded long distance.

Of course, it's also the case that the US went to a "cheap food" model following the Second World War, which emphasized size and production. That was a mistake.  It would have been better to emphasize the producers and to have sought to keep as many people in agriculture as possible.  A more agrarian type of farm economy would cause prices to climb initially, but it would also help stabilize the market long timer, making some of it more local and all of it more direct.

For that matter, the whole scale up scaling of economic scale on the retail and production end of things achieved that as well. Robert Reich decries "corporate profits" without seeming to ever realize that for much of the economy, even now, corporations aren't necessary.  We don't need Walmarts at all, and for that matter, there's no reason that something like Twitter can't be corporate owned.  If changes like that were made, it would also damper inflation.

Be that as it may, should the Republicans take the House and Senate tomorrow, they're not going to introduce an anti-corporate ownership bill and bring back a more Distributist economy.  No way. And in spite of Harriet Hageman's agricultural roots, she's not going to introduce any bills directed at returning large scale agarianistic agriculture to the economy either.  

And as long as fuel and food prices are subject to the reestablishment of the Russian Empire, we're going to be in an inflationary cycle.

That argues for defeating Putin decisively and right now.  

Finally, there's the COVID effect.

A pandemic that kills 1,070,000 people is going to remove a lot of workers from the economy forever.  That's inflationary.

The necessary halting of imports from China, something Trump did right during the pandemic, was inflationary, however.  Giving credit for where credit is due, that needed to be done, but in the globalized economy, the econmy has never righted itself, just as it didn't after World War One when a highly globaized economy was also disrupted by the war, and then of couse the Spanish Flu followed.

Lots of workers stayed home during the pandemic, many during mandatory quarantines. Government efforts started under Donald Trump, not Joe Biden, to address this by addressing wage cessation amounted to sending people money, a lot of whom never needed it. That was inflationary.

The perceived and mistaken idea that something needed to be done to get people back to work, they would have done that on their own for economic reasons gave rise to infrastructure bills under Trump that expanded under Biden.  That was inflationary.

But here's the added things. Putin's war jump started inflation all over the globe, and as we're in a globalized market, that means one country's fever at least gets another one sick.

For example:

 CPI Austria Austria cpi september 2022 1.599 % 10.531 %

 CPI Belgium Belgium cpi october 2022 2.372 % 12.268 %

 CPI Brazil Brazil cpi september 2022 -0.290 % 7.169 %

 CPI Canada Canada cpi september 2022 0.066 % 6.858 %

 CPI Chile Chile cpi september 2022 0.859 % 13.728 %

 CPI China China cpi september 2022 0.291 % 2.783 %

 CPI Czech Republic Czech Republic cpi september 2022 0.801 % 17.973 %

 CPI Denmark Denmark cpi september 2022 1.305 % 10.019 %

 CPI Estonia Estonia cpi september 2022 0.321 % 23.648 %

 CPI Finland Finland cpi september 2022 0.780 % 8.119 %

 CPI France France cpi september 2022 -0.564 % 5.552 %

 CPI Germany Germany cpi september 2022 1.936 % 9.991 %

 CPI Great Britain Great Britain cpi september 2022 0.411 % 8.808 %

 CPI Greece Greece cpi september 2022 2.937 % 12.024 %

 CPI Hungary Hungary cpi september 2022 4.077 % 20.124 %

 CPI Iceland Iceland cpi october 2022 0.668 % 9.405 %

 CPI India India cpi september 2022 0.845 % 6.488 %

 CPI Indonesia Indonesia cpi october 2022 -0.106 % 5.710 %

 CPI Ireland Ireland cpi september 2022 0.000 % 8.175 %

 CPI Israel Israel cpi september 2022 0.187 % 4.594 %

 CPI Italy Italy cpi september 2022 0.263 % 8.866 %

 CPI Japan Japan cpi april 2022 0.396 % 2.422 %

 CPI Luxembourg Luxembourg cpi september 2022 0.257 % 6.879 %

 CPI Mexico Mexico cpi september 2022 0.620 % 8.700 %

 CPI Norway Norway cpi september 2022 1.372 % 6.894 %

 CPI Poland Poland cpi september 2022 1.586 % 17.254 %

 CPI Portugal Portugal cpi september 2022 1.226 % 9.281 %

 CPI Russia Russia cpi march 2022 7.613 % 16.698 %

 CPI Slovakia Slovakia cpi september 2022 0.908 % 14.170 %

 CPI Slovenia Slovenia cpi september 2022 -0.921 % 10.002 %

 CPI South Africa South Africa cpi september 2022 0.094 % 7.801 %

 CPI South Korea South Korea cpi september 2022 0.285 % 5.583 %

 CPI Spain Spain cpi september 2022 -0.696 % 8.872 %

 CPI Sweden Sweden cpi september 2022 1.429 % 10.838 %

 CPI Switzerland Switzerland cpi september 2022 -0.176 % 3.252 %

 CPI the Netherlands The Netherlands cpi september 2022 2.340 % 14.496 %

 CPI Turkey Turkey cpi october 2022 3.545 % 85.515 %

 CPI United States United States cpi september 2022 0.215 % 8.202 %

 HICP Austria Austria hicp september 2022 2.436 % 10.915 %

 HICP Belgium Belgium hicp september 2022 1.336 % 12.061 %

 HICP Czech Republic Czech Republic hicp september 2022 0.885 % 17.829 %

 HICP Denmark Denmark hicp september 2022 1.473 % 11.101 %

 HICP Estonia Estonia hicp september 2022 0.338 % 24.094 %

 HICP Eurozone Europe hicp september 2022 1.196 % 9.927 %

 HICP Finland Finland hicp september 2022 0.726 % 8.413 %

 HICP France France hicp september 2022 -0.511 % 6.232 %

 HICP Germany Germany hicp september 2022 2.176 % 10.899 %

 HICP Great Britain Great Britain hicp september 2022 0.569 % 10.142 %

 HICP Greece Greece hicp september 2022 2.956 % 12.117 %

 HICP Hungary Hungary hicp september 2022 1.850 % 20.673 %

 HICP Iceland Iceland hicp september 2022 -0.235 % 5.933 %

 HICP Ireland Ireland hicp september 2022 0.000 % 8.604 %

 HICP Italy Italy hicp september 2022 1.582 % 9.366 %

 HICP Luxembourg Luxembourg hicp september 2022 0.510 % 8.832 %

 HICP Poland Poland hicp september 2022 1.522 % 15.698 %

 HICP Portugal Portugal hicp september 2022 1.270 % 9.811 %

 HICP Slovakia Slovakia hicp september 2022 0.937 % 13.579 %

 HICP Slovenia Slovenia hicp september 2022 -0.284 % 10.629 %

 HICP Spain Spain hicp september 2022 -0.246 % 8.974 %

 HICP Sweden Sweden hicp september 2022 1.221 % 10.252 %

 HICP the Netherlands The Netherlands hicp september 2022 2.842 % 17.061 %

 HICP Turkey Turkey hicp september 2022 3.097 % 83.394 %

But also note that global inflation rates are expected to peak this year, and then steeply decline.

At any rate, in a globalized economy in which we depend on stuff with overseas sources to come here, when prices go up there, they go up here.  Put another way, when is the last time you bought a shirt made in the United States?

So, what should the government do, and by that I mean right now, to address inflation?

The most important thing it could do would be to make systemic changes that take the country out, as much as possible, of a system that is subject to foreign commodity and product inflation without falling into the falsity of autarky, which we'd note is, of course, inflationary.

That would entail moving the volatile energy sector over to stable, and frankly North American based, energy production.  Nuclear energy would be the best option for the US for domestic and transportation energy.  If we wanted an infrastructure bill, this should have been it.  It's not too late to do this through various means, however, including tax breaks where appropriate, and by removing subsidization, which occurs in places we're so used to use to we don't recognize them.  The national highway system, for example, is subsidized, which in turn amounts to a trucking industry subsidization.

We could also do this in the food and retail sectors through anti monopoly and frankly highly distributist policies that revested much of the economy at a lower level.  That would be inflationary in the short term, but stabilizing in the long term.

In the immediate short term, we could quit deficit spending on things that we don't need to, which is only almost all, but probably not all, things.  The Federal Government doles out cash like crazy under both Republican and Democratic Administrations.  There are a lot of things that the Federal Government takes care of that it could just say to localities, "you take care of it, it's yours anyway".  Quite frankly in quite a few instances local entities couldn't take care of it, at least not without tax hikes, but then those things would be paid for along the way in most instances, and where they couldn't be, there's likely an existential problem at work such that they shouldn't be.

And contrary to the Republican whining about "thousands of IRS agents" and the Democratic silence on taxes, the upper marginal tax rates ought to be increased.  Billionaires now control a frightening amount of the US economy and ought to be taxed aggressively. That won't reduce them to poverty, but would recapture money that should be recaptured.  And in inflationary cycles, a windfall profits tax should be put in place.

Finally, as grim as it is, the Fed ought to jack up interest rates to double their current amount and put a massive damper on the overheated economy.

How much of this is going to happen? 

Probably none of it.

Monday, September 7, 1942. Japanese defeated at Milne Bay.

Today in World War II History—September 7, 1942: In Egypt, Battle of Alam Halfa Ridge ends when Germans are forced back. Australians give Japanese their first land defeat of WWII, at Milne Bay, New Guinea.

From Sarah Sundin's blog.

The British executed Operation Branford, a raid on the Channel Island of Burhou.  It was a scouting raid to determine if the island would serve as an artillery base for a contemplated landing on Alderney.\

President Roosevelt gave a fireside chat on inflation in which he stated:

My friends:

I wish that all Americans could read all the citations for various medals recommended for our soldiers and sailors and marines. I am picking out one of these citations which tells of the accomplishments of Lieutenant John James Powers, United States Navy, during three days of the battles with Japanese forces in the Coral Sea. 

During the first two days, Lieutenant Powers, flying a dive-bomber in the face of blasting enemy anti-aircraft fire, demolished one large enemy gunboat, put another gunboat out of commission, severely damaged an aircraft tender and a twenty-thousand-ton transport, and scored a direct hit on an aircraft carrier which burst into flames and sank soon after. 

The official citation then describes the morning of the third day of battle. As the pilots of his squadron left the ready room to man their planes, Lieutenant Powers said to them, "Remember, the folks back home are counting on us. I am going to get a hit if I have to lay it on their flight deck. 

He led his section down to the target from an altitude of 18,000 feet, through a wall of bursting anti-aircraft shells and swarms of enemy planes. He dived almost to the very deck of the enemy carrier, and did not release his bomb until he was sure of a direct hit. He was last seen attempting recovery from his dive at the extremely low altitude of two hundred feet, amid a terrific barrage of shell and bomb fragments, and smoke and flame and debris from the stricken vessel. His own plane was destroyed by the explosion of his own bomb. But he had made good his promise to "lay it on the flight deck."

I have received a recommendation from the Secretary of the Navy that Lieutenant John James Powers of New York City, missing in action, be awarded the Medal of Honor. I hereby and now make this award.

You and I are "the folks back home" for whose protection Lieutenant Powers fought and repeatedly risked his life. He said that we counted on him and his men. We did not count in vain. But have not those men a right to be counting on us? How are we playing our part "back home" in winning this war?

The answer is that we are not doing enough.

Today I sent a message to the Congress, pointing out the overwhelming urgency of the serious domestic economic crisis with which we are threatened. Some call it " inflation," which is a vague sort of term, and others call it a "rise in the cost of living," which is much more easily understood by most families.

That phrase, "the cost of living," means essentially what a dollar can buy.

From January 1, 1941, to May of this year, nearly a year and a half, the cost of living went up about 15%. And at that point last May we undertook to freeze the cost of living. But we could not do a complete job of it, because the Congressional authority at the time exempted a large part of farm products used for food and for making clothing, although several weeks before, I had asked the Congress for legislation to stabilize all farm prices.

At that time I had told the Congress that there were seven elements in our national economy, all of which had to be controlled; and that if any one essential element remained exempt, the cost of living could not be held down.

On only two of these points -- both of them vital however -- did I call for Congressional action. These two vital points were: First, taxation; and, second, the stabilization of all farm prices at parity.

"Parity" is a standard for the maintenance of good farm prices. It was established as our national policy way back in 1933. It means that the farmer and the city worker are on the same relative ratio with each other in purchasing power as they were during a period some thirty years (ago) before -- at a time then the farmer had a satisfactory purchasing power. 100 percent of parity, therefore, has been accepted by farmers as the fair standard for the prices they receive.

Last January, however, the Congress passed a law forbidding ceilings on farm prices below 110 percent of parity on some commodities. And on other commodities the ceiling was even higher, so that the average possible ceiling is now about 116 percent of parity for agricultural products as a whole.

This act of favoritism for one particular group in the community increased the cost of food to everybody -- not only to the workers in the city or in the munitions plants, and their families, but also to the families of the farmers themselves. 

Since last May, ceilings have been set on nearly all commodities, rents (and) services, except the exempted farm products. Installment buying, for example, has been (effectively) effectually stabilized and controlled. 

Wages in certain key industries have been stabilized on the basis of the present cost of living. 

But it is obvious to all of us (however) that if the cost of food continues to go up, as it is doing at present, the wage earner, particularly in the lower brackets, will have a right to an increase in his wages. I think that would be essential justice and a practical necessity.

Our experience with the control of other prices during the past few months has brought out one important fact -- the rising cost of living can be controlled, providing that all elements making up the cost of living are controlled at the same time. I think that also is an essential justice and a practical necessity. We know that parity prices for farm products not now controlled will not put up the cost of living more than a very small amount; but we also know that if we must go up to an average of 116% of parity for food and other farm products -- which is necessary at present under the Emergency Price Control Act before we can control all farm prices -- the cost of living will get well out of hand. We are face to face with this danger today. Let us meet it and remove it.

I realize that it may seem out of proportion to you to be (worrying about) over-stressing these economic problems at a time like this, when we are all deeply concerned about the news from far distant fields of battle. But I give you the solemn assurance that failure to solve this problem here at home -- and to solve it now -- will make more difficult the winning of this war. 

If the vicious spiral of inflation ever gets under way, the whole economic system will stagger. Prices and wages will go up so rapidly that the entire production program will be endangered. The cost of the war, paid by taxpayers, will jump beyond all present calculations. It will mean an uncontrollable rise in prices and in wages, which can result in raising the overall cost of living as high as another 20 percent soon. That would mean that the purchasing power of every dollar that you have in your pay envelope, or in the bank, or included in your insurance policy or your pension, would be reduced to about eighty cents worth. I need not tell you that this would have a demoralizing effect on our people, soldiers and civilians alike. 

Overall stabilization of prices, and salaries, and wages and profits is necessary to the continued increasing production of planes and tanks and ships and guns. 

In my Message to Congress today, I have (told the Congress) said that this must be done quickly. If we wait for two or three or four or six months it may well be too late. 

I have told the Congress that the Administration can not hold the actual cost of food and clothing down to the present level beyond October first. 

Therefore, I have asked the Congress to pass legislation under which the President would be specifically authorized to stabilize the cost of living, including the price of all farm commodities. The purpose should be to hold farm prices at parity, or at levels of a recent date, whichever is higher. The purpose should also be to keep wages at a point stabilized with today's cost of living. Both must be regulated at the same time; and neither one of them can or should be regulated without the other. 

At the same time that farm prices are stabilized, I will stabilize wages. 

That is plain justice -- and plain common sense. 

And so I have asked the Congress to take this action by the first of October. We must now act with the dispatch, which the stern necessities of war require. 

I have told the Congress that inaction on their part by that date will leave me with an inescapable responsibility, a responsibility to the people of this country to see to it that the war effort is no longer imperiled by the threat of economic chaos. 

As I said in my Message to the Congress: 

In the event that the Congress should fail to act, and act adequately, I shall accept the responsibility, and I will act. 

The President has the powers, under the Constitution and under Congressional Acts, to take measures necessary to avert a disaster which would interfere with the winning of the war. 

I have given the most careful and thoughtful consideration to meeting this issue without further reference to the Congress. I have determined, however, on this vital matter to consult with the Congress. 

There may be those who will say that, if the situation is as grave as I have stated it to be, I should use my powers and act now. I can only say that I have approached this problem from every angle, and that I have decided that the course of conduct which I am following in this case is consistent with my sense of responsibility as President in time of war, and with my deep and unalterable devotion to the processes of democracy. 

The responsibilities of the President in wartime to protect the Nation are very grave. This total war, with our fighting fronts all over the world, makes the use of the executive power far more essential than in any previous war. 

If we were invaded, the people of this country would expect the President to use any and all means to repel the invader. 

Now the Revolution and the War between the States were fought on our own soil, but today this war will be won or lost on other continents and in remote seas. I cannot tell what powers may have to be exercised in order to win this war. 

The American people can be sure that I will use my powers with a full sense of responsibility to the Constitution and to my country. The American people can also be sure that I shall not hesitate to use every power vested in me to accomplish the defeat of our enemies in any part of the world where our own safety demands such defeat. 

And when the war is won, the powers under which I act will automatically revert to the people of the United States -- to the people to whom (they) those powers belong. 

I think I know the American farmers. I know (that) they are as wholehearted in their patriotism as any other group. They have suffered from the constant fluctuations of farm prices -- occasionally too high, more often too low. Nobody knows better than farmers the disastrous effects of wartime inflationary booms, and post-war deflationary panics. 

So I have also suggested today (suggested) that the Congress make our agricultural economy more stable. I have recommended that in addition to putting ceilings on all farm products now, we also place a definite floor under those prices for a period beginning now, continuing through the war, and for as long as necessary after the war. In this way we will be able to avoid the collapse of farm prices (which) that happened after the last war. The farmers must be assured of a fair minimum price during the readjustment period which will follow the great, excessive world food demands (which) that now prevail. 

We must have some floor under farm prices, as we must have under wages, if we are to avoid the dangers of a post-war inflation on the one hand, or the catastrophe of a crash in farm prices and wages on the other. 

Today I have also advised the Congress of the importance of speeding up the passage of the tax bill. The Federal Treasury is losing millions of dollars (a) each and every day because the bill has not yet been passed. Taxation is the only practical way of preventing the incomes and profits of individuals and corporations from getting too high. 

I have told the Congress once more that all net individual incomes, after payment of all taxes, should be limited effectively by further taxation to a maximum net income of ($25,000) 25 thousand dollars a year. And it is equally important that corporate profits should not exceed a reasonable amount in any case. 

The nation must have more money to run the War. People must stop spending for luxuries. Our country needs a far greater share of our incomes. 

For this is a global war, and it will cost this nation nearly one hundred billion dollars in 1943. 

In that global war there are now four main areas of combat; and I should like to speak briefly of them, not in the order of their importance, for all of them are vital and all of them are interrelated. 

(1) The Russian front. Here the Germans are still unable to gain the smashing victory which, almost a year ago, Hitler announced he had already achieved. Germany has been able to capture important Russian territory. Nevertheless, Hitler has been unable to destroy a single Russian Army; and this, you may be sure, has been, and still is, his main objective. Millions of German troops seem doomed to spend another cruel and bitter winter on the Russian front. Yes, the Russians are killing more Nazis, and destroying more airplanes and tanks than are being smashed on any other front. They are fighting not only bravely but brilliantly. In spite of any setbacks Russia will hold out, and with the help of her Allies will ultimately drive every Nazi from her soil. 

(2) The Pacific Ocean Area. This area must be grouped together as a whole --every part of it, land and sea. We have stopped one major Japanese offensive; and we have inflicted heavy losses on their fleet. But they still possess great strength; they seek to keep the initiative; and they will undoubtedly strike hard again. We must not over-rate the importance of our successes in the Solomon Islands, though we may be proud of the skill with which these local operations were conducted. At the same time, we need not under-rate the significance of our victory at Midway. There we stopped the major Japanese offensive. 

(3) In the Mediterranean and the Middle East area the British, together with the South Africans, Australians, New Zealanders, Indian troops and others of the United Nations, including ourselves, are fighting a desperate battle with the Germans and Italians. The Axis powers are fighting to gain control of that area, dominate the Mediterranean and the Indian Ocean, and gain contact with the Japanese Navy. The battle in the Middle East is now joined. We are well aware of our danger, but we are hopeful of the outcome. 

(4) The European area. Here the aim is an offensive against Germany. There are at least a dozen different points at which attacks can be launched. You, of course, do not expect me to give details of future plans, but you can rest assured that preparations are being made here and in Britain toward this purpose. The power of Germany must be broken on the battlefields of Europe. 

Various people urge that we concentrate our forces on one or another of these four areas, although no one suggests that any one of the four areas should be abandoned. Certainly, it could not be seriously urged that we abandon aid to Russia, or that we surrender all of the Pacific to Japan, or the Mediterranean and Middle East to Germany, or give up an offensive against Germany. The American people may be sure that we shall neglect none of the four great theaters of war. 

Certain vital military decisions have been made. In due time you will know what these decisions are -- and so will our enemies. I can say now that all of these decisions are directed toward taking the offensive. 

Today, exactly nine months after Pearl Harbor, we have sent overseas three times more men than we transported to France in the first nine months of the first World War. We have done this in spite of greater danger and fewer ships. And every week sees a gain in the actual number of American men and weapons in the fighting areas. These reinforcements in men and munitions are continuing, and will continue to go forward. 

This war will finally be won by the coordination of all the armies, navies and air forces of all of the United Nations operating in unison against our enemies. 

This will require vast assemblies of weapons and men at all the vital points of attack. We and our allies have worked for years to achieve superiority in weapons. We have no doubts about the superiority of our men. We glory in the individual exploits of our soldiers, our sailors, our marines, our merchant seamen. Lieutenant John James Powers was one of these -- and there are thousands of others in the forces of the United Nations. 

Several thousand Americans have met death in battle. Other thousands will lose their lives. But many millions stand ready to step into their places -- to engage in a struggle to the very death. For they know that the enemy is determined to destroy us, our homes and our institutions -- that in this war it is kill or be killed. 

Battles are not won by soldiers or sailors who think first of their own personal safety. And wars are not won by people who are concerned primarily with their own comfort, their own convenience, their own pocketbooks. 

We Americans of today bear the gravest of responsibilities. And all of the United Nations share them. 

All of us here at home are being tested -- for our fortitude, for our selfless devotion to our country and to our cause. 

This is the toughest war of all time. We need not leave it to historians of the future to answer the question whether we are tough enough to meet this unprecedented challenge. We can give that answer now. The answer is "Yes."

 It's interesting that the speech was a little bit of a lecture in some ways.