Office of Price Stabilization
OFFICE OF PRICE STABILIZATION
OFFICE OF PRICE STABILIZATION also known as the Price Stabilization Board, was the federal agency whose task was to control prices during the Korean War.
The onset of hostilities on 25 June 1950 came as a complete surprise to Americans. Fear of a major conflict with the Soviet Union and still-fresh memories of rationing programs during World War II lead to massive hoarding and panic buying by both consumers and manufacturers. Retail sales for July 1950 increased by 8 percent. After the first month of the war, prices for coffee had increased 9 percent; tin, 26 percent; and rubber, 27 percent. Against this backdrop, on 19 July 1950, in a message to Congress detailing the progress of the war, President Harry Truman asked for limited economic powers to pursue mobilization efforts. This led to the Defense Production Act of 1950, which gave the president the option of imposing rationing and wage and price controls.
Initially, Truman tried to avoid imposing wage and price controls to slow inflation, instead pinning his hopes on credit controls and voluntary compliance. These hopes proved futile. By the end of September 1950, government figures showed that prices for a basket of twenty-eight commodities had increased by 25 percent since the beginning of the war. On 9 September 1951, Executive Order 10161 created the Economic Stabilization Agency (ESA) and Wage Stabilization Board (WSB). The order also allowed for a director of price stabilization under the aegis of the ESA. General Order Number 2 of the ESA formally established the Office of Price Stabilization on 24 January 1951, with Michael DiSalle, mayor of Toledo, as its administrator.
OPS's first act was to announce a price freeze on 26 January 1951. This stopgap measure proved unpopular and unwieldy, and, in many cases, OPS was forced to increase prices. It was not until April 1951 that OPS issued a long-range price control strategy. However, that plan also failed to gather popular support. OPS operations were hampered throughout its existence by the continuous debate over the appropriate level of mobilization and governmental economic control required for an undeclared war. Indeed, Allan Valentine, the first director of ESA, was opposed to establishing price controls. OPS also found many of its efforts undercut by salary rulings of the WSB, especially in the steelworkers' salary dispute of March 1952.
On 6 February 1953, President Dwight Eisenhower's Executive Order 10434 called for the end of all price and wage controls. OPS ended all activities on 30 April 1953 with residual operations passing to ESA.
Pierpaoli, Paul G., Jr. Truman and Korea: The Political Culture of the Early Cold War. Columbia: University of Missouri Press, 1999.
Heller, Francis H., ed. The Korean War: A Twenty-Five-Year Perspective. Lawrence: Regents Press of Kansas, 1977.
See alsoKorean War .