The Korean War broke out on June 25, 1950. After an initial (and significant) surge of
inflation, President Harry S. Truman's war
mobilization effort began to achieve some success in stabilizing the American economy. On September 8, 1950, the U.S. Congress enacted the
Defense Production Act. The Act gave the President statutory authority to order companies to do business with the United States in order to furnish equipment and services needed for national defense; to establish federal agencies as needed to implement the Act; and to allocate resources, personnel and funds to ensure national defense needs were met. However, the Act tied wage controls to prices. If any price ceiling was imposed, the government was required to issue regulations and orders stabilizing wages in the affected industry. The next day, President Truman issued
Executive Order (EO) 10161, which established the
Economic Stabilization Agency (ESA) to coordinate and supervise wage and price controls. Utilizing the wage and price control model developed in World War II, the Truman administration created two sub-agencies within ESA. The
Office of Price Stabilization (OPS) was given the power to regulate prices, while the Wage Stabilization Board (WSB) oversaw the creation of wage stabilization rules. The division of labor was specifically designed to unlink wages from prices. If prices rose automatically with wages, the inflationary spiral would continue unabated. Placing the onus solely on workers to keep wages low risked the wrath of labor, a lesson the administration had learned from the WWII experience. Delinking wages and prices leveled the playing field. Both workers and employers would now be forced to justify, independently, the wages and prices they demanded. The Wage Stabilization Board was authorized to control wages only for hourly employees. However, the WSB's authority in this regard was extremely limited.
Structure The
Economic Stabilization Agency had overall authority to coordinate and implement wage and price policies. Within ESA were three sub-agencies: • The
Office of Price Stabilization (OPS), which recommended price control policies to the ESA, and implemented policies which ESA had approved. • The
Wage Stabilization Board, which recommended wage control policies to the ESA, and implemented policies which ESA had approved. • The
Office of the Housing Expediter (OHE), which recommended rent control policies to the ESA, and implemented policies which ESA had approved. The WSB had nine members. Three members represented the public, three represented labor, and three represented business and industry. Initially, the WSB's three "public" members were
Cyrus S. Ching, director of the
Federal Mediation and Conciliation Service;
Clark Kerr, professor of industrial relations at the
University of California, Berkeley; and
John Thomas Dunlop, a professor of economics at
Harvard University. The three labor representatives were
Harry C. Bates, president of the
International Union of Bricklayers and Allied Craftworkers;
Emil Rieve, president of the
Textile Workers Union of America; and
Elmer Walker, president of the
International Association of Machinists. The three business representatives were Henry B. Arthur, manager of the research department at meat processor
Swift & Co.; J. Ward Keener, vice president of the
B.F. Goodrich tire company; and Reuben B. Robinson president of the
Champion Paper Co. The WSB was politically divided, however. On April 21, 1951, President Truman issued Executive Order 10233, which reconstituted the Wage Stabilization Board. Its members increased from nine to 18, and it was now given the power to issue recommendations and reports directly to the President in wage disputes.
History The reconstituted board did not retain all its powers for long, however. Executive Order 10276, issued on July 31, 1951, established the Office of Rent Stabilization. The new office was given the WSB's rent control powers, as well as given new powers to encourage the construction of rental units in areas near defense industries. By the end of 1951, the Office of Rent Stabilization had controlled the rent for 6.8 million rental units. On October 19, 1951, the WSB issued its first wage dispute resolution case. On August 30, 1952, Truman signed Executive Order 10390, which provided for alternate members for the WSB.
Abolition On February 6, 1953, President
Dwight Eisenhower issued Executive Order 10434, which effectively abolished the Wage Stabilization Board. ==References==