An Outlook article by Jack DuVall ("How Nixon's Wage-Price Controls Turned Into Political Slapstick," April 22) was wrong in alleging that George H. Weyerhaeuser, president of Weyerhaeuser Company, personally intervened with President Nixon in 1972 to kill both a price-control investigation of the lumber industry and the Price Commission itself. Further checking indicates no substantiation for that accusation. Two formal officials of the Price Commission state that they were told by higher officials that the Weyerhaeuser Company was applying pressure on the Nixon White House to drop both the investigation and the commission. They are unable to recall who told them this. Weyerhaeuser officials deny that anyone associated with the company was involved in such an incident, and independent sources from the Nixon White House staff and the Nixon Cost of Living Council say they do not recall the matter.
REGARDLESS OF WHAT ideological opponents of mandatory price and wage controls tell you, the fate of the Nixon administration's program does not suggest that controls are bound to fail.
Rather, the Nixon record chiefly illustrates how a president's reelection anxiety and debts to political supporters can turn an economic program into a political sideshow.
There is wide consensus, of course, that the Nixon wage-price controls were slapped on the economy primarily to restrain inflation in the face of an impending election year. It is also widely agreed that they accomplished that immediate end.
This was because in their first 20 months, the controls took the form of a three-month total price and wage freeze, followed by tough firm-by-firm controls in Phase II. Unfortunately, these were succeeded by a flaccid set of altered controls disguised as phase III and then the "sector-by-sector" decontrol known as Phase IV.
In short, this "economic stabilization program" was itself unstable: Once any phase betrayed signs of working, of being adequately absorbed and honored by business and labor, the administration shook the dice and rolled a new phase.
What would the broadcasting industry's reaction be if the Federal Communications Commission attempted to rewrite its basic broadcast regulations first after three months, then after 17 months, then after eight more months, with a continuous stream of amendments and extemporaneous policy refinements strewn along the trail? Obviously the government would be thought to have gone crazy.
But there is no requirement that a price and wage law be administered as if it were the Gong Show. Was it merely incompetence or a form of inspired slapstick that motivated the Nixon administration to keep fiddling with the controls dial? Alas, the explanation is a sad encouragement to the Watergate freaks who may still be loose: the Nixon administration's special predilection for political self-aggrandizement.
The problem was it worked
Recall, if you will, the golden age of Maurice Stans and his squeeze play on Cleveland shipbuilders, the time of pre-disclosure campaign finance, the time of dirty tricks in New Hampshire snow storms and of passionate concern in the White House basement about what was in the office of Daniel Ellsberg's psychiatrist.
Contemporaneous with this exotic atmosphere was Phase II. To the extent that it was effective, it indeed limited inflation as borne by consumers. Thus its benign impact on Nixon's reelection bid. But to that same extent of effectiveness, the controls had unpleasant side effects on corporate claimants to White House access: the trimming of profit margins and the restraint of price gouging.
Those of us who toiled in the bowels of the Price Commission and the Pay Board in Phase II were often exposed to stories of how the Cost of Living Council - a creature of the White House that was supposed to oversee the other two bodies - was wont to step into IRS investigation or pre-litigation and advise the price hawks and wage wardens to slow down, step back, or even get lost from certain cases.
Big business was no exclusive beneficiary of such action. This was also the era of hard-hat ceremonies in the Oval Office designed to advertise labor support for the Vietnam war, and on one occasion during Phase II, the International Longshoremen's Association - which was favorably disposed to the president's reelection - had an interest in a shipping rate increase in the port of Philadelphia.
It seems that an Ogden Corporation subsidiary was a shipper doing business in the port, and that its rate increase was under review by the Price Commission. If approved, the increase would trigger a substantial wage boost for the longshoremen. In the midst of this, the White House made it clear to William R. Corson, the Price Commission's director of compliance and enforcement, that the administration took a dim view of any commission action against its Philadephia friends. Despite their own judgment that the rate increase wasn't in the public interest, commission staff members were constrained to let it be approved.
Cases like this may have been the exception, but they certainly poisoned the rule, and they did nothing for the morale of people in the controls program.
Still, the discomforts of controls felt by Nixon supporters in corporate circles were not unreal and doubtless had cumulative effect. No sooner had the reelection been consummated that November than Phase II was pronounced dead (in December) and the funeral held (in Januray). Indeed, the Price Commission and Pay Board were deep-sixed for good riddance, and the Cost of Living Council was anointed as sole guardian of the program.
The Weyerhaeuser investigation
Another incident, described by Peter Carpenter, former deputy executive director of the Price Commission, may help explain the sudden demise of Phase II. Apparently, George Weyerhaeuser, who had been a donator to CREEP, was dismayed with the largest - was being treated by the commission. In the fall of 1972, his firm was suspected of several price violation, including sending American lumber (otherwise price-controlled) to Canada and then importing it as if it were Canadian lumber - at a higher price than the native merchandise could legally command.
The Price Commission ordered an IRS investigation and (perhaps the real sin in White House eyes) told the nation's media that the lumber industry wasn't playing straight with price controls.
So, as Carpenter has related it, Weyerhaeuser suggested to Nixon that the president ought to end official interest in lumber doings and, while he was at it, kill the Price Commission as well.
George Weyerhaeuser denies all aspects of this account. But killing the Price Commission is precisely what Mr. Nixon did, though the aftermath was called Phase III. That interlude, and its successor Phase IV, offered little more than suitable seminar material for John Dunlop, the kindly Harvard professor recruited to preside over their extended fruitlessness.
Investigating business firms for violating price regulations was, at the time, something like boys and girls playing hide and seek. When the little boy finds the little girl behind a tree, his punitive response is usually confined to kissing her, unless he just lets her go.
Well, a good businessman is not reasily fooled, and any with a modest endowment of sense surely saw after the installation of Phase III that the Nixon controls no longer meant business. The policy catchword was "voluntary compliance," which was somehow supposed to rise from the breast of industry like the chorus of a great hymn.
In fact, Nixon had conceived this program, as he did so much else, in the service of his politics. When that end was met, he abandoned it to the ineffectuality that any federal program suffers when it is systematically disliked and undermined by the White House staff.
So the disaster of price and wage controls in the Nixon regime was not intrinsic to the concept of controls; it was a product in large measure of the abuse of privilege and the disuse of integrity that were all too prevalent in that administration.
To work, price and wage controls require consistently applied regulations, maintained long enough to permeate the organic routine of the economy, and enforced without favor and without exemption. The truth is, on that basis, you can't say controls didn't work. The fact is they weren't tried.