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A€)M I MI'STRAT XV- Y
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M E M O R A N D U M FOR:

THE P R E S I D E N T

A u g u s t 30, 1974
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FROM:
VIA:
SUBJECT:

IN F L A T I O N FIGH T E R P R O G R A M

Since no one has yet come up with an econo mic
soluti on to the p r o b l e m of inf lat ion , here is one whi c h
is so simple, it just mi g h t work.
I suggest:
1.
That you go on n a t i o n w i d e radio and t e l e v i s i o n
next wee k to anno u n c e the e s t a b l i s h m e n t of the " I n f l a t i o n
F i g h t e r ” program.
U n der this program, each com pa ny w h i c h
signs a pled ge not to raise prices on its pro duc ts for one
year wou ld be award ed an "IF" pennant to fly over its plant
(similar to the A r m y - N a v y "E" flags p r e s e n t e d to c ompan ies
for their p r o d u c t i o n effor ts in World War II).
At first,
you should visit a nu m b e r of these p a r t i c i p a t i n g pla nt s to
p ers o n a l l y p r e sent flags.
Later, letters or tele gr ams of
c o m m e n d a t i o n could go out over your name to p a r t i c i p a t i n g
firms.
W o r ker s at these plants could be pr e s e n t e d with "IF"
bu tton s to wea r in their lapels.
2. The use of the "IF" symbo ls wo uld not be limited
to m a n u f a c t u r i n g plants.
Retail stores, gas stations, se rvice
companies, etc., w hich sign a p l edge to hold their prices intact
for one year w o u l d r e c eiv e a decal to paste on the store
window, i n d i c a t i n g this is an I n f l a t i o n Figh t e r shop.
The decal
could con sist of a large "IF" in the cent er and a slogan or
motto around it statin g s o m e t h i n g like this: "IF you want a
better America, p a t r o n i z e stores w h i c h displa y this emblem."
3. As firms sign up, the W h ite House wou ld release
to the news med i a their names and l oc ations along with a
message of a p p r e c i a t i o n from you, g e n e r a t i n g p u b l i c i t y in
their own loc alities for their action.
A spec ial p r e s i d e n t i a l
mess age of c o m m e n d a t i o n sh ould be sent to each cooperati^§-^f i r m .
4. Labo r unions w h i c h sign a pled g e to hold t h ^
line on w a g e s should be ac c o r d e d si milar recogn i t i o n . lifter
all, a halt to the p r e s e n t i n f l a t i o n rate of twelve to
four tee n pe r c e n t a year w o u l d be tant a m o u n t to a pay boo% ^ of
s
the same amount.




5. The pr o g r a m could be b r o a d e n e d to get e v e r y b o d y
into the act.
C o n g r e s s m e n who vo te to hold the line on
f
s p ending could be p r e s e n t e d with f,I F f lapel pins by you.
C o n s u m e r s could di s p l a y small "IF" flags or decals in their
window s, p r o c l a i m i n g they have sig ned up as i n f l a t i o n
fight ers and wil l refu se to p a t r o n i z e stores w h i c h fail to
d isp lay the "IF" emblem.
- :;
6. As part of your telev ise d a n n o u n c e m e n t of this
program, you w o u l d call on c o n s umers and h o u s e w i v e s and all
A m e r i c a n s to p u r c h a s e prod u c t s only from co mpani es w h i c h
ple dge to hold the price line or from retail stores
d i s p l a y i n g the f,I F , emblem.
!
You could ann ounce that you
are d i r e c t i n g the Federal g o v e r n m e n t itself, w h i c h is the
single b i g g e s t buy er in the country, to p u r c h a s e only from
participating f i r m s .
7. The econ o m i c p r e - s u m m i t and summit m e e t i n g s could
be used to e xplore further ways to co mbat in fla tion ,
including tax bene f i t s for firms w h i c h sign the pr i c e pledge.
For example, p a r t i c i p a t i n g c ompanie s could be p r o v i d e d
with tax a d v a n t a g e s s u f f i c i e n t to give their e m p l o y e e s a pay
incr eas e at the end of the year.
To s t i m u l a t e p r o d u c t i v i t y ,
com panies w h i c h p a r t i c i p a t e could be give n rapid tax
d e p r e c i a t i o n a l l o w a n c e s on new plan ts they buil d and on
expan ded p r o d u c t i o n facili tie s.
In sum, the i n c e n t i v e s to p a r t i c i p a t e in this p r o g r a m
cut across America:
For the c o n s u m e r - l o w e r prices.
For the m a n u f a c t u r e r — i n c r e a s e d s a l a b i l i t y of his
product and a c c e p t a n c e of his c o mpany as a c o m b a t a n t in the
war on inf lation — not to m e n t i o n p o s s i b l e tax b e n e f i t s
bec ause of his parti c i p a t i o n .
For the w o r k e r - - l o w e r prices at the m a r k e t p l a c e (which
is a n o ther pay increase) and the p o s s i b i l i t y of a real pay
incre ase at the end of the first year.
One final point:
This p r o g r a m wou l d not requ i r e a
vast ne w F e d e r a l B u r e a u c r a c y to admini s t e r .
In fact, it could
be done w i t h e x isting per son nel.
The A m e r i c a n p e ople wo uld
serve as p o l i c e m e n
to m a k e sure the p r o g r a m works.
A tollfree "hot line" could be i n s t a l l e d at the Whi t e H o u s e to _
receive reports of v i o l a t i o n s of the pledge.
An invest^gafcion
could then be made and if the firm is p r o v e n guilty, i/Cfc‘
"IF" ra ting w o u l d be lift ed amid w i d e s p r e a d p u b l i c i t y .(2




If p r operly promo ted , w i t h ample g r o u n d w o r k laid
b e f o r e the a n n o u n c e m e n t by you, the "IF" p r o g r a m could
ca p t u r e the im a g i n a t i o n of the A m e r i c a n p eople and; halt
i n f l a t i o n in its tracks.




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Federal Reserve Bank of St. Louis, One Federal Reserve Bank Plaza, St. Louis, MO 63102