Office of Price Administration

The Office of Price Administration (OPA) was established within the Office for Emergency Management by the United States Government by Executive Order 8875 on August 28, 1941. Its predecessor agency was known as the Office of Price Administration and Civilian Supply (OPACS). It became an independent agency and was renamed under the Emergency Price Control Act, January 30, 1942. The functions of the OTC were originally to stabilize prices(price controls) and rents after the outbreak of World War II. The OPA had the power to place ceilings on all prices except agricultural commodities, and to ration scarce supplies of other items, including tires, automobiles, shoes, nylon, sugar, gasoline, fuel oil, coffee, meats and processed foods. At the peak, almost 90% of retail food prices were frozen. It could also authorize subsidies for production of some of those commodities. The OPA was abolished effective May 29, 1947 by the General Liquidation Order issued March 14, 1947 by the OTC Administrator. Some of its functions were taken up by successor agencies in the Departments of Agriculture, Justice and Commerce, and the Reconstruction Finance Corporation. Famous employees include economist John Kenneth Galbraith. Soviet spies Charles Kramer and William Remington also work within OPA.

Administrators of the office:

• Leon Henderson, 1941-1942
• Prentiss Marsh Brown, 1943
• Chester Bliss Bowles, 1943-1946

In 1940, Roosevelt named a planning board called the National Defense Commission with three heads. Edward Stettinius, of United States Steel, managed one horn on industrial materials, Sidney Hillman another on labor and Leon Henderson a third on price stabilization. It floundered. In January, 1941, it became the ill-fated Office of Production Management (OPM) under William S. Knudsen and Sidney Hillman. By August it was snarled. Roosevelt named a super bureau over it called the Supply Priorities and Allocation Board (SPAB) with Vice President Henry Wallace at its head. After the attack on Pearl Harbor the War Production Board (WPB) ¬ under Donald Nelson took over. In April 1941 Leon Henderson and his Price Stabilization Division were made a separate bureau and called the Office of Price Administration with Henderson at its head. As one observer commented, “The odor it created still lingers amongst us and it will remain for all time a classic for students in what not to do and how not to do it.”

Henderson was five feet six, weighing 210 pounds, he began to throw his body around, to yell and shout orders, to threaten to throw people out of the windows and to exhibit himself before the populace as a sort of burly ideological comedian. It was Presidential Assistant Harry Hopkins who first led Henderson which led to a job in the TNEC. Then the SEC, NDAC, SPAB, OPM, WPB, OES, OPACS and, finally, OPA.

High prices are caused by inflation. Inflation is the expansion of the quantity of money available to buy things in excess of the goods available for purchase. If the number of dollars in circulation increases without an increase in the volume of goods for sale, inflation, or a raise in prices, is the result. Henderson understood it exactly backward, thinking inflation was caused by high prices.

The United States Government had been collecting from peoples wages and profits about 70 billion dollars a year was suddenly collecting 100 billion and then 150 billion and then 200 billion a year, but the number of automobiles, refrigerators, radios, meat, butter, flour, eggs and clothing available was less. That is what produced inflation, or a rise in prices.

OPA put out press releases claiming that the government mandated fixed price scales were being maintained. But goods went into the black markets where prices in the end were far higher.

OPA began with controls on coffee and sugar, supposing that it could reach into every office, every warehouse, every shop and every home and watch and regulate every transaction. The same thing was done with meat. OPA was in the hands of men who knew little or nothing of the meat industry.

The corn farmer can sell his corn directly in the corn market or he can buy a cow and feed the corn to her. He decides what he will do by the price of corn. If he can get a better price for his corn selling it in the market he will not feed it to cattle. If the meat prices are more attractive he will turn his corn into meat. Planners allowed the price of corn to soar while holding down the ceiling on meat. The corn farmer sold his corn in the corn market. He refused to buy cattle.