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How did the government control wartime inflation during World War II?

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The main method used by the government to control wartime inflation was the introduction of the General Maximum Price Regulation, or "General Max." This was a deliberate attempt to maintain prices at their March 1942 levels. An additional method was the limiting of wage increases to fifteen percent by the National War Labor Board.

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As the US wartime economy was working at full capacity, the dangers of inflation were ever-present. With just about everyone in work, it was inevitable that effective demand in the economy would continue at a high level, potentially leading to a sharp hike in inflation. The government used its substantial wartime powers to nip the problem of inflation in the bud. They used a number of methods to achieve this aim, two of which we will examine here.

First and foremost, the government introduced what was called the General Maximum Price Regulation, or "General Max" as it was known for short. Under the auspices of the Office of Price Administration, the General Max maintained prices at March 1942 levels in order to prevent runaway inflation. In the months leading up to April 1942, inflation had been growing apace, reaching as high as 10.3 percent. It was therefore felt necessary to impose a ceiling on prices to dampen down demand.

Generally, the measure proved effective; the annual rate of inflation remained low, at around three percent per year. Though inevitably, once price controls were scrapped after the War, inflation soared dramatically, reaching the dizzy heights of twenty-eight percent for a brief period in 1946.

A further measure introduced to combat inflation during the War was the limiting of wage increases by the National War Labor Board (NWLB). Wage increases were pegged at fifteen percent, as this was the factor by which the cost of living had risen between January 1941 and May 1942.

In some respects, the limiting of wage increases was almost too successful. Although it achieved its fundamental goal of bearing down on inflation, it also led to a slight reduction in the standard of living in some parts of the country, most notably the South.

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There was a severe risk for inflation due to the wartime effort in World War II. The need for goods and supplies drove demand for products through the roof, and this would have likely drastically increased prices had the government not taken action. A major inflation event would have been nearly impossible to recover from, since the majority of people would be coming back from the war to industrial jobs, and the nation was fresh off of a major depression.

To curb this, the government instead started a rationing program. Families were allotted a certain quantity of goods for food and supplies. However, instead of using cash for these items, the government issued vouchers, which sustained a steady value because the sellers couldn't charge extra for those products. In this way, the nation avoided dramatic inflation that would have severely harmed the economy.

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During World War II, the government attempted to control inflation. Often during a war, prices would rise due to an increased demand for products by the military and/or a shortage of supplies needed to meet the demand. To protect the consumers, the government often takes steps to control inflation.

During World War II, our government took steps to control inflation. The Office of Price Administration controlled the prices of non-farm products. The Office of Economic Stabilization controlled the prices of farm products. These agencies were established to keep prices from rapidly rising.

Another action the government took was to ration supplies. People were limited in terms of how much they could buy each month of essential supplies like meat and sugar. People were issued ration coupons each month to buy these essential supplies. The government even had a national speed limit of 35 miles per hour to conserve gasoline.

A third step taken by the government was to create the War Labor Board. This group mediated strikes so products would be produced and to prevent workers from demanding big pay raises that would fuel inflation. The government worked hard to keep prices under control during World War II.

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The main thing that the government did to prevent this was to impose rationing using coupons rather than cash.  By doing this, the government prevented people from bidding up the prices of whatever consumer goods were still available.  Another thing that the government did was to borrow money.  During the war, there were many war bond drives in which the government persuaded the people to lend money to the government.  This soaked up much of the money that might otherwise have been the cause of inflation during the war.  By reducing the money supply and by making it harder to buy goods using cash, the government prevented inflation.

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