OFFICE OF PRICE ADMINISTRATION

OFFICE OF PRICE ADMINISTRATION (OPA) was the federal agency tasked with establishing price controls on nonagricultural commodities and rationing essential consumer goods during World War II (1939–1945).

The OPA began as the Price Stabilization and Consumer Protection divisions of the Advisory Commission to the Council of National Defense (more commonly known as the National Defense Advisory Commission [NDAC]) created on 29 May 1940 in response to economic pressures from the war in Europe. NDAC's influence was limited, with the Price Stabilization Division setting standards for only basic scrap metals. The Consumer Protection Division's rent-control proposals of 7 January 1941 were universally ignored.

On 11 May 1941, by Executive Order 8734, the Office of Price Administration and Civilian Supply (OPACS) was created from the two NDAC divisions. Leon Henderson, head of the Price Stabilization Division, was appointed as administrator and quickly dubbed in the media as the "Price Czar." Noted economist John Kenneth Galbraith was chosen to direct OPACS's Price Division and served in this function through 1943.

On 28 August 1941, Executive Order 8875 transferred the Civilian Supply group to the Office of Production Management to consolidate the similar efforts of the two entities. OPACS was renamed the Office of Price Administration.

OPA's efforts began in earnest with the outbreak of war on 7 December 1941. Because it had the existing structure to interact with retail outlets and consumers, OPA was delegated the task of rationing. On 27 December 1941 it instituted rationing of rubber tires. Directive Number One of the War Production Board made OPA's rationing role permanent, and by April 1942, rationing had extended to automobiles, sugar, typewriters, and gasoline. By the end of the war, the rationing program also included coffee, shoes, stoves, meats, processed foods, and bicycles.

The Emergency Price Control Act (EPCA) passed on 30 January 1942 provided the legislative basis for OPA to regulate prices, not including agricultural commodities. EPCA also allowed for rent controls. The most prominent result of EPCA was the General Maximum Price Regulation issued by OPA in May 1942. This effectively set the price ceiling at March 1942 levels.

However, EPCA did not address other economic issues beyond price controls. The resulting economic dislocations forced Congress to pass the Stabilization Act on 2 October 1942. This created the Office of Economic Stabilization (OES) that was responsible for controlling wage levels, regulating food prices, and generally stabilizing the cost of living. At this point, any OPA activities that could affect the cost of living had to be coordinated with OES.

The effectiveness of OPA's measures is subject to some debate. While OPA pointed to an overall 31-percent rise in retail prices in World War II compared to a 62-percent rise in World War I (1914–1918), undoubtedly a black market developed in response to price controls. Maintenance of product quality was a constant concern. OPA even colorfully noted in its Twelfth Quarterly Report "a renaissance of cattle rustlers in the West." Reports from OPA's Enforcement Division show that 650,000 investigations were conducted for all of 1943, with 280,000 violations found. In 1944, a total of 338,029 violations were reported, with 205,779 administrative warning letters sent out. Court proceedings were initiated in almost 29,000 cases.

Rationing for gasoline and foodstuffs was discontinued on 15 August 1945. All rationing ended by the end of September 1945. Price controls remained in effect in the hopes of preventing price instability as the war economy converted back to peacetime functions, but they were gradually discontinued through 1947. On 12De-cember 1946, Executive Order 9809 transferred OPA to the Office of Temporary Controls. While some sugar and rice control programs were transferred to the Department of Agriculture, most other OPA functions were discontinued. OPA was disbanded on 29 May 1947.

BIBLIOGRAPHY

Auerbach, Alfred. The OPA and Its Pricing Polices. New York: Fairchild, 1945.

Hirsch, Julius. Price Control in the War Economy. New York: Harper and Brothers, 1943.

Thompson, Victor A. The Regulatory Process in OPA Rationing. New York: King's Crown Press, 1950.

Wilson, William Jerome, and Mabel Randolph. OPA Bibliography, 1940–1947. Washington, D.C.: U.S. Government Printing Office, 1948.

Office of Price Administration. Quarterly Reports, Volumes 1–22. Washington, D.C.: U.S. Government Printing Office, 1941–1947. Best source for material on the Office of Price Administration.

Office of Temporary Controls. The Beginnings of OPA. Washington, D.C.: U.S. Government Printing Office, 1947.

William G.Hines

See alsoWorld War II .

OFFICE OF PRICE ADMINISTRATION

During World War II (1939–1945), the federal government became the major consumer of production for the war period. Accordingly, Congress instituted a price fixing authority on all goods and wages with the creation of the Office of Price Administration (OPA), and the "General Maximum Price Regulation" (General Max), which froze all retail prices at their highest price levels as of March 1942.

On April 27, 1942, President Franklin Roosevelt outlined another aspect of price administration, to be known as "rationing" (which Roosevelt described as a "democratic, equitable solution" to the issue of providing goods for Americans that had become scarce because of the war). Items that were rationed in some way included gasoline, rubber tires, leather shoes, butter, and products with nylon content.

The rationing of goods to U.S. consumers during World War II was one of the many functions of the OPA. Perhaps the major problem of the OPA, functionally, was keeping economic inflation in strict control domestically, while providing military forces overseas with what they needed to fight the war.

See also: Rationing, World War II