Setting of government guidelines to limit increases in wages and prices. It is one of the most extreme approaches to incomes policy. By controlling wages and prices, governments hope to control inflation and prevent extremes in the business cycle. Countries with highly centralized methods of setting wages tend to have the greatest degree of public or collective regulation of wage and price levels. For example, wage settlements in The Netherlands must be approved by the government, and price increases are investigated by the Ministry of Economic Affairs. Other countries, including the U.S., have also made efforts at restraining wage and price increases, usually seeking the voluntary cooperation of management and labour. In the U.S., wage-price controls were instituted by Pres. Franklin D. Roosevelt during World War II and by Pres. Richard M. Nixon in the early 1970s, when high inflation combined with rising unemployment to create instability.
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President Franklin D. Roosevelt revived the Advisory Commission to World War I Council on National Defense on May 29, 1940 to include Price Stabilization and Consumer Protection Divisions. Both divisions merged to become the Office of Price Administration and Civilian Supply (OPACS) within the Office for Emergency Management by Executive Order 8734, April 11, 1941. Civil supply functions were transferred to the Office of Production Management.
It became an independent agency under the Emergency Price Control Act, January 30, 1942. 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.
Most functions of the OPA were transferred to the to newly established Office of Temporary Controls (OTC) by Executive Order 9809, December 12, 1946. The Financial Reporting Division was transferred to the Federal Trade Commission.