Executive Order 9697—Providing for the Continued Stabilization of the National Economy During the Transition from War to Peace

By virtue of the authority vested in me by the Constitution and statues of the United States and particularly by the First War Powers Act of 1941, the Second War Powers Act of 1942, as amended, and the Stabilization Act of 1942, as amended, and for the purpose of maintaining the stabilization of the economy in the present emergency, it is hereby ordered: 1. For the duration of the existing emergency, all departments and agencies of the Government shall, in any matter affecting the stabilization of the economy in which they have discretion in the use of their powers, exercise such discretion in such manner as will best promote the continued stabilization of the economy. It is the policy of the Government, in order so far as possible to prevent price increases, that there be prompt and firm enforcement, during the present emergency, of Government controls over scarce materials and facilities. 2. (a) Notwithstanding the provisions of Executive Order 9599 of August 18, 1945(1), as amended, and of the regulations issued thereunder, the Price Administrator shall promptly provide for the adjustment of price ceilings in any case in which he finds that an industry is in a position of hardship as a consequence of an approved increase in wages or salaries, as defined herein. An industry shall be considered to be in hardship if, after taking the entire amount of such wage or salary increase into consideration, the Administrator finds that the industry's current ceiling prices will leave it in an overall loss position or in an earnings position requiring adjustment on the basis provided in this section. (b) The adjustment to be provided shall be such as, in the judgment of the Price Administrator, will be sufficient, for the twelve months following the adjustment, to enable the industry, unless operating at a temporary low volume, to earn an average rate of profit equal as nearly as may be to the rate of return on net worth earned by the industry in the peacetime base period applicable to that industry, and in the case of commodities which are the subject of special statutory requirements, to a rate of return sufficient to satisfy such requirements. Except to the extent necessary to reflect the abnormal costs and reduced earnings incident to temporary operation at low volume, in no case shall the Administrator provide an adjustment insufficient in amount to prevent loss operation at the time of the adjustment. (c) The Price Administrator shall develop standards of adjustment consistent with the purposes of this order to applied in the case of an industry-wide action affecting an industry operating at temporary low volume. (d) In those cases in which the price regulations provide for the establishment or adjustment of ceiling prices on an individual-firm basis the Price Administrator shall establish such standards of adjustment as in his judgment are administratively workable and consistent with the purposes of this order. He shall establish similar standards to be applied in the case of the establishment or adjustment of rent ceilings. (e) The Stabilization Administrator shall by regulation or order establish such standards is in his judgment are administratively workable and consistent with the purposes of this order for determining the extent to which wage or salary increases in excess of the standards for approval of such increases prevailing prior to this order may be used, in the case of products or services being furnished under contract with a Federal procurement agency, as a basis for increasing costs to the United States. 3. (a) The National Wage Stabilization Board or other wage or salary stabilization agency having jurisdiction with respect to the wages or salaries involved shall approve any wage or salary increase, or part thereof, which it finds is consistent with the general pattern of wage or salary adjustments which has been established in the industry or local labor market area, between August 18, 1945, and the effective date of this order, or, where there is no such general pattern, which it finds necessary to eliminate gross inequities as between related industries, plants or job classifications, to correct substandards of living, or to correct disparities between the increase in wage or salary rates in the appropriate unit since January 1941 and the increase in the cost of living between January 1941 and September 1945. The Board or other designated agency shall have authority, with the approval of the Stabilization Administrator, to establish special standards for approval of wage or salary increases, differing from the foregoing general standards, to be applied in particular industries or classes of cases if it finds that such action is necessary to effectuate the purposes of this order. (b) The Stabilization Administrator may, by regulation, specify classes of wage or salary increases which will in his judgment have no unstabilizing consequences and which may be deemed approved within the meaning of this order without prior consideration by the wage or salary stabilization agencies. Such regulations may make special provision for cases, among others, in which (1) the increase is to be of limited amount, or (2) a small number of employees will be involved, or (3) there will be in all probability no substantial effect upon price or rent ceilings or costs to the United States. (c) Except as the Stabilization Administrator may by regulation otherwise provide, the making, after the effective date of this order, of any wage or salary increase pursuant to Part IV, section 1, of Executive Order 9599, without the prior approval of the National Wage Stabilization Board or other designated wage or salary stabilization agency having jurisdiction with respect to the wages or salaries involved, shall constitute a waiver of any right of the employer to use such increase, at any time during the continuation of the stabilization laws, as a basis for seeking an increase in price or rent ceilings or, in the case of products or services being furnished under contract with a Federal procurement agency, as a basis for increasing costs to the United States. The Stabilization Administrator shall have authority to provide by regulation that wage or salary increases of a particular class shall be unlawful unless made with the prior approval of the Board or other designated agency, if in his judgment such action is necessary to prevent wage or salary increases inconsistent with the purposes of the stabilization laws. (d) In accordance with and subject to the provisions of section 2 of this order, any wage or salary increase heretofore lawfully made, or made in accordance with a governmental recommendation in a wage controversy announced prior to the effective date of this order, shall be deemed to have been approved within the meaning of this order, and may be taken into account as a basis for increasing price or rent ceilings or, in the case of products or services being furnished under contract with a Federal procurement agency, as a basis for increasing costs to the United States. (e) All arbitration awards, and all recommendations of publicly-appointed fact-finding panels, with respect to wage or salary issues shall conform with the standards of this order and the regulations and directives issued thereunder. No wage or salary increases shall be put into effect in accordance with any such awards or recommendations, hereafter announced, unless and until approved by the appropriate wage or salary stabilization agency, or unless such awards or recommendations are voluntarily accepted by the parties on the basis stated in the first sentence of subsection (c) of this section. 4. The Stabilization Administrator, in the Office of War Mobilization and Reconversion, shall have full authority to issue such orders and directives as may be necessary, in his judgment, to carry out the purposes of this order. 5. Any provision of any prior Executive order in conflict herewith is hereby superseded to the extent of such conflict. 6. This order shall become effective February 14, 1946. HARRY S. TRUMAN THE WHITE HOUSE, February 14, 1946