ABSTRACT
The historical setting of the problem of repressed inflation is to be found in the years during and immediately after World War II. Within a short time of the outbreak of the war the economies of the United States and of the United Kingdom were operating under conditions approaching full employment. To gain control over the large quantities of goods and services necessary for the prosecution of war, it was necessary to spend vast sums of money. If inflation and collapse of the price mechanism under the pressure arising from these tremendous war expenditures were to be avoided, the economy would have to make huge savings. And if such savings were not forthcoming voluntarily, then controls must be brought into force to limit consumption expenditures. Thus price control, rationing and allocation became fixtures in the economies of the United States and the United Kingdom during World War II. Their essential purpose was to displace rationing by the purse and to ensure that the short supplies of goods and services available for consumption were spread equitably among the entire population.
