Summary
Saša Ilić
The Collapse of Wage and Price Policies in the Summer of 1945
Abstract: The paper presents the wandering of the new DFY authorities on wage and price policy issues and their inability to balance the cash income and supply ratio of basic necessities of life. Numerous organizational efforts and scope of normative activity in the face of general poverty, economic disintegration, and lack of staff, did not stabilize the situation and the government contributed to the price collapse in the summer of 1945 with its disfavor.
Key words: Wage, Price, Supply, Black Market, Controlled Market, Consumer Basket, Democratic Federal Yugoslavia
The calming of the economic and social situation after World War II necessitated a balance between wages, prices and supply. The new KPY authorities began to address these issues early because most of the population was in a dire financial position. At the end of 1944 wage acts were adopted and employee income was raised, but lack of consumer goods and poor supply favored the black market and undermined the effects of wage growth. The new wage increases, the replacement of occupation money with the DFY dinar, stringent anti-speculation regulations, and other socio-economic measures adopted during April-May of 1945 only had short-term effects due to insufficient supply. The price increase quickly “melted” the value of earnings. During the first half of 1945, the cost of living increased by more than 100%, the market showed huge a fluctuation in prices and major difference in prices of the same product, depending on the place of sale, the "price scissors" went in the opposite direction as expected (to the detriment of industrial products, although they were supposed to act to the detriment of agricultural products), as well as the negative effects of foreign trade (due to unfavorable currency parity, above all the high ruble exchange rate and low productivity in the country). In analyzing the failure of its wage and price policy, the government downplayed the various economic disadvantages, especially its own mistakes and saw political-ideological reasons and especially the campaign of the "capitalist elements" as the bigger problem.