On this connection, Norikazu Takami wrote an interesting article on 
the controversy regarding inflation during the later 1950s.

"The Baffling New Inflation: How Cost-Push Inflation Theories 
Influenced Policy Debate in the Late-1950s United States," History of 
Political Economy, Vol. 47, No. 4, pp. 605-629.

Here is the abstract.
"The aim of this essay is to examine how cost-push inflation theories, 
which highlight autonomous increases of wages and other production 
costs as a cause of inflation, played a decisive role in the policy 
debate over interpretation of the price movements of the second half 
of the 1950s. In late 1956, economic experts, including politicians 
and journalists as well as economists, began to observe a peculiarity 
accompanying the ongoing inflation, namely, an apparent lack of excess 
aggregate demand, and they placed great emphasis on cost-push 
inflation theories in their interpretations of this peculiar 
phenomenon. When the recession of 1958 was accompanied by a steady 
increase of general prices, some experts took this as further 
supporting evidence for cost push inflation. Against the background of 
this atypical inflation, the United States Congress, then ruled by the 
opposition Democratic Party, initiated a large-scale inquiry into the 
nature and causes of inflation. These investigations produced one 
report in particular that emphasized cost-push theories. This essay as 
a whole shows how the controversy over the inflation of the late 1950s 
created a general perception that inflation can be at least partly 
controlled by measures that addresses cost increases in the private 
sector, and we suggest that this perception sowed the seeds of the 
Great Inflation later."

The author's version of the paper can be retrieved from the following:
https://31beba71-a-62cb3a1a-s-sites.googlegroups.com/site/takamijp/takami-cost-push-av.pdf?attachauth=ANoY7cpvE9O6q8tbHlyXxjqt20FPfoH9KV6PVkvmRmaPXdCfoRZ5i3bwhCUV8JSzjF-l5dCQbl4JqerNr5aT-MB6gKhw2a_KHzU9N7KRUH3W8EKDrtRgubgkOtwHivVcS2NyhOK9JNE63I2OAv34i8XdlBq-6UP9m16pfnNFGFhQ3OWCd4JCKLVruEm5A29XDjXERJ8PHwWRZfOfdJTVl2vTNJLrTXUpYg%3D%3D&attredirects=0

with best,
Masazumi Wakatabe

On Sat, 27 Feb 2016 17:07:12 -0800
  Mason Gaffney <[log in to unmask]> wrote:
> In 1951 the pressure was on to rein in inflation, soaring into 
>double
> digits.  Tsy Secy John Snyder entered into an accord with new Fed 
>Chair Wm.
> McChesney Martin to temper the Fed's previous mission of supporting 
>the
> price of Tsy bonds by its "Open Market Operations".  The new mission
> included controlling the price level.
> 
> 	Thanks to a strong political reaction against inflation, 
>controlling
> prices took priority.  It was a political bargain, a shift not quite
> tectonic, but powerful, and with enough backing to last for many 
>years. The
> original "Accord" became a "Compact".
> 
> 	Creeping inflation continued, however, and after 1970 began to
> gallop. This time Pres. Carter in 1979 apptd Paul Volcker Chair of 
>the Fed
> with a new and stark remit to stop inflation dead, which he did. 
>Interest
> rates soared; S&Ls collapsed.
> 
> 	I recite that familiar history just to express surprise that no one
> in this interesting and learned thread has mentioned it.  It seems 
>central
> to causing and curing inflation, regardless of "spirals". 
> 
> 	It also is worth stressing that the power of most labor unions was
> broken during the period covered.  If there ever was a wage-price 
>spiral it
> is now just a bogeyman.
> 
> Mason Gaffney
> 
> -----Original Message-----
>From: Societies for the History of Economics [mailto:[log in to unmask]] 
>On
> Behalf Of Roger Sandilands
> Sent: Saturday, February 27, 2016 4:15 AM
> To: [log in to unmask]
> Subject: Re: [SHOE] Is there a history of cost-push or wage-price 
>spiral
> analysis?
> 
> Per contra James Ahiakpor, I think it is transparently obvious that 
>the Fed
> failed in its classical duty to be a proper lender of last resort 
>during the
> Great Depression. Just because it accommodated the public's 
>increased
> preference for cash rather than bank deposits does not gainsay this.
> 
> What happened is that in order to meet the public's demand for cash, 
>the
> banks were forced to borrow from the Fed. And because the Fed did so 
>little
> to relieve the banks of their consequential indebtedness, many of 
>them
> closed and the survivors' repugnance to debt led them to contract 
>their own
> lending. The result was a one-third decline in the community's total 
>means
> of payment - defined sensibly as cash plus bank deposits subject to 
>transfer
> by cheque to make payments every bit as effectively as if they were 
>using
> notes and coin [and properly excluding bank reserves not in 
>circulation from
> a sensible definition of money].
> 
> Is James seriously suggesting that if the public had $2bn more cash 
>but $4bn
> less in the banks, they would feel they had just as much money as 
>before?
> That they would feel the Fed was doing its job properly? And that 
>they would
> not be inclined - or forced - to reduce their spending? And that if 
>the
> banks remained heavily in debt they too would continue to lend as 
>before to
> maintain the community's circular flow of income?
> 
> Even Mill (Principles, 3, XI, para 2) agreed that the maintenance of 
>a flow
> of "credit" - by which he meant "money substitutes" in the form of 
>bank
> deposits that were means of payment - was indispensible in "making a
> corresponding addition to the aggregate production of the 
>community".
> 
> On this criterion, the Fed was grossly delinquent. As Lauchlin 
>Currie wrote
> in The Supply and Control of Money in the United States (Harvard 
>1934:
> 146-47):
>    "Much of the current belief in the powerlessness of the reserve 
>banks
> appears to arise from a complete misreading of the monetary history 
>of
> 1929-32. It is generally held that the reserve administration strove
> energetically to bring about expansion throughout the depression but 
>that
> contraction continued despite its efforts. Actually the reserve
> administration's policy was one of almost complete passivity and
> quiescence." [Cited in David Laidler, Fabricating the Keynesian 
>Revolution,
> 1999: 236]
> 
> But James asks: "So wherein lies the validity of the claim that the 
>Fed
> failed to act as a lender of last resort?"
> 
> The answer: Only by defining and monitoring money in the narrow 
>sense of
> currency - and also by treating non-circulating bank reserves as 
>money. And
> also, I would add, by treating interest-bearing time (savings) 
>deposits as
> though they have the same economic effect on the circular flow as
> non-interest-bearing demand (transactions) deposits held for 
>differing
> motives, hence differing turnovers.
> 
> With a one-third drop in the money supply, prices also fell 
>drastically. And
> faster than did money wages. So real wages of those in employment 
>rose. Ah,
> so it was the workers who were to blame for the Depression??
> 
> As a postscript, one of those who thought this way was Harvard's 
>Joseph
> Schumpeter. Lauchlin Currie (who was Schumpeter's teaching 
>assistant) told
> me that JAS's sole anti-depression policy prescription was to favour 
>wage
> cuts - for Harvard's tea ladies, not for the faculty whose real 
>incomes
> therefore rose. This accorded, said Currie acerbically, with his 
>belief that
> "a gentleman cannot live on less than $50,000 a year."
> 
> - Roger Sandilands
> --------------------------
> James Ahiakor wrote:
>   I tried very much to avoid getting into this discussion, but I 
>couldn't
> resist because of Tom Humphrey's latest contribution.  He employs 
>our modern
> (Keynesian) definition of money and "money stock" to interpret Henry
> Thornton's monetary analysis along the lines of Milton Friedman.  It 
>is
> misleading.  He argues:
> 
> So I guess Thornton did indeed anticipate bank failure and money 
>stock
> contraction resulting from the Fed's failure to act as a lender of 
>last
> resort in the Great Depression of the 1930s.
> 
> Thornton (1802, 90), along with the other classics, including David 
>Hume,
> Adam Smith, and David Ricardo, defined money as specie and banknotes 
>as
> money substitutes or "paper credit."   The notion of "the money 
>stock," be
> it M1 or M2, is not to be found in their works.  M1 and M2 include 
>the
> public's "savings," be they the regular savings deposits or 
>checkable
> deposits.  The Fed did expand its liabilities (notes) by about 25%, 
>from $4
> billion to $5 billion between 1930 and 1933 (Irving Fisher 1935); 
>Friedman
> and Anna Schwartz (1963, 24-29) also report that currency in 
>circulation
> rose from $3.78 billion in January 1930 to $5.57 billion by March 
>1933.   So
> wherein lies the validity of the claim that the Fed failed to act as 
>a
> lender of last resort during the Great Depression?   From where did 
>the
> money, properly so called, arise for the public to hold its 
>additional
> quantity?  Perhaps, it is noteworthy that Friedman (1960, 88-89) 
>also
> acknowledges that "Under present circumstances, even the stock of 
>money is
> not directly controlled by the [Federal Reserve] System.  The System
> controls directly its own earning assets."
> 
> As for the wage-price spiral argument, it belongs firmly with Keynes 
>and his
> followers, just as Richard Lipsey has noted.  It is all in Keynes's
> tradition of rejecting the classical quantity theory of money as the
> explanation of the price level and its changes.  In the classical 
>analysis,
> an increase in nominal wage rates does not by itself raise the price 
>level.
> That would rather put pressure on profits.  Thus, following David 
>Ricardo's
> explanation of that mechanism, J.S. Mill chides those who would 
>argue
> otherwise, noting:
> "There is no mode in which capitalists can compensate themselves for 
>a high
> cost of labour, through any action on values or prices.  It cannot 
>be
> prevented from taking its effect on low profits" (3: 479).  Mill (3: 
>699;
> italics added) further explains:
> 
> "The doctrine, indeed, that a rise of wages causes an equivalent 
>rise of
> prices, is, . self-contradictory: for if it did so, it would not be 
>a rise
> of wages; the labourer would get no more of any commodity than he 
>had
> before, let his money wages rise ever so much; a rise of real wages 
>would be
> an impossibility.  This being equally contrary to reason and to 
>fact, it is
> evident that a rise of money wages does not raise prices; that high 
>wages
> are not a cause of high prices.  A rise of general wages falls on 
>profits.
> There is no possible alternative."
> 
> What von Mises should have argued regarding unions raising wage 
>rates is
> this: Unions may succeed in raising the (nominal) wage rates of 
>their
> members, but that may also lower the wage rates of non-unionized 
>workers
> because of the increased rate of unemployment that would result from 
>the
> raised union wages.    Mises's argument is one of the unfortunate 
>results of
> some Austrians' disputing classical monetary analysis.
> 
> James Ahiakpor
> 
> On 2/26/2016 7:06 AM, Thomas Humphrey wrote:
> Robert,
> 
> Henry Thornton in 1802 obviously could not anticipate all the events 
>of the
> Great Depression that happened 128 years after he wrote. And he most
> certainly did not postulate a downward wage-price spiral in his 
>analysis,
> which can be found on pp. 118-19 of the standard Hayek edition of 
>his
> (Thornton's) Enquiry Into the Nature and Effects of the Paper Credit 
>of
> Great Britain. Instead, Thornton said that a one-time fall in prices 
>would
> result from a monetary contraction. But nominal wages would remain
> unchanged. Nominal wages would remain unchanged because workers 
>would
> interpret the price fall as being temporary (albeit perhaps for a 
>protracted
> period of time), and would anticipate a later reflation of the price 
>level.
> (Why lower wages in the face of a price fall anticipated to be 
>temporary and
> subsequently reversed?)
> 
> Thornton was arguing that conventional domestic monetary contraction 
>might
> not be the best way to deal with a balance-of-payments deficit and 
>resulting
> outflow of gold. For the monetary contraction would, by causing a 
>price fall
> which in the face of sticky nominal wages would produce rising real 
>wages,
> lead to a fall in real output and employment in all sectors, 
>including the
> export sector, of the economy. And depression in the export sector, 
>Thornton
> held, was hardly the best way to correct the balance-of-payments 
>deficit
> causing the gold outflow.
> 
> Thornton applied that same reasoning to argue that monetary 
>expansion, not
> contraction, was the proper way to handle financial crises and 
>panics when
> the demand for base money was increasing as bank depositors sought 
>to
> convert deposits and notes into coin and bankers sought increases in 
>their
> reserve/deposit ratios. Without monetary expansion to meet the 
>increased
> monetary demand, the result would be monetary contraction, price 
>falls,
> rising real wages, layoffs, and falling real activity. In this way,
> recession would follow from financial panics. Bank failures would 
>also
> occur. So I guess Thornton did indeed anticipate bank failure and 
>money
> stock contraction resulting from the Fed's failure to act as a 
>lender of
> last resort in the Great Depression of the 1930s. But, to reiterate, 
>he did
> not anticipate the concept of a downward wage-price spiral. Instead 
>he
> postulated a one-time rise of real wages owing to the fall of prices 
>in the
> face of unchanged nominal wages. One must look elsewhere for the 
>origins of
> the "spiral" idea.
> --Tom Humphrey

Masazumi Wakatabe
Professor of Economics
Faculty of Political Science and Economics
Waseda University
1-6-1 Nishi-Waseda, Shinjuku-ku, Tokyo, Japan 169-8050
Phone:+81-(0)3-5286-9722
Fax:+81-(0)3-5286-9722
Blog: http://www.forbes.com/sites/mwakatabe/