INFLATION: Freeze II: Back to the Drawing Board

"Oh, everybody thinks Phase III was a failure. Let's move on."

With more than a touch of bitter resignation, Treasury Secretary George Shultz last week thus delivered the epitaph for the Administration's five-month-old attempt to control inflation on the honor system, of which he was the chief ideologue. An hour later, in a nationwide TV speech, President Nixon did indeed move on—with the second freeze since August 1971. He imposed a halt on increases in prices—but not in paychecks—for up to 60 days.

That will be followed, the President promised, by a Phase...