Mary Bell Archive | Trotskyist Writers Index | ETOL Main Page
From Labor Action, Vol. 14 No. 7, 13 February 1950, p. 2.
Transcribed & marked up by Einde O’ Callaghan for the Encyclopaedia of Trotskyism On-Line (ETOL).
Despite some fluctuations in the cost-of-living index, inflation will continue its upward spiral. This is the only conclusion to be drawn from the hearings on the recent steel price increases held before the Joint Committee on the Economic Report. Everyone knows that steel is a basic industry, and that as steel goes, so goes the economy.
The leaders of the big steel industries are adamant about their price increase averaging about $4 a ton, threatened even before the recent pension demands of the steel workers union had been agreed upon. As a matter of fact, “anticipatory” increased costs played a large role in steel’s line of argument before the committee. They had, of course, anticipated the pension demands; they now anticipate rises in the price of scrap and coal. However, one is not supposed to anticipate the PROFITS for 1950 of the big steel corporations.
Admitting that some persons believe that United States Steel ought to absorb, cost increases because of its high earnings in early 1949, Benjamin Fairless, president of the corporation, stated:
“I cannot agree with speculating about profits in our corporation or in the steel industry based on one-quarter or one-half year earnings at an extraordinary high rate of production. Nor can I agree with those who think we should borrow long-term money to replace – I did not say expand, I said replace – existing facilities. If there is any certain way to ruin or liquidate a business, that is it.”
With that unanimity so characteristic of the modern “competitive system of private enterprise,” most of the other steel companies raised prices, too.
Ben Moreel, president of Jones & Laughlin Steel Corporation, Pittsburgh, complained before the committee that “so-called steel profits have been so meager that the industry is giving away its assets with every ton of steel sold.” H.B. Batcheller, chairman of the board of Allegheny Ludlum Steel Corporation, said: “We hope that we don’t have to raise prices further, but we fear we will.” A.B. Homer, president of Bethlehem Steel Company, said the $4 a ton increase was necessary to realize a profit rate in 1950 that would not be “substantially below” the 1949 rate.
An interesting interchange occurred between Representative Wright Patman, Texas Democrat, and Homer at the hearings when Patman asked if the method of increasing profits by increasing prices was not a “subsidization of Bethlehem Steel by the American people”? “Isn’t it a method of obtaining capital at no cost to the company?” asked the congressman.
Homer parried with the statement that the inquiry “is a new one on me. I was under the impression that you neyer received anything for nothing.” Whether this brilliant riposte satisfied Patman is not recorded in the press dispatch. The same executive revealed further that the profit rate for 1949 for his company was only 7.8 cents per dollar of sales, compared with 12.1 in 1929, although the 1949 earnings were the largest in history, and hence the over-all profit, if not the percentage, was also the greatest in all time.
While speaking somewhat about the necessity of increased prices to keep machinery in repair and the increased costs of materials, the main argument of all the steel executives for the price increase at this time is the pension plan obtained by the steel workers union. This, of course, is a clever, if transparent device of the steel corporations – it serves as the pretext for their price rise and puts the blame for it on the labor unions: if only the unions would be satisfied with their lot and not ask for more, then prices would remain stationary.
Of course, the arguments of the steel barons are twaddle. In the case prepared by the steel workers union for its pension negotiations, the phenomenal profits of the steel industry were laid bare. In the committee hearings, Senator Joseph O’Mahoney of Wyoming cited figures indicating that U.S. Steel had made almost six per cent on its investment including the years of the depression. Fairless retorted: “We don’t accept those figures.”
A responsibility is thus placed on the steel workers union to answer the arguments of the steel industrialists. It is they who should take the lead in demanding no price rise in steel. It is necessary for them, as for all labor, to get away from the narrow concepts of simple economic gains for their own members, to demands that affect no only their members but the whole of society.
Especially in such a period of inflation is it necessary to couple with wage and pension demands the demand for no price increases! This demand was once used in the United Auto Workers’ struggle against General Motors, but has receded recently.
A complementary demand, which fits their arrogant complaint about “low profits” to a T, is to open the books of these corporations. Let them show cause why they must boost the inflationary spurt upward in a grab that will ultimately dip into every pocketbook – except the big stockholders.
Mary Bell Archive | Trotskyist Writers’ Index | ETOL Main Page
Last updated: 7 March 2023