The New York herald., 1921-02-14
FINANCIAL NEWS
AND COMMENT
Readjustment at Stage Where
Cost Reduction Holds Chief
Attention.
WAGE SITUATION is CRUX
Steel and Rail Conditions
Mean Much to Future Of
Country's Business.
WAGE SITUATION is CRUX
ny WILLIAM w. CRAIG.

| has arrived. IL promises 70 De, perhaps
the most interesting period OF deflation
Industry has seen orders for it's products
and materials fall with great rapidity
The railroads have seen their traffic dry
up as Industry declined. But the process
of making wage schedules conform tC
shrunken output and receding prices ha.
not made any important progress except
In the textile field sRather than lower
wages. employers have preferred to oper.
ate on part time or have reduced work.
ing forces.
There Is q limit to that method Of
handling operating costs, however, be.
cause the morale and the efficiency oi
/ organization depend on the maintenance
OF steady employment OF all the hands
that factory or a mill needs. The new:
OF the last few days from the steel trade
shows that a decided change is taking
| shape among those corporations which
seek to do a large and profitable busi-
ness and retain intact the organizations
built up during years OF effort. The
aggressive action OF railroad managers
against what they describe as a wasteful
set of regulations governing railway
wages is patent to every one who has fol-
lowed the proceedings before the Rail-
road Labor Board.
Steel and Rail Events Momentous.
| In steel and on the railroads events
which carry great significance for the
future Of the country's business activi-
ties are forward. Since the top Of last
years boom was reached steel prices. as
represented in premium quotations over
the basic level OF March. 1919. have
fallen about 80 per cent. Order books
show that the fall has not tended to
stimulate new buying. On the contrary,
the further prices have receded the more
fresh contracts have been held back.
No less an authority than Judge Gary
of the Steel Corporation estimates that
at current costs steel cannot be sold by
anybody under the prices OF March.
1919, without loss to many producers
and moderate profits to others.
Judge Gary would maintain the base
prices established two years ago, hold
TO present wages and keep going until
the revival of general business increases
the volume of steel orders This lis a
programme to which many OF his COM
petitors do not subscribe. The Midvale
Steel and Ordnance Company let II be
known a few days ago that 1t was going
after orders at the best prices oblain-
able. The other large Independents are
not revealing their plans, but comment
shows that some Of them at least are
leaning toward the Midvale policy,
whence come the rumors Of trade war
In the making 1t Is probable that the
nresent situation viii be handled with
more hnesse than in 1911. when the head
Of o big company announced in meet
ing of steel makers that he was gong
to make mis- prices accord with the
demand. and forthwith led a price cut
ting contest There is not likely to be
a drastic campaign of price slashing
rather, the chances point toward ragged
declines, accompanied by little publicity.
sellers dealing solely with buyers In.
strictly private negotiations.
Gary Policy Disconcerting.
How about wages under a programme
OF silent attrition OF prices? Judge
Gary's policy OF keeping up wage scales
and prices Is undoubtedly disconcerting
to the heads Of competing organizations.
As a matter OF public interest the ques-
H. l., lrs aff s.fl.
gtructing the return TO normal business
which everybody has been praying for
may be raised. Wages are directed in
large part by the course of living costs.
Steel wages have been Increased from
l5O to nearly $50 per cent. since 1913.
Wholesale prices have declined about 40
Der cent from the peak Of last year and
retail prices are 90 per cent under the
maximum OF the postwar period and are
gradually going lower. with those
figures I'm mind. independent steel manu-
facturers argue that wages are due TOT
downward readjustment. In fact the
average wage level outside the Steel
Corporation and three or four OF the
larger Independent companies has been
depressed approx imately 20 per cent.
since December 8. That reduction mas
not resulted In any real Improvement OF
profits because business refuses 70 come
in. Under the surface Of steel trade dis
cusslon a current OF opinion which sug-
gests additional cuts Of pay. reduction
OF prices greater than those OF IS 20 IS
a ton already quoted for few products
and a grim effort OF manufacturers ~
get orders may be plainly seen. Judge
Gary asserts that price cutting has been
proved useless as a business stimulant
The effort OF competitors TO prove him
wrong promises to supply one OF the
most interesting chapters OF present
economic history.
stock Prices Drift.
A drifting course OF stock market quo
tations last week seemed TO record an
Impression among the public followers
OF securities that until the steel and
railroad wage situation Ia stabilized
little can be expected in the way OF
broad Improvement Of business Tight
money for a day or two naturally re-
stricted speculative operations originat-
ing among professional traders, but the
larger aspect OF the market Is TO be
studied In tho reluctance Of the public
TO buy. The lack OF LIQUIDATION or OF
heavy pressure for the sis'rt account ln-
dcated what has been noted before
namely. that the decline Of last year dis
counted the depression OF business. The
public is awaiting Developments OF a
constructive nature, not those OF do
pressing force Hope OF an early set
tlenent Of the railway wage problem