The New York herald., 1921-02-25

pendents were taking orders at high
prices their inventories were piling up
at equally high prices. The Steel Cor
poration maintained steady price level
and q steady level OF inventory costs,
1t did not mark UP its goods on hand and
ii does not have now TO mark them down
Neither does 1t have large loans out
standing against inflated inventory val
ues. And II is more or less fortified
against the evaporation Of business
which affects the independents because
it had on its books at the close Of
January untitled orders totalling more
than 100000 tons. These orders are
the accumulation OF business gathered
last year when the Steel Corporations
prices were lower than those of it's
competitors.
Consumers stand a Factor.
What the steel consumers think about
the situation can be adduced from the
fact that the Steel Corporation has
suffered little from cancellations, al
though prices have been cut by inde-
pendents. The corporations customers
have been led to believe that prices
would not be cut and they feel safer
in standing by their contracts than In
cancelling them and going into the mar
ket at current prices.
But If the Steel Corporation were now
to reduce prices the steel trade would
undoubtedly be thrown Into a state of
stiN greater deinoralizatio and buyers
would hold off to see how much fur
ther prices would go unless some spe-
cific and we'll nigh universal agree
ment were reached among all producers
as to the extent of the reductions and
assurances were given that no further
drastic revisions would take place in
the near future. But this probably
would not defer wage OF price reduc-
tions If the Steel Corporations direc-
tors felt that other conditions were
ripe for such action.
So far as can be learned 1t is the
Steel Corporations policy to look at
the law of supply and demand from
more than one angle. Even If business
has fallen off in volume, prices cannot
be reduced without a reduction in
wages. And wages cannot be reduced
unless the supply OF labor Is likely to
prove equal to the increased demand
that would arise from increased busi-
ness and the necessity for hiring new
help to take the place of workers who
would quit if wages were reduced.
Problem OF the Indcpcndcn
The cost Of living is large factor
in Judging these conditions General
liquidation OF labor and drastic re-
ruetion IN living costs would no doubt
make for easier conditions, because
labor would accept lower wages partly
by reason OF lower prices and partly
by reason of the numbers out of work
1t Is these factors the Steel Corpora
ton is sizing UP. The full test will not
be complete for some time, The inde-
pendents are cutting prices now as an
entering wedge to a cut In wages. LIZ
they succeed in taking enough business
away from the Steel Corporation to
compel IL to follow their lead, or If
they are able to reduce wages on their
own responsibility and still retain their
working organizations, then they viii
be on a sound competitive basis and in
position to ignore the action OF the
Steel Corporation.
Unbiased critics. however, do not be-
lieve the independents will be able 10
do this The cost OF living has de-
clined far enough to permit a reduce
tion in steel wages, but not far enough
TO permit q reduction large enough TO
affect prices materially and at the
same time allow steel workers TO co l.
tine the living standards to which they
have become accustomed.
Nevertheless It is more than likely
that if the, cost of living continues its
downward trend the Steel Corporation
will then be able under Its established
policv TO take up the question of a
reduction both IN wages and prices