The Indianapolis times. [volume] (Indianapolis [Ind.]) 1922-1965, 1931-05-22
SCHWAB SEES
TIDE TURNING
FOR BUSINESS
Bethlehem Steel Chairman
Frankly Optimistic
Over Outlook.
FARRELL SEES CLOUDS
Head of U. S. Corporation
Is More PeSSimiStic in
His Views.
BrUrited Press

ITO btCftos
ByUrited Press
NEW YORK, May 22-Two views
Of the economic status and future
of the steel industry were presented
to the American Iron and Steel IN
stitute today by Charles NJ. Schwab.
chairman Of the Bethlehem Steel
Corporation, and James A. Farrell,
president of the United States Steel
Corporation.
Schwab is frankly optimistic and
believes that the nation can be
cheered by the knowledge that the
tide is coming in" Farrell said that
he does not believe leaders in the
steel industry are doing a good job
'and, unless we do q better Job,
something is going to happen"
Farrell said that he believes the
steel industry Should take the risk
Of closing down rather than to
waste our raw materials"
Wages Not Cut He Says
schwab told members of the in
stitute that the steel industry has
not cut wages and will continue to
stand by its workmen. While pro-
Tossing not to give counsel to other
lines Of business, his address made
clear his conviction that, through
greater efficiency in operation,
American wages generally can be
stabilized.
Farrell urged the leaders to pay
attention to Schwab's advice and
said he wished he had the power to
bring about rehabilitation of the in
dustry.
Unnecessary fears of the nations
people should be dispelled at once"
Schwab said, 'for those fears are
an important contributing factor in
the present economic situation"
Schwab probed the subject of de-
preston from several angles and
declared there are two clouds over
our business horizon" and two only,
which need to be dissipated.
Wage Cutting Is Cloud
One Of these Clouds" he said, is
the question Of wage cutting, which
has been solved by the steel indus
try with extremely satisfactory re-
suits; and the other is the fear on
the part Of business men concern
ing the instability Of prices, partic-
ularly the fear Of lowering prices.
These two conditions can and will
be adjusted, Schwab said.
Millions of American families, he
declared, entertain a fear that there
will be q cut in wage rates and
consequent living standard.
This fear" Schwab said, has led
the public to husband it's savings, to
wear old clothes, to postpone the
buying Of homes, to curtail Dur
chases far below the level Of normal
needs"
Arbitrary Slashing Is Danger
The danger lies, schwab believed,
to arbitrary slashing Of wage rates,
and he held that such methods are
neither sound nor sane.
II am fully mindful" he said, "oH
the obligation of industry to the
Investing public. 7 am aware that
the reduction of dividends properly
raises the question as to whether
there has been a reduction in labor
costs, but say that labor costs in
the steel industry can be and have
been liquidated without taking it
out Of the wage rate of the mill
employe.
Labor costs can be liau;S ted
either by greater efficiency or by a
slash in rates. Arbitrarily to cut
rates is much the easier method. It
is a simple matter for management
to take the pay roll and say, Cut
it 10 per cent But the former
method is the one that has perma-
nent value"
Doesn't Menace Standards
'In getting lower labor costs
through increased efficiency, in
dustry SO improves its production
facilities that the cost per ton is
far less, and yet the buying power
and the living standard of our
people need not be threatened"
The second cloud of the bust
ness horizon, Schwab said, has
been the fear on the part Of bust !,
ness men concerning instability Of
prices, particularly the fear Of
lowering prices. Before liquidation
could be completed, this readjust-
ment had to be made.
Wholesale prices. as a matter Of
fact, had been trending downward,
On the average, for ten years, with
only OCCASIONAL short-term rises.
This benefit had not, in the main,
been passed on to the ultimate con-
sumner, and the sharp readiustment
Of retail prices was necessary be-
fore the situation was in proper
balance
eve have had the LIQUIDATION
now in most lines. Retailers who
have not made adjustments to the
new price levels know their own
situations and still have that step
to make
When prices are out Of line,
price cuts will bring new business.
because they can be made without
imperiling purchasing power, which
consists Of wages, profits, dividends
and other forms Of income" ne