Evening star., 1941-04-18
Wage Boost Hits
The Steel Industry
Price Curb May Drive
Small Concerns
To Wall
By Jay G. Hayden.

One of the Nations foremost rugged
individualists and New Deal haters-
Ernest T. Weir-precipitated the To-
acute embarrassment, as it now appears,
OF both his fellow producers and the
Roosevelt administration.
AS the story is told by insiders, the
big Steel wage conference was dead
locked early last week between a To-
cent-an-hour increase. demanded by the
union, and 5-cents-an-hour offered by
the companies. President Roosevelt was
in on the game to the extent of urging
the union to accept an increase small
enough to obviate the necessity of in
creasing steel prices.
A meeting of employers and union
representatives was in progress when
Philip Murray, chairman of the Steel
Workers Organization Committee, was
called from the room to receive news
that Mr.. Weir's National Steel Corp.
had announced an increase in wages
in its non-union plant of the full 10
cents an hour. A few hours later the big
figure and since then virtually all steel
manufacturers in the country have fol-
lowed suit.
The administrations embarrassment
from this situation arises from the pos
sible necessity of approving an increase
in at least some steel prices through the
new Price Sterilization and Civilian
cnf ,,iflS
purpose Of keeping prices down. More
than that, the P. S. c. S. A. is confronted
with quick showdown as to the extent
of its price-ixing power, applied to the
biggest of industries, whereas it would
have preferred to start with less
conspicuous small-scale test.
1t is not improbable that the Presi-
dent will be compelled to ask Congress
for additional price-flxing legislation
to deal with the steel situation-another
issue that he has not wanted to provoke
at this time. Senator Robert A. Taft,
Republican, Of Ohio has contended that
the President is completely without
statutory authority to fix prices, except
in specific industries such as bituminous
coal.
Price increases, coincident with Big
Steels recognition of the C. I. o. in
1887, amounted to about 50 a ton and
representatives of the industry declare
that at least as large an increase would
be necessary to Offset the present wage
increase. In addition to this, the steel
spokesmen say, their production cost
will rise about 40 cents ton as result
of the s1-a-day jump in wages of John
L. Louis coal miners, If this finally
holds.
Donald M. Nelson, chief co-ordinator
of national defense purchasing, on the
other hand, declared Wednesday, that
he did not believe any horizontal rise
in the price of steel" is necessary.
Nelson said "a large increase in the
production of steel and the consequent
lowering of overhead can provide for
the wage increases" Leon Henderson,
director of the P. s. C. S. A., has indi-
Gated that he holds substantially this
same opinion.
Steel representatives hint that the
first move from their side will be an
announcement by one of the smaller
steel producing companies, perhaps with
in the next "a hours, of an increase In
steel prices.
If Mr.. Henderson attempts to "crack
down" on the fist price raiser, a court
test of the Governments authority to
fix steel prices may be anticipated.
One obvious weakness in the Gov
ernments position Is that production
costs and profits vary widely as between
companies. Hardest hit by the wage
increase are the relatively small pro-
ducers whose business is exclusively
confined to steel. There are many of
these, 1t is claimed, which were in the
red even at the former wage levels.
Big companies, on the other hand,
engage in collateral activities, such as
Bethlehem's shipbuilding and United
States Steels cement plants, which
boost their net earnings.
Steel prices fixed by the Government
must be at level high enough to
permit the least profitable plants to
operate-otherwise, these would be
forced out Of business. An attempt to
discriminate between plants, in a formal
Government order, would be extremely
complicated.
An interesting suggestion advanced
by the steel spokesmen is that a two
price system-one for the larger and
more profitable plants and another for
the small and weak producers-may
eventuate This they say would be
impracticable under normal competitive
conditions, but it might work out under
the present condition in which all pos
sible steel production is in demand.
The overall cost of the wage increase
the steel representatives estimate at
$125, 900 900, as against 1910 profit for
all companies of about $500, 900.
The steel profit for the last 10 years
has averaged only per cent. But here
again there is a wide variation as be-
tween companies. Some have been con-
tinuously profitable. while others have
as consistently suffered losses.
Why did Mr. Weir upset the steel
wage applicant? The best guess is
that he and other independents were
put severely on the spot when big
Steel" recognized the c. I. O. in 1887.
This time Mr.. Weir, being better able
than others to stand q wage increase,
simply beat his troublesome competi-
tors to the draw.