Evening star., 1946-09-05
Writer BIomes Labor
For Break in Stocks
Declares Industry Can't Absorb
Wage Increases With Output
By Dapid Laurence

| w age increases WIN Output
By Dapid LaVrence
The break in the stock market may
foreshsdow the coming depression in
America AS usual, nobody can tell
why market suddenly goes to pieces.
and sometimes the factor that touches
off decline is not the main reason but
merely tends to collapse an already bad
situation. Selling by foreign investors
| may have furnished the spark but the
situation as whole has been weak
anyway.
Today the most obvious fact about
the industrial situation is that America
isn't getting the necessary production.
This is because labor politicians have
abused their ollective-bargaining power
and have bludgeoned employers into
granting wage increases which cannot
be absorbed by price increases.
Instead of increased production so as
to justify wage increases, American
manufacturers of today, particularly in
the durable-goods field, are face to face
with serious exploitation of shortages
in skilled labor. Whenever any group
m our economic system has a monopoly
encouraged by law and by the admin
istration, other groups are bound to
suffer.
Losses in Operations.
The truth about corporation earnings
has not yet come out. Some companies,
especially in the field of consumer prod
ucts, have done well, but in the heavy
goods industries there are already on
record some startling losses due to
strikes or indirectly to work stoppages
among suppliers of goods needed to
make finished products.
Many corporation statements, because
they can this year apply carrybacks on
excess profits, do not reveal the large
losses in actual operations. Many per-
sons IN the business community have
hoped against hope that labor politicians
would get down to business and give
America chance to produce and that
the second half of the year would show
a marked improvement.
But the third quarter-July, August
and September-is we'll under way and
there Is relatively little improvement In
the outlook. The year 1916 not only
will be worse than 1945, but prospects
are that unless something is done to
encourage production and keep costs
from rising 1947 will be much worse for
many businesses on the earning side
than 1946. There will be no carrybacks
OF losses affording tax credits in l947,
because the law ends these credits on
December 81, 1916.
Stock Selling Inevitable.
Under such circumstances, with earn
ings tending downward, it was inevits-
BILE that the public would find the prices
OF stocks too high and begin to sell
Also with the tendency turning to more
instead OF less strikes and with the ad-
ministration openly in alliance now will,
the CIO-PAC. there can be little hope
OF an improved psychological situation
in industry until the effects of the
Truman policies are fully understood.
1t may take depression of major pro-
portions before the people will see the
truth. re-.... .-se-..-, .ot,.
| The Presidents statement on Labor
Day openly praising 1abor,s record, and
stating that he favored participation by
unions in political action" indicated
clearly that Mr.. Truman knows little
about what is happening in industrial
America and that he has, for the sake
OF politics, taken a stand which cannot
but be discouraging to all industry.
The entire economic situation is In
evitably out of balance due to the neces-
sity of reconversion from wartime to
! peacetime production. If ever there was
time for craftsmanship In the White
| House, 1t was in the last several months.
/ But Mr.. Truman missed his opportunity
and failed to furnish leadership. As q
/ consequence, his weakness has been
taken advantage of by labor union poll
ticians who have assumed that more
pay for less work. can bring prosperity.
Economists Ignored.
In the face of heavy war debt OF
budget, 1t is the consensus of all sound
economists that increased output per
man can save the American economic
| system from collapse. But the admin
iStration has ignored that approach alto
| gether and Mr.. Truman himself has in
sisted that take-home pay must equal
wartime pay, notwithstanding the drop
In business volume.
The best way in free America to read
just or correct any situation is to get
the facts to the public. The American
economic system cannot stand the wage
demands already granted or about to
be insisted upon In another series Of
strikes. The American consumer can
not pay some of the prices that these
same wages have now forced While
demand is high, it will be short-lived, be-
cause cheaper substitutes will be bought,
or buying will be deferred.
The simple fact is that more pay
for less work" means depression and
industrial chaos. This has always been
true. 1t was known the very day the
strikes began. 1t takes time for all the
people to find out what has been hap
pening, and usually the stock market
| finds out ahead of time what earnings
are going to be like. The holders of
stocks apparently have lost confidence in
| the willingness of the Truman admins
| tration to bring about a tightening Of