Evening star., 1947-08-04

more. 1t must - els1
be able to sell
outside the David Lawrence
country enough goods to balance
the cost of buying food and neces-
sary commodities from other coun-
tries.
Tn America, the demand by the
union labor bosses in 1s45 and l94o
that workers get approximately the
same pay for 40 hours OF work tnat
thew eot for a regular workWeeS
and overtime during the war mas
resulted in an inf1ationary cycle
that is still pyramiding business
operating costs.
President Truman, who refused
IN maintain wage controls but Tor
a long time insisted on keeping
nrice controls, has fought a losing
battle to persuade American pro-
dncers to absorb wage increases
within their existing prices. he
urged them to take a chance on
quantity production or large vol
r,noe of sales to get a profit. They
didn't like the risk In the tace oi
rising costs In materials.
Mr. Truman failed to persuade
znch union bosses as John L. Lewis
to hold the line, too. As a conse-
nuence and despite the administra-
tion's efforts to belittle the real
meaning of the wage increase IN
coal and to insist that the costs
could be absorbed, there have been
serious sequels.
Steel Companies Raise Price.
Steel companies, faced with ris-
ing price in coal, have lifted prices
of steel products.
Automobile companies, faced with
a rise In steel prices, have lifted the
prices Of automobiles.
In countless businesses. steel is
the backbone Of the product mace
and hence influences the price.
So coal Influenced steel and now
steel ts influencing host OF other
thines-including new construction
when will the spiral end7
The answer ts that, for the time
heine, our export trade Is absorb
inr a huge volume of American gooos
ard when the exports decline-as
thew have already begun to do-the
American domestic market will ab-
sorb some Of this export business Tor
a while until shortages are met.
This may take few months any
way.
Then vhat-when shortages are
met and demand is In balance with
supply7
Ths answer h q recession" or
"depression'' depending on whether
the movement turns out TO be o
mild correction Of q maladjusted
situation or whether 1t becomes
more intense and fsr-reaching.
The situation today Is by no means
nara11el to 1929 except In one sense
the Nation found then. as 1t will
now. that II cannot stand the con-
tin,1ar1ce of a ma1adjustment IN
definttelv. The present crisis Is due
tn hteh prices and rising wages.
Eventually, Is the purchasing
power of the people Il curtalleo'
demand falls off and factories have
to be shut down.
More Productiveness Needed.
At that time the folly Of the union
leaders in forcing the issue Will
doubtless be camouhaged in an at
tempt to spread the work IN 30
ho,,r weeks-which will mean that
most wage earners will earn less.
n nroduction per man is Increased,
the situation will be retrieved aiIer
a painful transition.
The responsibility for recession
or depression will fall squareiy on
the administration which refused
to apply to the wage spiral tne
same pressure it exerted on pr1ce
control, The i'll effects of the ad-
.n,tnistrs tion's unbalanced effort to
retain price control are still being
felt, as is also its policy OF en-
couraetng unions to ask for wsrtlme
earnings for less hours of work.
When the recession" or "depres-
sion" occurs and is fully understood
the answer to recovery Will be 10
hrins about increased production
ner hour of wages. This, in turn
will permit lower prices. Propa-
panda to the effect that the pro-
duction of coal, for instance, has
Increased recently Is met with
counter charges by coal operators
that coal production Is below what
II was before the new contract was
signed.
Unless this country and other
countries can lind way to in
crease production and reduce prices
there will be economic stagnation
and unemployment. The high level
of business activity noticeable at
the moment in America can be
deceiving. Once the export trade
comes down to normal and the in
eyitable resistance to price increases
really takes hold. q serious tran
sition" period may be expected
When? 1t is anybody's gueSs-the
climax can come anywhere from
two months to two years hence, de-
pending mostly on the severity OF
the impact of developments abroad
on our own economic structure.
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