Evening star., 1948-02-25
Poor Public Relations,
Cheap Politics Seen in
Steel Price Protests
Cost to Consumer Held
Unaffected by Rise in
Semi-Finished Products
By DAVID Lawrence

The latest story on steel is q
story Of bad public relations in the
steel iridustry and cheap politics in
Washington.
Instead of finding out what oc-
casioned .the rise in the price of
semi-hnished steel, the political-
NEUTRALITY-SUSPICIOUS. President Tru-
msIi, who was Ut sea and couldn T.
possibly have known what had
lsppeifed-jumped to the conclu-
sion 'tfmt some sort Of price souge
on the public had occurred.
Already some Senators have asked
for revival of the excess profits tax
and some want TO make . public
utility out Of the steel industry.
But what are the facts?
= The facts are that no price in
crease was put into effect which
r increased In any way the price to
the public for the purchase of steel
products.
=, Semi Finished Products Up.
What happened was that in the
realm of semi finished products,
which includes ingots, slabs, blooms
and billets and tube-round and
skelp-all embraced in what Is
known 10 crude steel-there was,
price increase of S. q ton.
But since all the semi-finished
steel used in the country each year
Ii only. . per cent Of the total steel
sold, the actual dollar value Of the
increase I'd estimated ct less than
: 90, ,000, 900. The total value of S.
100000 tons Of steel sold at $40
ton amounts to $4,550, 900 900 q year.
i. 30 what happened was an in
crease of less than one half of I
Per cent Of the total sales volume.
This price, moreover, Is not being
paid by the public at all. It is
being paid by the steel companies
that buy from each other.
IT % happens that the major
steel companies with facilities to
make the crude steel sell 1t to other
steelnakers who fabrieate 1t into
hnished products. The large COM
pAnies. discovered that they were
unwittingly subsidizing their COM
petitors at the rate of IS q ton.
The competitors, 1t was learned,
we're pocketing the IS ton and
charging the public the same price
for finished products Is the larger
companies have been charging.
Ne Signs Of CoIlusion.
Then why did all the companies
move up their prices for the crude
steel together7 That has always
happened in the steel industry.
When the largest producer puts. up
his price, the others follow. There
Is no collusion and there need be
none. That Is what Is commonly
called "price-posting" and it hap
pens in dozens of industries of
various kinds. ; ~
Certainly there is no reason why
q steel. company which discovers
that it is operating a division OF its
business at loss should be ex-
pected to keep on operating that
way, especially when 1t merely added
TO the profit of competitor who
was selling the finished products
to the public cat the same price,
irrespective of thesiew' cost to HIM
of the senaifnisaed steel - l5
=. Why. did the major companies
not pocket the loss. which didn't
amount to very much anyway, and
save themselves embarrassment and
political inqueries? The answer Isl
that they should have done SOL
They blundered in the field of pub
lie relations and there is no use
blinking that fact. The price rise
was o piece of, routine that should
have been evaluated In its possible
effect on the whole picture.
~. Like Comedy Of Errors.
There are some who say that the
increase in the price of semifinished
products was testing process and
that, If the public, had accepted 1t,
there would have been other in
ereases. This is an imputation
which does not seem plausible,
Judging from the desire of the steel
companies to ward OH third round
of wage increases. 1t certainly
would have been stupid tactics to
announce any general increase-if
any had been planned-until the
wage increase had been granted.
It locks like q comedy of errors
all around-a mistake by the steel
companies in sending up the price
of 4 small fraction Of their produc-
tion, . mistake by the politicians in
Warrington in jumping to wrong
conclusions, and another piece of