Evening star., 1948-03-14

per, ton to the cost of the so-called
semi finished products. The reason
advanced was that these items were
being sold at q loss and that the
rate Of profit on other products was
unsatisfactory.
The Economic Council, conceding
that the full consequences Of the
increase cannot be appraised yet,
criticized the action taken by the
industry as opposition to public
interest" and also sought to dis
count the Commerce Department s
comparison on costs and return.
High Profits Cited.
TN spite of these evidences Of
moderate price making" it said,
"the steel industry has been able
to earn profits (after taxes higher
than at any time In its history,
with few exceptions for individual
companies.
while it Is true, as disclosed in
the Department of Commerce re-
port, that the rate of profit on
invested capital and the rate of
profit on sales are not exceptional,
either when measured by the past
experience Of the industry or when
matched against the record of other
industries, we do not believe that
these comparisons furnish an ade-
quate standard by which to Judge
the economic soundness Of the
recent price advance.
The issue is not whether the
steel industry is guilty Of profiteer-
ing. 1t is whether, In the interest
OF the health of individual COM
panies, 1t was necessary in this way
to add to the infiationary pressure
on the economy at this time
Profit Position Called Good,
AS q counter-argument against
the raise, the council said that the
profit position of the industry is
good and can be expected to remain
so, and that there are no compar-
able factors such as increases in
pay and materials costs which had
to be met when United States Steel
increased prices IS ton last
August.
AS for the industry claim that the
need to attract capital figured in
the increase, the council said so
long as imitation continues, capital
expansion will be burdened by in
creasing construction and equip
ment COSTS"
Further, the council added, the
expectation that the recent drop in
commodity prices would encourage
restraint in demands by both busi-
ness and labor, and tend toward
stability, had been dimmed by steel.
Had it not been for the administra-
tion's steel inquiry, other industries
would have fallen in line with the
steel advances, the council asserted
Explaining that the results of the
increase cannot be forseen yet, the
council explained that it still must
be shown whether finished steel
prices will advance, and that the
wage picture-with third round
increases in the making-must take
shape. Efforts by the Federal
Reserve Board and the American
Bankers Association to use credit
controls to check imitation consti-
tute another undetermined factor.
Inflationary Influences Strong.
THE steel price action forces
upon our attention the fact that
inf1ationary influences are still
strong" it concluded. "If this in
flationary trend is to be halted
without broad use of public powers
all those who occupy strategic posi-
tions in the setting of prices, in the
fixing of wages and in the granting
of credit must recognize the public
interest in their private economic
decisions in a way the steel industry
has not shown in this instance.
up to this time, the evidence
does not indicate that it was
prudent to postpone action on the
, principal features of the anti-in-
!. fationary program which you pro-
posed in November"
The Justice Department, report
ing incidentally that ALLEGHENY