Evening star., 1949-08-28
Wages and Stockholders
Correspondent Says Steel Labor's Claims
Flout RIGHTS of Investors
By Elisha M. Friedman

prosperous period 1941-1948 dividends were
rs per cent Of wages and the balance after
dividends reinvested of $205 million did not
make good the deficits Of the 1930s Yet this
$205 million reinyested constituted for each
employe $7oo of additional plant and ma
chinery.
The price of U. S. Steel common
on the New York Stock Exchange in 1947
was matched in 1881. An investor who held
this stock over this period received $34 in
II years and zero for seven years thereof.
If he had bought United States Government
AIS of 1947-1952, he would have received
$72 without losing income for any year or
any sleep in the interval.
The common stockholder takes risk Of
losses. But he should have hopes of gain.
In a prosperous year strong union pre-
empts the profits and leaves the investor
to hold the bag in deficit years. What a
tribute to the power and vitality Of private
enterprise! It is being bled to death, but
continues to serve and fight? How long can
this continue?
Steel stocks have declined since 1887 in
relation to the DoW-JoneS industrial average
and are in a bear market, relatively. Steel
stocks are selling in the stock market at
two or three times the current rate Of an
nual earnings, and they yield over 10 per
cent. Some steel stocks are selling for less
than their net liquid assets. The market
thus values at zero the plant and equipment
good will and management. Such steel
companies are worth more as junk or in
liquidation than in the market as an oper-
ating company. under Mr.. Murray's control
of the industrys wage policy.
Asks the Source of Additional Capital.
This is the impartial and objective judg-
ment Of the stock market, record of an
ever-darkening past and dismal down.
trend for the industry. Who will furnish
fresh money for new and better machinery
for the workers?
The union shifts its arguments to fit its
case, depending on the time, so that the
supporting statements seem more like ra-
tionalizations than reasons. The argument
was first that the cost OF living had risen.
That argument became absurd. Then the
cost Of living declined and labors argument
became sharing in the profits" Now that
profits are declining. the argument is to
increase purchasing power for the benefit
of the rest of the country through wage
increases to steel workers. Mr.. Nathan
would not accept the obvious corollaries of
his arguments in reverse. He does not urge
reducing wages to correspond to the decline
in the cost Of living in profits or in operating
margins or in productivity.
What is in the best interest Of the public
and Of the steel workers? Certainly steel
wages should not now be raised. Mr. Murray
should follow the example of the anti
munist labor leaders in Europe. Since the
end OF the war they have been fighting all
wage increases and urging price decreases.
Present high wage rates per hour can pro-
duce lower wage costs per unit through in
creased efficiency. There is a great backlog
and shortage of housing. More building at
lower costs will keep steel workers and others
employed at current high wages. In auto
mobiles the average car is II years old, as
against before the war. Lower priced
steel will make possible lower-priced cars
and more employment for workers in steel
and steel-using industries.
The labor unions have achieved a posi-
ton OF unique power over the rest of the
community. This power must be limited
either by labor's prudent self-restraint, by
Federal statutes or else by a self-defensive
organization of stockholders by companies,
by industries and by a national federation
like the CIO.
Unionism threatens to become a cancer
on society. For cancer, unlike healthy
organ, is tissue which, firstly, takes without
giving and, secondly, Is uncontrolled in it's
growth. Eventually cancer kills the body
and then dies with it. Let Mr.. Murray re-
member that the excesses of the German
unions under the young Weimar Republic
contributed to the rise of Naziism and to
the fall Of the republic. TO the extinction
OF unionism and the liquidation and Ian
gushing of its leaders.