Toledo union journal. [volume] (Toledo, Ohio) 1942-current, 1949-09-30
BEHIND THE
HEADLINES
By NATHAN ROBERTSON

WASHINGTON GPA) - From long
range standpoint the most disturbing aspect OF
the Steel Industry Fact Finding Boards report
was its virtual acceptance of industrys 'boom
and bust philosophy instead of the govern
ment's policy of maintaining balanced econ
onny to avoid future depressions.
Ever since the enactment of the full en-
ployment law in 1916 the government has been
officially committed to the policy of trying to
correct economic Embellishments before they
became serious enough to plunge the nation
into tragic and costly depression. Both the
President and the Congress are officially
nledged to this policy-although man Con-
eressmen have never seemed to take it very
seriously.
In line with this policy, the union pre-
sented mass of statistical evidence ind1cat-
ing that profits in the steel industry were too
high for prolonged national health The union
contended that profits should be cut, either
bv increasing wages or lowering prices. The
union pointed out there was no evidence of
a willingness to cut profits by reducing prices,
and so the only alternative was higher wages
Back of this argument was the theory
widely supported among labor and liberal
economists, and officially endorsed in the full
employment law, that in order to MAINTAIN
steadily expanding economy, instead OF the
violent booms and busts of previous years, 1t
was necessary to maintain balance between
production and purchasing power.
Abnormslly high profits destroy this bal
ance bv diverting too much money from con-
sumner buying power into savings and indus
trial expansion.
Thus if corporation turns out SlOO OoO'-
600 worth of goods in a year and comes out
with S1O,OOOOOO profit, it probably is not
working for the best interests of the country
Much of that profit goes into expanding pro-
duction, but the wages being paid for produc-
ing those goods are not high enough to ABSORB
the products in the market
OF course that is an oVer-smplification, be-
cause the workers in that corporation do not
bl1y most of its products But if all corpora
tions are pursuing the same policy, it means
that for the country as whole, wage earners
are not getting enough purchasing power TO
buy the products of industry. Too much money
il going into profits and therefore into savings
or into expanding production facilities at
time when production ,already is higher than
purchasing power. Henry Ford first demon
EtTated
the key to successful mass production
If the corporation making S1O,OOoO0
profit on 100000 900 of business raises wages
or cuts prices, and all other corporations do
likewise the balance can be restored Under
an ideal economy some profits would go every
year into expanding production but only
enough TO keep pace with expanding purchas-
ing power as productivity of industry ex-
psnded.
For several years now, the Presidents
Council of Economic Advisers, set up under
the full employment law to watch for eco
nouic Embellishments has been warning that
nrofts were too high, and that purchasing
power was not keeping pace with production
Big business has ignored these warnings.
Throughout the recent inflationary period
the attitude of industry has been that 1T hao
TO make big profits, while business was GOOD,
in order to survive in periods of depression
when profits 90 down or disappear. This is
the crux of the dispute. Economic planners
have contended that this policy of high profits
in time of boom creates depression by throw
ing production and purchasing power out OF
balance Suddenly industry finds it has no
market for its goods and starts firing workers.
This is the way depressions begin
The Steel Fact Finding Board seemed to
take industry's side in this basic dispute. Al
though profits of the big steel companies be-
fore taxes were six times as high on net worth
In the first quarter of 1949 as they were in
1889 and more than four times as high, after
taxes the Board did not find that they were
too high 1t reported that although profits
were much higher than in the thirties, and
"appear to be substantial" looking at them
"over the whole business cycle" they do not
seem to have been excessive"
This attitude the part of the Board is
what worries liberal economists, We can never
reach normal balanced economy, If excesses
In time of boom excused as necessary to
balance periods of depression. That is denial
of the whole theory of the full employment
law II is boom and bust" economics. The
key to eliminating depressions is the elimina-
ton of abnormal profits when business is good.
The findings Of the Board on pensions and
social insurance were progressive and repre-
sented great gain for the union But its con-
cusions on how to make our economy work
were regressve, and If widely accepted can