Evening star., 1950-10-27
White House Forced
To Act on Controls
Before Election
Labor Leaders Seeking
Prompt Action Toward
Excess Profits Tuxes
By David Laurence

By David Lascrence
Political pressures and the in
exorable demands of the defense
program have combined to force
the hand of the administration
1t had been planned to defer until
after election the controls that
might give concern to the econ
omy. But some of these controls
could no longer be postponed.
President Truman found him
self pressed by the labor union
bosses who want him to move
promptly toward excess-profits-
tax legislation. That's one reason
why he has been considering a call
to bring Congress back here i'm
mediately after the election in
stead of on November 27, as
planned.
The labor union chiefs are eager
for some sort of congressional ex-
pose of profits for the current
year as means of justifying their
demands for higher and higher
wage scales. This shows little
regard for the imitation spiral so
far as higher costs of operation
are concerned. Some businesses
have been trying to absorb these
>age increases without price in
creases but this cannot be accom-
plished generally nor can the large
businesses do it without dipping
into their normal profit levels and
curtailing the reserves they usu-
ally store UP for depression days.
Stock Market Reacts.
The stock market reacted ad-
verSely to the news that excess
prof1ts-tax legislation was going
to be enacted this year. The diff
flculty is not only that such a law
would cut down funds already
allocated for planned operations
this year but might, if applied
retroactively to June 80 or Octo-
Der /, throw business of the last
quarter of the year into confusion.
There are some influential
members of Congress who think
that rise in the corporation tax
rate, probably to a so per cent
level, would be better than the
complicated excess profits tax
laws of wartime. But if the labor
unions are masters of the White
House as well as of the Democratic
Party after November las they
may well be if they succeed in de-
feating prominent Republicans
for Congress-passage of the ex-
cess-prof1ts tax will be assured.
At the very time when there
should be restraint on all sides so
that the economy can be geared
to the absorption of large de-
fense program, the political pres
sure of factions and economic
groups may do the very thing that
the Soviets have been waiting for
make Americas internal eco
nomic situation critical.
Controls are necessary and con-
trolls will be accepted by all groups
provided they are applied with an
even hand and without regard to
politics or special privilege.
Shortages Appear.
Shortages of materials needed
for the defense program have be-
gun to affect businesses of various
kinds. Credit controls are ex-
pected to cut down on production
of various articles usually bought |
on the installment plan. Likewise,
the new regulations just issued |
which prohibit construction of |
buildings for amusement or rec
reation purposes, point the way to
limitations on other products
which may come to be termed
non-essential."
The new order telling the in
dustrial world that manufactur-
ers of household appliances, radios
and television sets will have to
cut their use of aluminium, cop
per, nickel and related products
by 80 per cent is the kind of
limitation that must inevitably af-
feet employment.
In the face of such rules, can
wage levels be allowed to sky
rocket? The labor leaders admit
that something may have to be
done to keep their own ranks from
demanding higher and higher
compensation. It has been init
mated that if an excess-profts-tax
law is promptly enacted, this
would halt wage rises. The truth
Is it will work just the other way
there will be tendency to grant
the increases if Uncle Sam is to
bear the bigger part of the ex-
pense through tax deductions. In
the end, wage control will become
lmperatlve-and that's what the
whole lnf1ationary trend will ulti-
mately bring unless checked by
greater self-restraint than is being
exhibited today at the collective
bargaining tables.
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