Evening star., 1950-12-22
Sterilization Nightmare

Sterilization Director Valentine has put
brave face on his rejection of the appeal from
General Motors for modification of the order
freezing prices as of December on some makes
of cars. But nobody will be fooled. The whole
stabilization program is evolving into something
of an economic nightmare.
The automobile industry has been singled
out for an effort at pinpoint price control Other
industries urged to accept control voluntarily
and in the background there are threats of
"crackdowns." This is both an inequitable and
economically impossible procedure
In the case of General Motors, Mr.. Valentine
cites figures to justify his action. He says that
during its best three years up to 1850, the cor
poration's earnings ran at an average annual
rate of 1927 million before taxes. In the quarter
since the Korea outbreak, he says, GIN earnings
are running at "the reported annual rate" of
$1,90Oy000,000 before taxes If those figures pre-
sent fair picture, strong argument can be
made for holding the GIN price level
But GIN cites figures of its own Tt SAYS
that the price increases announced for its 1851
models which have been rolled back and frozen,
represent net increase of approximately
per cent since the fall of 1948 It says further
that the prices of things used in car production
have increased from to 800 per cent during
the current year. including boosts by the Gov
ernment in the price of synthetic rubber of IL
per cent on one grade and 80 per cent on another.
1t also says that wage costs, including empoye
benefits, have risen lib per cent in 1850.
On these figures, again assuming they pre-
sent fair picture, GIN also has strong argu-
ment. For these production-cost increases will
be rejected In the cost to GIN of making its 1851
cars, and no allowance is made for this in Mr..
Valentines estimate of post-Korean earnings
Furthermore, the Government is required by
law to stabilize wages when it freezes prices
But there has been no hint of what, if anything
1T intends to do about wages in the automobile
industry
Perhaps the Governments action in "set-
tling" the railroad dispute gives clew. 1t is
broad settlement and it has some good features
But what the Government really has done is to
buy off the railroad workers
This is best illustrated in the case of the
yardmen belonging to two of the rail unions
the Trainmen and the Conductors They wanted
to exchange 48-hour week for 40-hour week
without loss OF pay. This would have meant an
increase OF 81 cents an hour. Last June presi-
dental emergency board recommended an in
crease OF IL cents. The unions turned it down.
Later, the railroads raised the ante to % cents
That, too, was turned down, accompanied by
strikes and threats of strikes. Now the White
House announces settlement" The 48-hour
week Will continue during the emergency But
the men, as of January l. will get an increase
OF 70 cents an hour, plus provision for further
cost-of-livng increases. When they eventually
go on the 40-hour week they will get four cents
an hour more-or a total of II cents more than
presidential board found last summer to be
fa1r and reasonable. Some settlement!
There is something peculiarly repugnant
about this business of waving the big stick over
the heads of industry and knuckling under to
the strong-arm tactics of labor unions. If the
Government hopes for any public support or
respect for its stabilization program it had better
pause and consider where it is going 1t is a
pad law to begin with, since it does not cover
rents and exempts certain foods until the
farmer reaches the protection of parity. And
the advised, hasty steps that are being taken
under this law are making bad situation worse.