The potters herald. [volume] (East Liverpool, Ohio) 1899-1982, 1950-01-12
Truman's Council
Raps Steel For
Hike In Prices

Washington LPA) - Business
generally was given pat on the
back by President Truman's Coun-
Gil of Economic Advisers, in its an
nual report to the President, but
the steel industry was singled out
for sharp rebuke for its decent
~ price increase on basic steel.
The Council reported initiation is
no longer a threat, but price in
creases were serious because they
tended to spiral and to retard con-
sumption, which must be expanded
if full recovery from last years re-
cession is to be achieved.
"If there is any room for price
change in some vital industrial
areas" the Council said, at is
downward and not in an upward
direction. Earnings are generally
rewarding, though not so high as
year ago, and they can best be
protected and advanced by those
policies which will maintain and
expand volume.
"Steel prices are a case in point.
Some reduction in steel prices
would favorably influence the
whole economic situation. Some of
these other products, whose prices
are affected by steel prices are also
priced at a level where sustained
and growing output seems uncer-
tain at current prices.
"The statements of the steel in
dustry accompanying the recent
price increases did not in our judg-
ment impair the shortly prior find
ings of the Steel Industry Board.
These findings were to the effect
that the situation in the industry,
allowing for pensions, did not justi
fly price increases and in fact left
room for price decreases in view of
no wage-rate increases"
Continuing, the Economic Coun-
Gil warned business executives not
to wait for tax cuts. Changes in
tax rates can, at most, be only
small un d er present circum-
stances" the Council said. "The
possibilities for increase in con-
sumption are large.
eve shall not be completely out
of the woods after our recent diff
ficulties," the Council added, until
private adjustments and public
policies are successful in raising
the level of consumption, which is
not now sufficiently high for sus-
tanned maximum production and
employment or for the full pros
perity Of our business system"
This discussion of prices came in
one of the most interesting chap
ters of the report-entitled "The
Significance of 1949 and the Econ
omic Outlook" The significance of
1949, the Council said, was the
proof that we have learned to mas
ter recession without going into
a depression.
Credit, Council added, should go
to business, labor, and government.
The economic measures enacted
under the New Deal to provide
cushions for the economy were
governments contribution to thei
handling of the 1949 crisis, the re-
port said, concluding that 1--WE are
learning how to use our intelli-
gence to accomplish all that our re-
sources permit"
In another chapter, the Council
stressed the Importance of wage in
creases to keep the economy in bal
ance. 1t said the only way to trans
late a growing potential for ma
tional output into actuality "is to
distribute more goods. If the price
level is reasonably stable, then the
purchasing power nee
essary for expanding market must
come mainly in the form of money
incomes rising in accord with i'm
proved productivity. And since
wages constitute the bulk of per-
sonal income, the soundest general
formula, once wages, prices, and
profits are in a workable relation
ship is for money wages to increase
with productivity trends in the
whole economy"
This call for higher wages mark
ed a sharp break with the policies
of the Economic Council under Ed
win Nourse, former chairman. '
Nourse felt increased productivity
should be reflected in lower prices,
rather than wage increases-a pos
ition which labor contended was
because prices rarely
go down except in bad times.