Evening star., 1952-04-28
Truman Gives Farmer Reasons
He Felt He Had to Seize Steel
Presidents Letter
Stutes His Beliefs
On Constitution

On CONSTITUTION
President Truman views tn
steel industry seizure as juStifiet
by national need and authorized
by his constitutional powers, sub
ject to limits protecting individ
ual rights.
In a letter to Charles S. Jones
noted airman and now a cattl
raiser at Washington Crossing
Pa, the President answered sew
eral key questions about th'
seizure.
Mr.. Jones, now So, few will
the Lafayette escadrille ovel
France in World War and late
piloted Gene Tunney to Phila.
delphia for Tunney's first heavy
weight title bout with Jacl
Dempsey.
Mr.. Jones wrote to the White
House after hearing the Presi-
dents radio talk on the night Of
April 8. He asked specifically
about steel profits and taxes, the
"closed shop" why the Taft
Hartley Act was not used, whether
Wage Sterilization Board mem
bers were appointed on the rec
ommendation of labor, and wheth-
er the boards recommendations
exceeded demands by the CIO
Steelworkers' Union.
Text of Letters.
The text of the exchange OF
letters follows:
Dear Mr.. Jones:
II have your letter concerning
my radio address on the steel Sit
uation and I was very interested
in the questions you raised. I
wish I could take the time to
write to the many hundreds of
people who have written me about
the steel situation. The majority
of the letters I have received in
dicated approval of the action I
took. From the letters indicating
disapproval, it is quite apparent
that many of the writer's based
their disagreement on a misun-
derstanding of the facts. Unfor-
tunately, in the limited radio time
I had, I could not possibly go into
detail on all phases of the steel
case. But am going to take the
time now to answer the specific
questions in your letter.
The first question you raised
relates to steel company profits.
The profits figures which I used
in my radio address were profits
before taxes.
There has been a lot of discus
sion of this, but it should be clear
that if you are going to estab-
lish fair price ceilings, you have
to figure on the basis of income
before taxes. If you took income
after taxes. you would have to
raise price ceilings to compensate
for income tax increases. And if
we let prices-and wages-go up
to compensate for bigger income
taxes, we would obviously not be
preventing initiation, we would be
encouraging it.
Index Used as Standard.
"This is the reason we have to
use profits before taxes in de-
termining whether an indus
try is entitled to a price increase
1t is the same with all other
groups in the economy. The wage
increases recommended by the
Wage Sterilization Board for the
Steelworkers were based on wages
before taXeS-not on take-home
pay after tax deductions. In ad-
justing wage rates to the cost of
living, which is the practice in
many industries, the standard
used IS the consumers price in
does not take account
OF the increased income taxes paid
by workers. In determining fair
price supports for farm products,
the law does not take into ac-
count the income taxes that
farmers pay.
obviously, If we are going to
be fair. business must be governed
by the same stabilization princi-
pies applicable to wage earners.
salaried persons and farmers.
1T is true that the steel COM
panies are paying high taxes. So
is everybody else. If we allowed
the steel companies to get price
increases to cover their higher
taxes, we would simply be shifting
the tax burden to those less able
to afford it.
Profits at High Level.
"As a matter of fact, the steel
companies are making so much
money that even with today's
high taxes their profits after taxes
are greater now than the profits
they made after taxes in the three
years before the Korean outbreak
and those were very profitable
years. The Iron and Steel Institute
has reported that it's members
some 80 per cent of the industry
$494 million in profits
after taxes for the three years be-
fore Korea. That comes to about
$3.50 per ton. And for 1851, the
institute reports profits after taxes
Of 1858 million-or $7.07 per ton.
$50 you see that whether you
take profits before or after taxes,
the conclusion is still the same.
We will never be able to prevent
~ %I,;o 49,. .a,--a.,.,. .e