A Small Thing

Into a hearing of the Joint Committee on the Economic Report last week walked the two biggest steelmakers in the nation. U.S. Steel's Benjamin F. Fairless and Bethlehem Steel's President Arthur B. Homer had come to explain their latest price increase (TIME, March 1). They got a shock. The G.O.P. majority on the committee proved to be cold, critical and suspicious, and currycombed the steelmen with the zeal of New Dealing reformers. Ohio's Senator Robert A. Taft sounded the keynote: "Every labor leader in the country has been encouraged by your action to get wage raises he would not otherwise seek."

For 3 1/2 hours, flushing and sweating by turns, big Ben Fairless twisted and squirmed under the committee's attack. Why should labor ask for higher wages, he asked. Labor, he said, "does not eat steel." It bases its wage demands on food and general living items. These had not been affected. The increases affected only 10% of the industry's output--semi-manufactured goods on which it had been losing money due to rising costs. There had been no general price increases. The whole thing, said Steelman Fainess, had been "misinterpreted." It had been such a small thing that Big Steel's directors had not even bothered to pass on it.

Help for Unions. Senator Taft, obviously hot under the collar, thought the "small rise" would result in a general increase in steel prices soon. Any labor leader, he said, could also use the argument about rising costs as a basis for a wage demand. Taft thought Big Steel had made its own wage negotiations, which begin next month, a lot "more difficult."

Even if losses on certain items were used to justify the price hikes, the fact remained, said Bob Taft, that the industry had chalked up record profits. Fairless objected that U.S. Steel's earnings had been even higher in 1916 and 1917 ($224,000,000 in 1917 against $150,000,000 last year). Taft snapped: "Yes, but those were war years without price controls."

Trouble for Homer. New Hampshire's Senator Charles W. Tobey put it just as sharply. Suppose Ben Fairless were a steelworker, pinched by the cost of living, and he read of the company's high profits and its price hike. Would he not press his union for higher wages?

Fairless flushed a deep crimson. He had been a steelworker, he fired back, and had tended an open hearth. But he still thought it would be in the best interest of the steelworkers not to demand a wage increase "at this time."

Beth Steel's Arthur Homer fared no better. When he said that Beth Steel's costs were increasing every month, Taft snapped: "So are your prices." When Pennsylvania Democrat Francis Myers pointed out that Bethlehem had earned $14.35 a share last year against $5.75 in 1939, Homer countered: "We didn't have the inflation forces then we have today." "You certainly did not," agreed Myers.

Heat for Raises. Big Steel's best arguments--that its earnings still lagged behind those of other industries (see below) and that it needed money to pay for its $775,000,000 expansion program--were drowned out in the general uproar. Fabricators all over the country were protesting to the committee that they were being "hijacked" by the steel companies. (Makers of metal furniture were among the first to pass the increase on: they will raise prices 3% to 16%.)

The hearing shed little more light on the price problem. But it was fair warning of the heat the committee intends to turn on important price raisers from now on.

In last year's rich grab bag of profits the pilloried steelmen had copped one of the smaller prizes. Last week the National City Bank of New York published a preliminary survey of 960 manufacturing concerns in 26 industries. All told, they had rolled up a net profit of $3,202,000,000--50% more than in 1946. The iron & steel industry, with an 11.3% profit on invested capital, was up 3.9% from 1946, but still 5.8% below the average of all industries. The biggest bonanza was struck by cotton textile companies. They had netted 40% on invested capital.

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