Too Much Steam?

All down the line, the U.S. economy was moving into high gear. Christmas shopping was off to a flying start (see NATIONAL AFFAIRS). The Pittsburgh steel mills, rushing to make up for strike-lost time, expect to hit 90% of capacity this week. Soft-coal production climbed to 14 million tons the week ended Nov. 19, highest point since April 1948. Unemployment was dropping in the cities that had been hardest hit in the spring recession and the fall strikes. And the automakers were chestier than ever. General Motors predicted that it would make a record 2,750,000 cars and trucks this year, nearly half the industry's output, and promised to equal or top that in 1950.

The outlook did not look as good to everyone, notably to Federal Reserve Board Member Marriner S. Eccles. He warned that there was inflationary trouble ahead. Before a congressional subcommittee last week, he ticked off a few signals: consumer credit is now up to $17 billion, almost double what it was at war's end, and the Federal Government is running into the red at the rate of $5.5 billion a year. Too many houses are being built on too slim security, said he, and the new corporation pension plans, which he flatly called "a big mistake," will keep prices high. He thought that the time had come for FRB to tighten up on credit and thus discourage inflationary borrowing.

The talk about inflationary Government spending had grown so loud that even the Administration seemed to be taking note. Last week Secretary of Commerce Charles Sawyer was back at his desk in Washington after a swing around the country, in which he had dispensed thousands of soothing words into the ears of worried businessmen.

At one time or another, he had spoken out for cuts in defense spending, greater economies in ECA operations, and a tighter rein on atomic energy appropriations. As for the farmer, Sawyer told a luncheon group in New Orleans' International House: "I don't hold with this idea of giving the farmer special treatment . . . No one has any idea how much the Brannan plan would cost. I think that's one place we could make big savings."

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