Reverberations

"This," said the voice on the telephone, "is Roger Blough. the man you've been reading about." Thus, with a humor rare in him, U.S. Steel's board chairman last week arranged for another appointment with President Kennedy--and he found the President a gracious victor.

Both in private conference and in public declaration, Kennedy was anxious to assure U.S. industry that he intended to bear no grudge as a result of his winning war against a steel price increase. "I want business to do well." he told a White House visitor. "If they don't, we don't." Said he at his press conference: "This Administration harbors no ill will against any individual, any industry, corporation or segment of the American economy. There can be no room on either side in this country at this time for any feelings of hostility or vindictiveness . . . When a mistake has been retracted and the public interest preserved, nothing is to be gained from further public recriminations."

The Price of Logic? Roger Blough, beaten, battered, and more than a bit bewildered, was happy to declare public peace. After his White House visit he returned to the privacy of his Manhattan office, overlooking New York Harbor. There, surrounded by charts and statements that explained U.S. Steel's economic position, he pondered how he had gone wrong.

Everyone agreed that industry must modernize to meet competition. Government statistics show that in the whole U.S. economy, corporate profits after taxes have grown only from $22.8 billion to $23.3 billion in the past eleven years.

During that period, employee compensation jumped from $154.2 billion to $302.9 billion, corporate taxes from $17.9 billion to $22.8 billion, and the gross national product from $366.5 billion to $521.3 billion. And last year. Blough said, U.S. Steel's profits fell from 8.2% of sales to 5.7%.

To Blough. such figures made an unassailably logical case for the steel price increase he had tried to put through. But Blough was not completely logical--many a businessman disagreed with him--and he was far from unassailable, as he found out when the President launched his slashing, emotional political attack against the steel industry.

"Never-Ending Chain." Last week the meaning and long-term effects of that onslaught were still being debated by businessmen, economists and politicians across the land. Some of those who insisted that the President went much too far sounded even more denunciatory than Kennedy had been against Big Steel. "I just figured that this is the way Hitler took over," said George McDougal, vice president of the Daniel Construction Co. in Greenville, S.C. Said University of Chicago Economist Milton Friedman: "It brings home dramatically how much power for a police state resides in Washington." Declared his Chicago colleague, Yale Brozen: "Kennedy's action was the greatest display of dictatorial white-fatherness one could imagine. Who is this or any Administration to say what prices should be?" Said Dr. Raymond Saulnier, chairman of the Council of Economic Advisers under President Eisenhower: "I think his action will go down in the books as the outstanding example of Government interference in a business decision in our history."

Saulnier was one of many economists and businessmen who argued that, even without presidential interference, the price rise would have been forced back by-the economics of the market. "Suppose the Government had done nothing," suggested Gordon Spangler, business analyst of Boston's First National Bank. "There is a good chance that Inland would have made the same decision not to go along, and that would have forced U.S. Steel to drop their increase."

Many others were deeply worried about where Government can draw the line in intervening to hold down prices. "I think the Government exceeds its authority when it becomes vindictive as a result of its views not being accepted," said Los Angeles Department Store Executive Edward W. Carter. "This gets into a never-ending chain, because when you start regulating prices, you have to regulate wages, and to do that, you have to regulate where people work. It is hard to see where you stop. It could lead to nationalization of the steel industry." "Down the Line." The main argument of those who defended Kennedy's action was that price stability is more important to the national interest than--as they considered it--a temporary tampering with corporate freedom. "We've got a situation today which didn't exist 25 years ago--a major economic phenomenon in that a $6 price rise in steel can affect our whole foreign policy," said Georgia Tech Industrial Expert Ken Wagner. "Whether or not we like it, Government has to take action. I might disagree with his decision, but not his decision to act." Said Northeastern University President Asa Knowles: "The action was entirely in the national interest. If he hadn't taken it, the increased steel price would have resulted in high costs to the taxpayers all the way down the line." University of California President Clark Kerr defended the President's action against the steel industry, maintained that it does not establish a pattern of coercion by Government. "This was a specific solution to a specific problem," he said. It will, he added, cause steel executives "to think deeply about the concept of administering prices as they do. Steel is not really a competitive market. It's one big company."

On one subject, both Kennedy's critics and defenders could agree. The President had taken drastic political, economic and legal action against industry, in the name of the public interest in holding the price line. But labor costs also enter into the national wage-price equation. And the question that many were asking was this: If a major union were to defy Kennedy in his efforts to achieve national economic stability, would he move against that union with all the will and determination that he showed against Big Steel?

This file is automatically generated by a robot program, so reader's discretion is required.