The Kennedy Approach

In the bitter and uncertain aftermath of the steel episode, the nation has been waiting to discover how John Kennedy would deal with business in the future.

At the annual U.S. Chamber of Commerce meeting last week, the President labored to be conciliatory and to prove himself no foe of business. But in one sentence, he firmly restated the thesis that underlay his intrusion into steel pricing.

Said the President: "All the segments [of the economy], including the national Government, must operate responsibly in terms of each other, or the balance which sustains the general welfare will be lost.'' The President told the Chamber that he hoped the steel crisis would mark "a turning point'' for the better in relations between business and Government.

Though he denies that he intends taking any broad new economic approach. Government-business relations are clearly moving into new and uncharted seas.

What the Administration seems to be driving toward is an economy in which, without express legislative controls, both big business and big labor will be under continuous pressure from the White House to conform their price and wage policies to the "public interest"--however that may be denned by the Government at the time. If so, the Administration maybe letting itself in for repeated off-the-cuff rulings that can hardly fail in the long run to prove contradictory, chaotic or ineffectual.

Echoes of F.D.R. The prospect is already evoking alarmed outcries from both labor and management. In California last week, the leader of an aerospace union grumbled: ''We have got to the point where we are using wartime controls in peacetime." At the U.S. Chamber of Commerce meeting, outgoing President Richard Wagner, a Chicago oil executive, even more bluntly declared: "We should remember that dictators in other lands usually came to power under accepted constitutional procedures established as a result of the erosion of sound constitutional principles." In Wagner's speech, and in many a private conversation among the Chamber of Commerce members in Washington last week, there rang faint echoes of the hostility and fear with which the business community once regarded Franklin D. Roosevelt.

Solitary Dissenter. For all their growing leeriness of the Kennedy Administration, businessmen were at least eager to see whether, in order to hold his noninflationary line. Kennedy would have to crack down on labor as hard as he had on Roger Blough.

Symptomatic of this attitude was the report of Kennedy's 20-man Advisory Committee on Labor-Management Policy, which last week urged that the President be granted extraordinary powers "in any bargaining situation in a major or critical industry which may develop into a dispute threatening the national health or safety." In such cases, the board recommended, the President should be empowered to: 1) appoint an emergency board which, as is now the case with the regulated railroads and airlines, would mediate the dispute and recommend settlement terms; 2) order an 80-day strike postponement without asking court sanction, as the Taft-Hartley law now requires; 3) go to Congress and ask for specific remedial action. All this would require a major overhaul of U.S. labor law and would mean further Government intervention in collective bargaining. Yet. of the six businessmen on the board, only Henry Ford II* publicly dissented from the proposals as an encroachment on economic freedom. Wrote Ford: "In a democratic society, the need for reform cannot serve as justification for the elimination of freedom."

The Coming Tests. The advisory committee proposals are still not law -- and may well never become so. Without them, many businessmen question Kennedy's power -- and determination -- to move into the numerous major labor disputes now looming before the nation.

The most immediate battle involves the troubled railroads and their 450.000 nonoperating employees. Last week, in a recommendation that the Administration had little choice but to support, a presidential emergency board called for average wage increases of 10.2-c- an hour for the workers. The proposal pleased neither side in the dispute. The unions had demanded more than twice as much, and management asked why it should give anything at all when so many lines are running in the red. If a rail strike erupts -- and the unions will be legally free to strike in 30 days -- Kennedy will be put to a labor relations test every bit as formidable as his collision with Big Steel.

The Hard Choice. Besides the rail roads, two other major industries are head ing into labor negotiations: aluminum this month and aerospace next month.

Kennedy's toughest chore, if he intends to keep watch over wages and prices, is apt to come not with major unions but with the tangle of small and militant locals in the construction industry. Last week a strike of construction workers --and a likely lockout by employers -- was threatening to paralyze building in Northern California. The locals involved demanded that their current hourly base wage ($3.23 to $3.47) be increased by a phenomenal $1.15 an hour over three years. Management offered 33-c-, and neither side was budging.

Here, and in a score of similar construction disputes certain to break out around the country in the next few months, the President faces a hard choice. If his Administration does not move to settle these disputes as effectively as it moved against steel, the construction unions can touch off jogs of inflation all around the land. If the White House does intervene time after time in such local disputes, it risks eroding its largely psychological powers over labor and management. In the long run, the biggest block to John Kennedy's efforts to exercise a cautionary control on business and labor is the multiplicity and diversity of business decisions the U.S. takes every day. Too much of an effort to orchestrate the economy may only produce cacophony.

*The other business members: Inland Steel's Chairman Joseph Block. U.S. Lines' Chairman John Franklin, Reynolds Metals' President Richard Reynolds, IBM's Chairman Thomas J. Watson Jr., McGraw-Hill Chairman Elliott V. Bell, and, until his death last January, Burlington Industries' Chairman Spencer Love.

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