Price Rise

In a 22-story tower on the edge of Manhattan's bustling financial district, top officials of the U.S. Steel Corp. waited one day last week for a final figure to guide them in fixing the twelfth consecutive steel price rise since World War II. As soon as word came of another jump in the cost-of-living index, which meant an automatic wage boost for steelworkers, statisticians swiftly added the change to a mosaic of other figures on increased costs, including the industry-wide wage hike called for in the contract signed last year. Soon after, U.S. Steel President Clifford F. Hood announced a steel price boost averaging $6 a ton. Before the week was out, the nation's other steel companies moved to make Big Steel's increase industrywide, thus adding half a billion dollars to the annual cost of the U.S. economy's basic commodity.

Protests & Denials. Reaction was swift and conflicting. Many steelmen had plugged for a boost ranging from last year's $8.50 a ton to $10 or more, were disappointed at the rate set by the industry leader. Said Avery C. Adams, president of Jones & Laughlin Steel Corp.: "The announced price increase is grossly inadequate in so far as covering our total anticipated cost increases is concerned." But the loudest protests came from those who thought the increase was too great--even though many had feared it would be even greater. House Democratic Whip Carl Albert of Oklahoma called for an immediate congressional investigation of the "irresponsible" hike, and Democratic Senator

Estes Kefauver said that the Senate Antitrust and Monopoly Subcommittee will do so. Senator Harry Byrd's Senate Finance Committee got ready to grill Treasury Secretary Humphrey on the boost this week, may also call steel-industry executives to testify. And incoming Secretary of the Treasury Robert B. Anderson wistfully told Congressmen: "I wish the steel increase had not taken place."

U.S. Steel President Hood, blaming the boost on rising labor costs, said that this week's wage increase will amount to 21-c- an hour, boost the corporation's annual labor costs by $87 million to $1,543,000,-ooo, which is a record high. But labor refused to have the price hike laid at its door. Said United Steelworkers' President David J. McDonald: "Even without raising prices and without obtaining greatest output per man-hour, the corporation is in a position to increase its net profit from $348.1 million in 1956 to $437 million in 1957." The steel industry, charged Dave McDonald, is trying to make the union a "scapegoat" for the "irresponsibility of pricing policies which have contributed to the rising trend of prices for more than a decade."

Inauspicious Circumstances. Though U.S. Steel may have trimmed its boost somewhat in anticipation of unfavorable public reaction, other restraining influences served to keep the hike below last year's. Last week the industry was operating at 86% of capacity, and demand for steel was fairly soft and competition strong. Consumer resistance has been heightened since last August's rise by periodic boosts in extra charges for special processing or handling required by many customers. Surprisingly little anticipatory buying in steel took place before last week's price hike.

In view of all this, why had the industry felt it wise to announce a price boost at all? The steel industry's picture for the rest of 1957 is changing for the better, giving the industry confidence that its price hike will stick as more and more customers who have cut inventories too low begin to place new orders. The industry is also suffering from the nation's tight-money market, and it has to depend largely on profits to finance its ambitious expansion plans.

No Rush to Boost. In the past, steel price increases have been immediately felt throughout the economy as users rushed to pass on the hike to the consumer. But there was considerable doubt that last week's boost would set off a round of consumer price rises. Competition is intense, and many industries may prefer to absorb the increases--which amount to only $11.58 on a $3,000 car, 66-c- on a $300 refrigerator--rather than raise prices; others may delay price increases for many months. A spokesman for one of the big three automakers said, for example, that he did not expect the steel increase to affect the price of 1958 models (though labor and other costs may raise the price).

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