Steel & Superstition

To the theory that the steel industry is a bellwether for the economy, that if steel raises or lowers its prices steel-using industries will automatically raise or lower theirs, U.S. Steel Corp. Board Chairman Roger M. Blough had a curt reply: "Sheer economic superstition." Said Blough last week: "All the money the American people spend for steel in a year is so small, in comparison to their total expenditures for all the other things they buy, that any change in the price of steel is overwhelmed by the price movement of other goods and services which make up the average family budget."

As the first industry witness in a Senate investigation to see whether price boosting by business or wage increases for labor is primarily responsible for inflation, Blough stoutly denied that the $6-a-ton average price increase ordered by U.S. Steel last month (TIME, July 8) was inflationary. As far as U.S. Steel was concerned, said Blough, the increase represented only a 4% rise in selling prices, and was not enough to offset wage and other cost increases amounting to about 6 1/2%. For a family spending $5,000 a year, he said, the rise will bring an increase in the cost of retail products that they buy of "considerably less than 1-c- a day--or not even enough to buy one cigarette."

The price of steel, and the price of steel products, Steelman Blough continued, have often moved in opposite directions. From 1951 to 1955 the price of steel rose 14%, while household appliances dropped 13%. When U.S. Steel in May 1948 tried to fight inflation by refusing a wage increase and instead cut steel prices by $1.25 a ton, the cost-of-living index spurted two percentage points during the following three months. After three months U.S. Steel realized "we might as well have tried to stop an express train with a peashooter. So we had to rescind our price action, increase the pay of our workers and try to catch up with the [price] parade we had fallen so far behind." Perversely, the cost of living then declined.

From this Blough concluded: "No one company, no one industry, no one union can alone stop the march of inflation. Neither the steel industry or any other industry ever sets the wage pattern in America, for the postwar wage pattern has been a never-ending spiral in which each industry, in its turn, is called on to pay a little more than the preceding industry did, and the next industry must then pay a little more than that."

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