Jolt

At most U.S. grocery stores last week, 97-c- would buy what $1 bought a month ago. Nobody was certain, but most Americans were hoping that this slight dip in food prices might be the start of the downhill slide from inflation. Last week they got a jolt.

The country's biggest steelmakers decided to jack up some of their prices again. Cried the Wall Street Journal: "It would appear that the steel managers had concluded that the country was still riding the inflation wave and that they had better ride with it while it lasts."

Steel, the bellwether of U.S. industry (and the patternmaker for industrial wages), acted as if it were ashamed of what it was doing. There was no public announcement of the price advance. Some of the increases were accomplished by a sleight-of-hand change on the price tag. U.S. Steel's Carnegie-Illinois subsidiary merely told customers that semi-finished steel, which had previously sold at $55 a gross ton (2,240 lbs.), would now cost $54 a net ton (2,000 lbs.). Other major steel producers, as they usually do, followed Big Steel's example. Prices went up on about 11 % of total steel production.

Merely an Adjustment? Steel's timing made it appear as if it were practically inviting labor to raise its prices too. It gave Phil Murray, who has continually harped on Big Steel's big profits,* new ammunition in his campaign for a "substantial" wage increase for the C.I.O.'s 875,000 steelworkers.

Murray, who has a no-strike contract with the steelmakers, had no sooner opened his wage drive in Pittsburgh last week when U.S. Steel Corp.'s President Ben Fairless denied that prices had been jacked up in anticipation of Murray's demands. The price change, he said, was merely an "adjustment of a particular situation of limited scope"; some of the products, he added, were "being sold at a loss." Republic Steel's tall, greying President Charles M. White said it was "compensation for past wage increases."

In a speech this week at New Haven, U.S. Steel's Board Chairman Irving S. Olds dismissed price-wage increases as a major cause of inflation. The real root of the disease, he said, was expansion of bank credit, and the cure was in deflating it. His point had merit, but his attitude, like almost every businessman's, was that the other fellow ought to have more self-control.

On the Carpet. Some of industry's best friends in Congress disagreed. Vermont's Senator Ralph K. Flanders, himself an industrialist, reminded the steel managers that they had a responsibility beyond making money for their stockholders. Said he: "Apparently the steel industry does not yet realize.. . . that its decisions on prices must be in the public interest as well as its private interest." A top Republican policymaker in Congress, who had been neck-deep in the fight to take and keep controls off business, cried: "A cynical stunt ... a damned fool thing to do." Senator Robert A. Taft swiftly announced that "two or three typical steel leaders " would be called on the carpet of Congress' Joint Economic Committee this week to explain their action.

The steelmen were also likely to be on the Department of Justice's carpet. Suspicious of the uniform and almost simultaneous price advances, the antitrust division moved with unusual speed, prepared this week to find out why the advances had fallen into such a neat pattern.

*U.S. Steel made $126 million after taxes in 1947, up $38 million from its prosperous 1946; Bethlehem Steel's earnings jumped from $42 million to $51 million; Republic Steel almost doubled its 1946 profit of $16 million.

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