Wider Ripples

Like ripples from a pebble dropped in water, the war's effects last week spread in ever widening circles through the U.S. economy, stirring a mild backwash of inflation. All over the U.S. prices were shooting upward. Last week alone, tires went up as much as 12 1/2%, tin rose 15-c- a Ib. to 97-c- in New York, cotton futures soared $10 a bale in one day. Overall wholesale prices bounced higher; the Bureau of Labor Statistics reported a week's rise of 1.8% in its wholesale price index.

Consumers were doing little to help keep prices down; their growing rush to stock up on nylons, tires, sugar and anything else they felt like hoarding was creating shortages where none existed. In Kansas City, when department stores hiked the price of nylons from $1.35 to $2 a pair, the crush to buy grew even bigger. In Atlanta, Davison's department store sold as many television sets in two weeks as in three previous months.

This pressure put a new kind of strain on an economy which, even before the Korean war began, had spurted to a peacetime high. In June, the Federal Reserve Board reported last week, the index of industrial production had pushed to 197, two points above the November 1948 peak. The U.S. consumer also had plenty of cash with which to buy goods; the Commerce Department reported that wage and salary payments in May had reached a yearly rate of $139.2 billion, another peacetime record.

On the Ready. If all this activity and money gave a new prod to inflation, it also put the U.S. productive machine in good shape for any further war conversion that might come. The war in Korea had found key U.S. industries roaring at capacity; rising employment had restored the bulk of U.S. workers to their jobs. As a result, said Secretary of Labor Maurice Tobin last week, the U.S. is far better prepared for war production than when World War II found the nation with 8,000,000 unemployed, many of them untrained or grown rusty at their skills.

The Labor Department foresaw no grave problems of manpower shortage. "Most companies," it said, "are still operating on a 40-hour week. By going on a 48-hour week, they could easily turn out more goods with the same work force." Some plants had already done so: among them, Bridgeport's Remington Arms Co., the five Ohio factories of Timken Roller Bearing Co. In Indianapolis, General Motors' Allison division canceled the vacations of 8,000 workers, paid them extra to speed its current orders for jet engines and tank transmissions.

Manhunt. But even the limited war production so far had brought a marked increase in the demand for workers. In Long Beach, Cal., Douglas Aircraft got an $8,000,000 order to recondition about 200 B-26 bombers, began hiring an additional 1,500 men. In San Diego, Consolidated Vultee Aircraft's appeal for 3,000 additional workers brought a block-long line of applicants to its gates (see cut).

Industry's biggest scramble, so far, was not for men but for raw materials. They were already so scarce that new war orders were bound to force some cutback in civilian production. The word from Washington was that President Truman, in his speech to Congress, would ask for powers to allocate steel, crude rubber, manganese and tin to manufacturers with war orders. And the President also wanted powers to tighten credit (e.g., charge accounts, installment buying, etc.). But industry got assurance that the President would ask only as much power as the emergency requires.

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