Lifting the Lid

The year began in a strange air of frustration. Everybody knew that arms production could not be achieved without dislocations of men and machines. But the dislocations and restrictions on materials for civilian use came before arms orders were ready to take up the slack. As a result, in Detroit alone, 125,000 people, 14% of the work force, were unemployed.

After a protest by business and labor, more materials were released for civilian goods.

The civilian producers turned out more goods, but customers showed no haste to buy; they thought prices too high. On top of that, the Federal Reserve Board's credit curbs cut sharply into installment buying.

Under pressure from businessmen, FRB dropped all controls on credit, while Congress clipped its powers. Even so, the businessmen had to cut prices to get customers; discount houses slashed appliance prices as much as 30% below list.

In the early summer doldrums, production was almost paralyzed by the steel strike, the longest and perhaps the most unnecessary in steel history. It was a prime example of the folly of Government controllers, who argued that wages could be continually raised without an increase in prices. The strike was provoked by the decision of the Administration's "impartial" fact-finding committee to give the union an even bigger raise than it expected--plus the union shop to boot. When the industry refused, Mobilizer Charles Edward Wilson, General Electric's ex-president, tried to stave off the strike with a deal to give the steelmakers a price raise to match the wage increase. President Truman okayed the deal, then backed down, leaving Wilson no choice but to quit after 15 months as mobilizer. After 53 days, a settlement was reached; it was almost exactly what Wilson had proposed.

But in the interim, 19 million tons of steel --equal to the entire increase in capacity since Korea--was lost.

After the strike's end, production bounced back as retailers, cleared of their inventories, hustled to order. Business, still picking up at the time of the election, was swept up in a wave of optimism with Eisenhower's victory.

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