Era of Good Feeling

In a smoke-filled room in Pittsburgh's Carlton House one night last week, two greying executives shook hands on a bargain. David J. McDonald, president of the United Steel Workers, and U.S. Steel's Vice President John Stephens agreed on a 9-c--an-hour increase in wages and fringe benefits for 400,000 steelworkers, thus adding at least $100 million a year to the industry's $3.5 billion wage bill.

Never in the union's 17-year history had it and Big Steel dickered in such an atmosphere of reasonableness. The company, which had originally taken a "no raise" stand, had the rug pulled out from under it by the auto industry's unexpected raises two years ahead of contract expiration (TIME, June 1). On labor's side, McDonald wanted no strike in his first test as leader of the 1,100,000-member union. When Stephens, who at first offered 5-c- an hour, said that 8 1/2-c- in wages and 1/2-c- in fringe benefits was the limit, McDonald called it "an honorable compromise." Stephens, in turn, praised McDonald's "statesmanlike conduct," expressed the hope that the cordial atmosphere would continue. To add to the good feeling, the company made the raises (not due until July) effective immediately. And in a major step toward upgrading the South's wage standards, it agreed to wipe out the traditional 5-c--an-hour differential in Southern mills.

The rest of the industry was quickly falling into line. Steelmen, who had just completed the biggest May production (9,900,000 tons) in history, and still have their mills booked to capacity months ahead, were willing to pay for uninterrupted production because recent price boosts had improved their profits picture. In 1951, price controls and allocations trimmed their margins, and in 1952 a 53-day strike trimmed them still more. Now, with all controls off, steel's indicated profits show signs of rivaling 1950's big year (see chart). Moreover, new price rises, estimated at $3 or more a ton, will be tacked on to pay for the wage boost. However, there is no certainty that a raise will mean higher retail prices for all steel products. So many items are in ample supply that steel users will think twice before raising retail prices.

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