Why Not?

This time the steel industry's timing was flawless. President Johnson had just announced his endorsement of a wage increase for the airline machinists. So why shouldn't U.S. corporations, which have long felt inhibited by the guideposts, increase the prices on their products?

First into the field was Chicago-based Inland Steel, the nation's seventh-ranking producer, whose Chairman Joseph Block, 63, was a Kennedy Administration hero for his 1962 part in upholding the guideposts principle. That was when President Kennedy went on television to denounce American steel-men--most particularly U.S. Steel's Roger Blough--as a band of economic bandits for having raised prices in violation of the guideposts. At that time Block refused to go along with the industry in proclaiming a price rise. A price hike was "untimely," according to Block, and Inland would keep prices where they were. Under presidential pressure and a clear market threat by Inland, the rest of the industry followed suit. Ever since, Block and Inland have been, in the words of a colleague, like "the bastards at the family reunion" wherever steel people get together.

Overworked and Fallacious. Block has long since wearied of the fact that the guideposts hampered both management and labor, and appeared to apply more to some industries than to others. "The thing that gripes me," he said last week, "is the overworked and fallacious idea that steel is the key. Steel and a few other so-called basic industries are expected to adhere rigidly to the prevailing prices while thousands of others, many concerned with such essential elements of the cost of living as food, clothing and shelter, go their merry way and raise prices at will." It was not surprising, therefore, that after the President's airline attempt, Block announced that Inland was upping its prices by $2 to $3 a ton on about a third of its basic products.

One of the Administration's biggest complaints was the fact that no one had previously informed the White House about the pricing plans. And so, shortly before midnight, off went White House telegrams to steel magnates who had not yet decided what to do. This resulted in a certain amount of confusion. One Pennsylvania-based steel company chief executive was away from home as late as 1:15 a.m. When the phone rang, his teen-aged daughter answered, was startled to hear a Western Union operator inform her, she thought, that she was being invited to Washington to discuss the matter of possible price increases in the steel industry.

Considerable Concern. Despite the post-midnight telegrams, other steel companies raised prices. First were Armco and Jones & Laughlin. The Administration reacted with what seemed little more than a throwing up of hands, in view of the President's previously activist role. White House Press Secretary Bill Moyers told reporters that the President looked upon the price increases with "considerable concern." But, said Moyers, speaking of the steel companies in a manner that caused some brow-raising flashbacks, "no one can force them to do something they don't want to do." Moreover, explained Moyers, the President himself felt "that one of the prices you pay with the kind of free society we have is from time to time a decision by business and labor that is not in accordance with the national interest as the Government sees it."

A little while later, Gardner Ackley denounced the steel industry not so much for its proposed price increases as for its failure to seek extra-legal permission from the White House beforehand. "In my view," said Ackley, "the action of these companies can only be characterized as irresponsible. They were unwilling even to hear the Government state the public interest in this matter." Concluded he: "This is not an hour in which this business leadership of America can take pride."

Even as Ackley was talking, other steel companies were going along with Inland. That same day, giant U.S. Steel, which has been stung before by the guideposts, almost nonchalantly said that it was upping prices. It, too, had not consulted ahead of time with the White House.

By last week's end almost every major steel firm in the U.S. had raised prices. The only one that had previously informed the White House was Bethlehem. In answer, it got short thanks from presidential advisers, who argued against the move but didn't seem to have any remaining guidepost arguments to offer.

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