All over the U.S. last week, the
prices of meat and many other products rose with a rush that was
painfully like the burst of inflation in 1948. Booming industrial
production sent metal markets soaring: copper jumped 2 a Ib. to 22;
nickel was up, and even magnesium, which hadn't shown a rise since
1943, moved up 1 a Ib. With steel mills running at better than 100% capacity for the eighth
consecutive week, the wildest commodity of all was steel scrap.
Top-grade scrap climbed to $46 a ton last week, a 48% advance in three
months, to hit an alltime high. At week's end some big buyers dropped
out of the market to wait for lower prices. But many industrial
purchasing agents predicted that most metals will be high and scarce
for the rest of the year. The Dow-Jones commodity futures index, which
reflects traders' ideas of coming prices, pointed to still more rises.
Last week the index went to 148.06, its highest mark since August 1948. For some, the new inflation spelled trouble. Harvard Economist Sumner H.
Slichter urged the Government to clamp the lid on mushrooming consumer
credit, now at a near-record $18.6 billion, and admonished businessmen
to “exercise caution in the accumulation of inventories.” Slichter
thought, however, that if employment stays up, the current level of
business might easily last for nine months to a year longer. General Motors Corp.'s Charles E. Wilson was even more optimistic. In a
speech before Washington's National Press Club, he charted the path
which the U.S. should follow to realize the full benefits of the new
industrial society it has created. As a starter, he contradicted
critics who charged that the 4-an-hour wage increase per year in
G.M.'s new five-year labor contract will add fresh fuel to inflation.
The increase is neither inflationary nor deflationary, he stated: “Unit
costs are not increased, since productivity is assumed to increase
[about 2% a year] at least as fast as hourly wages.” The worker is
thus given a fair share of the fruits of technology. To produce more, with the same amount of human effort, by better
machines and organization, is a sound economic and social objective,
said Wilson. Both G.M. and the U.A.W., he added, accept the principle.
Another cardinal principle of free enterprise is to earn good profits
by efficiency and progress, and not by “just collecting a toll . . .
Some [people], reluctant to face competition, seem to use free
enterprise talk as a cloak for a little extra selfishness.” Added Wilson: the U.S. must work out “an American solution of the
relations of labor and industry, and not attempt to adopt the
philosophy of class conflict from Europe … on the one hand, or the
cartel thinking of noncompetitive reactionaries on the other … If
the people of our country really understand this principle [of
increased productivity] and stick to it, and are willing to work for
the things they would like to have just as they have been willing to do
in the past, I have no worries about our country being able to stand
the costs of pensions, insurance and high wages.”
