THE ECONOMY: Short Wait

Exactly nine days after President Truman asked them to “wait and see” before raising their prices, steelmakers got tired of waiting. The American Rolling Mill Co. was the first to act; it boosted its prices as much as $7 a ton. Next day Republic Steel Corp., third largest U.S. producer, boosted its prices $5 to $8. The same day, National Steel Corp. raised prices an average of $5.25 a ton. The following day, Jones & Laughlin Steel Corp. joined the move with raises of $6 to $7 a ton. The raises, on the whole, were much larger than anyone had expected.

The recent coal-mine wage boosts, said steelmen, were the last straw on a pile of increased costs which they have been absorbing. The increases in steel wages last spring, said Republic, had amounted to “approximately $4.50 per ton of steel” and had caused a drop in the second quarter profits (see Earnings).

National Steel’s Chairman Ernest Tener Weir figured that his costs since the first quarter, aside from those on coal, had risen $11 per ton of steel. His breakdown: scrap $4, labor $4, fuel oil $1, miscellaneous $1, depreciation $1. Scrap prices, which have jumped over $10 in two months, are now at an alltime high average of about $40 a ton and still rising. Under such conditions, said steelmen, boosts in the prices of finished steel were not only warranted but “imperative.”

Still to be heard from were bellwethers Bethlehem and U.S. Steel. But they were getting that old price-raising feeling, too. Both companies raised pig-iron prices $3 a ton. Big Steel brushed off the raise as a bookkeeping device. It uses almost all its pig-iron output itself. But the raise was a plain sign of the way both companies were thinking. With the ice broken by smaller companies—and the pattern already set—both were expected to increase steel prices also, thus assuring a general rise in the industry.

What effect would this have on the nation’s economy? The steelmen, naturally, said that it would be small. Said National Steel’s Weir, “The increased cost for a refrigerator won’t be more than a couple of dollars.” The American Iron and Steel Institute estimated that a price rise of $6 to $7 a ton in steel would mean a direct increase of $10.50 to $12.25 in the cost of producing the average automobile. At week’s end, automakers and other hard-goods manufacturers were still mum on any price rises. But in most of these lines, competition alone was not great enough to force them to hold the line. The only encouraging sign came from Armco’s fabricating subsidiary, Sheffield Steel Corp. (bolts, wire, nails, etc.). Despite parent Armco’s action, Sheffield, which makes its own steel, said that it plans no price rises.