One More Round

The Little Steel formula, for 16 months the Administration's chief bulwark against inflation, had all its underpinnings knocked out last week. Like all political structures, it did not immediately fall. The two big questions for all citizens:

1) How soon would the crash come? 2) What new defenses could the Administration raise behind it?

Little Steel, with its proviso that wages could rise 15% but no more over their Jan. 1, 1941 levels, was never intended as a permanent holding point. As a delaying device, it has worked well. The rush of economic history has been so swift and powerful that Little Steel, at first hailed by labor and damned by management for the raises it permitted, now is praised by management and damned by labor.

Four events marked the doom of Little Steel last week:

> The Administration finally gave in to John L. Lewis' wage demands (see col. 3). Technically, giving the miners $1.50-a-day raise, plus travel time, did not violate the formula. But this sham legality did not obscure the important fact: now that John Lewis has breached the line, the Administration can no longer hold back wage demands by other unions.

> At its annual convention (see p. 18), C.I.O. resolved: the hell with Little Steel. President Phil Murray's 900,000 steelworkers started a big push this week for 15-c--an-hour increases. Other big C.I.O. unions will follow.

> Chairman William H. Davis of the War Labor Board, rock-solid defender of Little Steel, finally conceded that his prize formula was outmoded. In a monthly report to the Senate he said: "As the months flow by and the board continues to hold wages ... we become increasingly conscious of the fact that we are asking one segment of our society to do its part to protect all Americans from the ravages of inflation . . . [although] a similar obligation has not been placed as heavily upon . . . some of the other segments of this society."

> Franklin Roosevelt, knowing he could hold the line no longer, hit upon a shrewd new delaying action, to win him at least another two months' time, and then enable him to retreat gracefully. He appointed a five-man committee from WLB to investigate the cost of living and report to him in 60 days. The committee will unquestionably find that costs have gone up more than 15% since January 1941, for the best available Government estimate (Bureau of Labor Statistics) sets the rise at 22 1/2% and labor leaders argue that the true figure is even higher.

Once the committee reports, the nation will get another shot of "controlled inflation." The Administration will probably permit a general wage increase of 6 or 7%, will then try to hold that line with some new bulwark. The new wages will add nearly $5,000,000,000 to the nation's payroll, will give the cost of living another boost by raising purchasing power and manufacturing costs (e.g., the Lewis raise will force coal prices up an estimated 15-45-c- a ton).

For everyone in the U.S., there will be one more round of higher everything, before the lid is clamped on again.

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