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Jack Ranger

Tapping the Wall Street Wire

Behind Outcry About High Prices

(14 April 1947)

From Labor Action, Vol. 11 No. 15, 14 April 1947, pp. 2.
Transcribed & marked up by Einde O’Callaghan for the Encyclopaedia of Trotskyism On-Line (ETOL).

In the past few days a number of surprising persons have suddenly started to cry out publicly that prices are too high and must come down. From President Truman to the National Association of Manufacturers, we hear this cry. What is behind it: (1) It is a psychological offensive against the union movement, now negotiating new wage agreements; (2) prices have so far outstripped wages that even the meatheads among the capitalists can see we are headed for a depression, unless drastic steps are taken.

It is not the unwillingness of the people to pay the high prices asked that is responsible for the current drop in retail sales, states the New York Journal of Commerce in a recent discussion of the state of the economy

“It can be statistically demonstrated that national income at present is insufficient to support the prices asked for all the goods that are being, produced,” says the Journal. “A national income of approximately $224,000,000,000 rather than the present rate of around $185,000,000,000 would be necessary to move the present industrial production into consumption at the present price level.”

A stronger argument for the CIO demand for higher wages WITHOUT price increases could scarcely be conceived. The very paper that denounced the CIO Nathan report for advancing the demand for wage increases without price increases now acknowledges that "prices are approximately twenty-one per cent too high on an average relative to the current levels of national income and industrial production.”

“The relationship between the value of production and national income in the first quarter of 1947 closely resembles the relationship in 1920 (the year of a sharp economic crisis – J.R.),” the paper says. “Fundamentally, conditions now are very similar to those in 1920 with new peacetime highs for industrial production, with price inflation, and with national income insufficient to fully absorb production at the price level ... The conclusion is inescapable that a correction of the imbalance between national income, prices, and production will occur in the not far distant future. Even if government spending for relief and support of certain countries abroad attains the maximum figure mentioned anywhere of $5 billion annually, it still will be far from sufficient to offset the indicated deficit in national income.”

Indeed, if prices remain at their present level, the government would have to hand out, not $5 billion but $39 BILLION, to provide the necessary additional purchasing power to absorb the goods being produced. Obviously, the government won't do it. The union demand for price increases without wage increases, and union committees to enforce the demand by inspecting the books of the companies, is just what the doctor ordered.


The American Public Welfare Association, in the current issue of Public Welfare, states that continued inflation will cast many marginal income families on relief once their savings are exhausted. Even in 1945, before inflation really got started, three U.S. families out of ten had to live on less than a “marginal budget,” reports the magazine. It estimates that at least one-third of the families living on sub-maintenance incomes already are receiving some form of public assistance, and that more severe effects are expected when more families with “marginal income” – below $2,000 – consume their savings. In 1945, 19 per cent of the families in the less-than-$1,000 income bracket were spending savings to pay living costs, while 21 per cent of the families in the $l,000–$2,000 bracket were doing likewise.

Women and Jobs

One of the sure signs that times are tough lies-in the return of women workers to the job market. Rosie the riveter is looking for a job again, as the Wall Street Journal observed. In February there were 100,000 more women looking for jobs than in the previous month. “Usually it’s quite. obvious that their husbands just can’t make both ends meet,” said the manager of the Connecticut employment service. In that state, 219,000 women are employed in non-agricultural jobs, close to the wartime peak and more than double pre-war. In the nation, employment of women totaled 15.4 million in February, some 4.2 million above the total for 1940, the last full year of “peace.”

The Census Bureau, noting that wholesalers’ inventories had climbed another four per cent in February, said that many pipelines to retailers were filling up. “At the end of February, two months’ supply of merchandise on hand was quite common, even among such fast moving lines as groceries,” said the bureau. While more goods are available, less are being sold. Sales decreases in February over January were reported for 28 out of 36 businesses checked, more than three-fourths.

Economic Notes

Charge, accounts in the nation’s stores declined $162 million in February, to a total of $2.6 billion. Credit for installment buying (other than automobiles) declined $9 million, to a total of $977 million. Credit given for buying automobiles on the installment plan increased $44 million, to a total of $625 million, reports the Federal Reserve Board ... A Wall Street Journal compilation of 1946 earnings reported by 340 companies in 21 different industries gives a general picture of the profiteering now rampant. Of the groups analyzed, textiles led the way, increasing its profits 219 per cent over 1945. Here are the profit increases for other industries, 1946 over 1945: Pulp and paper products, 163 per cent; distillers, 145 per cent; rubber and rubber goods, 104 per cent; retail stores and mail order, 100 per cent; food products, packing houses, 79 per cent; building equipment and supplies, 74 per cent; iron and steel companies, 54 per cent, etc., etc. Only three industries showed decreases from war-swollen 1945 profits: Aircraft, auto and electrical equipment manufacturers. First industry to feel the impact of unemployment is the very industry that has been guilty of the most flagrant profiteering, the textile industry. At least 14 woolen mills in New England have closed down, and 22 more are working only part-time.

The mills that are hard hit are those making woolens; there is still a good market for worsteds, a better-quality cloth ... Despite Truman’s whoopla about the need for lower prices, a nationwide industrial survey by the Wall Street Journal showed that “most of industry is not primed for price slashing.” The aluminum, steel, lumber, electric supplies, building materials and coal industries say “Nothing doing.”

Business Notes

The Chicago Journal of Commerce recently called editorial attention to a secret survey of manufacturers on the question of prices. “Only two per cent of the respondents feel that their products are priced too low,” reported the Journal. “Forty-four per cent believe that the prices are too high. Sixty-one per cent report higher prices since ceilings were removed in November. Zero per cent report lower prices.” ... Business inventories continue inexorably to rise, as high prices drive the masses out of the marketplace. The book value of manufacturer inventories rose another $385 in January, the Census Bureau reports. The increase, which set a new high of $20.7 billion for the value of inventories at the end of January, was about equally divided between the durable and non-durable industries. Goods in process rose nearly $200 million. Finished goods inventories rose $150 million, the first rise since October. Shipments of non-durable goods by manufacturers to their customers were up 33 per cent from a year ago. But new orders booked by manufacturers were only 14 per cent ahead of January, 1946.

The New York Journal of Commerce, surveying the situation, reports that “shipments by manufacturers are running ahead of new orders. Inventories are increasing faster than new orders. Obviously, this relationship cannot long continue. If new orders do not turn up very soon, production and shipments will have to be curtailed, for otherwise stocks will pile up. And new orders are not going to turn up with retail sales in smaller volume than a year ago.” While department store sales in February were up a little less than eight per cent over a year ago, since the retail price level was 20 per pent higher, unit sales were smaller this year. “The evidence accumulates that a recession in the non-durable goods industries is at hand,” reports that paper ... January department store sales were up 14 per cent, but stocks were up 56 per cent higher than at the end of January 1946.

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