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Jack Ranger

Tapping the Wall Street Wire

(26 May 1947)

From Labor Action, Vol. 11 No. 21, 26 May 1947, p. 2.
Transcribed & marked up by Einde O’Callaghan for the Encyclopaedia of Trotskyism On-Line (ETOL).

State of the Economy

President Truman has no doubt gained his limited objective of boosting his popularity by conducting the sham battle against high prices. But the battle was and is a sham, and the kickback is going to be a stunner. After all the ballyhoo, there have been a few scattered puny decreases, but these have been balanced by increases in other’ commodities. Everything is the same or worse, and here are the facts.

Corporation profits climbed to on annual rate of $15 billion in 1947’s first quarter, according to the Commerce Department. That’s $3 billion above 1946 profits. The N.Y. Stock Exchange reported, May 17, that 32.2 companies reporting for the first 1947 quarter earned a net of $707 millions, up 112.9 per cent from the corresponding 1946 quarter. Machinery and metals companies were, up 247,5 per cent; steel and iron, almost as much; railroads, up 171.3 per cent; amusement, up 155.6 per cent, etc.

As to the widely heralded “10 per cent off” sales in the small towns, those were largely devices to pawn off shoddy merchandise on the public. The “Newburyport” plan was dropped in several areas after it fizzled. The South Side Chicago Merchants Association tried the plan for a few days. Sales jumped 50 per cent the first few days, then quickly dropped below normal. In Hingham, Mass., the plan was abolished after local merchants reported “no appreciable increase” in business volume.

In the past seven weeks, the N.Y. Journal of Commerce weekly wholesale price index has been virtually stable, fluctuating within the narrow range of 1.3 points. Of the 110 commodities used, 52 were unchanged, 26 moved lower—and 32 moved higher.

What is more, it is the important commodities, like food and steel, which are not budging. Let’s listen to the authentic voices of the masters in these industries:

Clarence Francis, General Foods Corporation chairman, says housewives shouldn’t expect a sharp break in prices. Profit for his company’s first quarter this year was equal to 98 cents a share (after plunking aside, a million for contingency reserves), compared with first quarter profit in 1946 of 83 cents, said Francis smugly. While asserting that a downward trend in food prices would be “a healthy thing” for the economy, Francis shows no disposition to play doctor. “We are working on the smallest over-all gross margins in our history,” he says.

Benjamin F. Fairless, president, U.S. Steel Corporation, purses his lips and says his company is giving no consideration at this time to price reductions. The Journal of Commerce backs that view. “Current expectations are,” it reports, “that the steel industry will resist attempts to have it cut quotations notwithstanding that first quarter earnings reports show highly satisfactory results.”

You see, the demand for steel is still far greater than the supply. Mr. Fairless and his colleagues are capitalists, and quite properly therefore believe in gettin’ while the gettin’ is good. They don’t give a hoot in hell for Truman’s demagogy.

And don’t count on any significant reductions on manufactured goods. The Guaranty Trust Co. of New York in its current issue reports that the prices of raw materials are “too high” for finished goods to come down. The Guaranty voices the complain that one hears more and more from capital and industry—namely, that it is food prices that are too high. This is the traditional viewpoint of industrial capital, which doesn’t mind lower food prices, because this means lower living costs for the workers, and less pressure on the factory-owners for higher wages. At the same time, the less the workers spend on food, the more they will have to spend on the products of industry.

But food shows no signs of coming down. In fact, and this is the explosive factor in the situation, food piay very easily make the sharpest advances in the next year. Why? The foreign situation. The workers’ food riots in Germany the other day are the tip-off that the crisis in Europe is coming swiftly to a head. Food, and yet more food, must be shipped across to remove the sharp edge of revolt from Europe’s millions. Food is Wall Street’s weapon against revolt abroad, and Wall Street will use that weapon to the full. Here or there a food item, in temporary over-supply, may be cut in price, but do not look for any significant drop in food prices for some time.

Returning to the industrial viewpoint, here is the National Industrial Conference Board, crying that the real cancer in the present price structure is “the extreme imbalance” within the price level rather than the general level of prices. Translated, this means that Big Business believes ITS profits are about right, but that food prices are too high.

“A pair of shoes was equivalent, to 18 pounds of butter in 1939, and 16 pounds in 1941,” the NICB report states. “Today it purchases only 10 pounds. A factory worker receives in exchange for his dollar only 39 per cent as much farm produce as he did in 1939–1941, or only 54 per cent as much as in 1926 ... Should the government continue its support of high farm prices or aid speculative movements through a repetition of its disorderly purchase program in the first quarter of 1947, the spread between farm and factory prices would widen rather than narrow.”

Economic Notes

Well, look at foxy Joe trying to chisel Atlantic passengers off the competition. The Soviet State Fleet has announced it will inaugurate this month a regular passenger service between Odessa and New York, and at prices far below those fixed by the North Atlantic Passenger Conference. And between New York and Mediterranean ports, the Russian state fleet will charge only 2,000 rubles—which works out at about $20, compared with $160 to $360 on other vessels. That is indeed low-cost transportation ...

Trade union secretaries, take note: The three west coast states of California, Washington and Oregon are expected to have 5,800,000 workers in the labor market by 1950, an increase of 1,500,000, or 36 per cent, from 1940, according to the Federal Bureau of Labor Statistics.

Argentina is following the example of South Africa in industrialization and has completed contracts for its largest peacetime project, involving $100,000,000 worth of plant construction machinery, and equipment. That country will construct a completely integrated steel mill on the River Plate at San Nicolas, northwest of Buenos Aires, to be in operation early in 1950. The project will be financed under Argentina’s recently announced five-year plan, with the profits garnered by the government from the spread between what it pays the nation’s farmers for meat and grain, and what it sells those commodities for in the world market. Our State Department bellows at the rooking the Argentinian farmers are taking. Well, how do the Washingtonians think this country was industrialized if not at the expense of American farmers? ... American textile exporters are already worried that MacArthur is being too generous with the Japanese by proposing to let Japan operate 4,000,000 spindles. Before the war Japan had 12,000,000 spindles.

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