 time for the Laun Jean Chronoscope, a television journal of the important issues of the hour brought to you every Monday, Wednesday and Friday. A presentation of the Laun Jean Wittner Watch Company, maker of Laun Jean, the world's most honored watch, and Wittner, distinguished companion to the world honored Laun Jean. Good evening. This is Frank Knight. May I introduce our co-editors for this edition of the Laun Jean Chronoscope. Mr. William Bradford Huey, editor of the American Mercury, and Mr. Donald I. Rogers, an editor of the New York Herald Tribune. Our distinguished guest for this evening is Dr. Jules Backman, professor of economics, New York University. The opinions expressed are necessarily those of the speakers. Dr. Backman is one of the nation's leading experts on wages and prices and has a former consultant of the Office of Price Stabilization. We'd like to explore some of your theories about the present state of the nation's business and the nation's economy. Can you tell me, sir, is it true as we read in the papers that we're in a state of recession at the present time? Well, I think that depends on what you're looking at. The answer is yes if you're talking about the civilian economy, that is automobiles, building, textiles, apparel. The answer is no if you're talking about war industries because war production continues to expand. Well, how about we people who work in neither the heavy industries nor the war industries? Well, you fellows in the financial field, writers are doing just about all right. There's been no special recession or expansion there. Are you telling our audience, sir, that if it were not for war industry now and the demands of the rearmament program that the country might well be in a serious recession? Well, I don't know how serious it would be, Mr. Huey, but I am convinced that we'd have a considerably large amount of unemployment. We'd have lower prices, we'd have less inflation, and we'd have less demand generally. We'd have a condition which wouldn't look as good as it does today. Now, you're saying that in the war industries, things are holding well. Where is business worse in the country now? Well, I guess we get the most complaints and justifiably from the textile industry and from apparel. The television and appliance industry hasn't been doing too well these days. You know, if you walk into one of these appliance stores, it's almost impossible to get out at any price. Well, very recently, they removed the credit restrictions. They removed regulation W, which means that anyone can go in and charge things and pay for them over a longer period of time. Do you think that that will help the television and appliance industry and perhaps the apparel industry as well? I think it'll help the appliance industry a little. But the real reason why appliances have not been selling is that the fellow who bought himself a television set a year ago, instead of waiting until he thought he could afford it in 1952, just doesn't buy it now. In other words, when the war broke out in Korea, many people rushed out to buy. Scare buying. Scare buying. And part of the problem we faced is that people have not been undertaking that type of buying now, and they haven't been doing their normal buying. Are the retailers paying now for what they reaped back right after the Korean War? Yes, they are. And I think if you look at the figures, you'll find that the extra amount of selling at that time is just about equal to the smaller amount of selling now. It's sort of cancel it. It's sort of cancel out. The public demand for goods is now going down. Is that correct, sir? I think the public demand for goods has gone down a little. Whether it's going down at this moment is difficult to say. It seems to be sort of stabilizing at a lower level than we had a year ago. And our audience is particularly interested in prices. Now what about prices? Are they on their way down? Well, thus far, we've had some good hints as to what may happen. Prices at retail usually are the last to fall. But I'm happy to say that at wholesale, they have declined. And we've already had a considerable number of announcements of lower prices for appliances for clothing. I guess about everything except fresh fruits and vegetable and rents. Now, you say you're happy to say that, sir. In other words, do you regard it as a good omen? Is good for the American people for prices to come down? Well, Mr. Huey, when you see what the dollar buys, any step in the direction of buying a little bit more is a good omen. In other words, sir, you feel that it is perhaps a good sign if the wholesaler and the retailer do not make so much profit. It's not only a question of how much profit they make. It's a question of what we have to pay when we walk into a store. Now, if they sell a large volume of goods, they can make money even though they don't make as much on each unit. Call that turnover. Now, in this period where the war industries are holding, but where prices are coming down, who are the best paid people, the best paid workers in the American economy now? Well, the best paid workers generally are coal workers, steel workers, construction workers, automobile workers. Are they generally run anywhere from 25 to 50 cents above the average for all manufacturing industries? Aren't these the very workers who create most of the labor strife looking for more higher increases in pay? They're usually in the forefront. Well, now, why is that, sir? Why are these industries, are they to blame for it? Who's to blame for the fact that they continually seek higher wages? Well, many of these workers are in industries which are essential to the war effort. And when something is scarce, as laborers in those industries, you go out and try and get it. In other words, these are the people that are in the best bargaining position to get higher wages. Well, yes, look at the contrast between the textile workers who are fighting to stay in the same place and say steel workers who are fighting the jump way ahead. The textile industry isn't doing too well. The steel industry moves along with capacity. In other words, it's an effort on the part of the steel industry to take advantage of the war situation to get a higher wage scale for themselves. You mean the steel workers? Yes, I think that that's the case when there's a shortage of workers, they try to get more when there's a surplus. They just don't get more. For example, in 1949, they didn't get wage increases largely because business conditions were sort of settling down. Supply and demand working on the labor side. Very definitely. Well, don't you feel, however, that the textile in the textile industry, particularly, they're just waiting for the steel issue to be settled? Well, it's difficult to talk for the textile industry, but from what I've been able to find out about it, they're hoping they can get the same contracts they had before because business has been pretty bad in that area. Now, Dr. Backman, our audience has heard a great many experts on the steel controversy. Now, some of them said they were speaking for the people, some for the government. We've had this enable spokesman for industry. You perhaps could qualify as being objective. Now, can you how would you simplify the present steel controversy for our audience? Well, I'd say one thing we'd want to know is what is the economic position of the steel workers? How much money are they making compared with other workers? How much of their wages increase? Well, that's one aspect. The other question is that how much have their wages increased recently? Well, now we've had Mr. Arnold and others have talked about the catch up that it was necessary for the steel industry now to precipitate a crisis so that they could catch up. Now, what are they catching up to? Well, that's something I have not been able to find out. If you look at the figures, they look something like this, the steel workers run in the top 10 or 15 percent of workers in terms of wages in the economy. If you go back to almost any date you want, go back to 1939, they made 20 cents an hour more than all manufacturing workers go back to the end of the war, they made 20 cents an hour more, go back to the beginning of 1950 before Korea, they made 24 cents more. You look at the figures today, they're making 24 cents more. I think what happened is this, when the steel industry and the workers agreed to an increase last year, temporarily steel workers got up to a spread of as much as 33 cents. Then when the other workers caught up to steel, they came back to this 24 cent spread. And that's where they are today. And if steel workers get an increase, I think it's pretty clear as to what will happen with other workers. The others will go ahead with them. Well, John L. Lewis seems to be waiting, aluminum retailers, you can go right down the line. All right. Now, when Mr. Ellis Arnold, the economic stabilizer was on this program, he said that if the steel industry was given its price increases, it would cost the average American family about $400 a year. Because the prices of other metals and other services, other supplies would go up along with steel, which perhaps was logical reasoning. But we never did explore the other side. Suppose the steel workers are given their wage increases. What will that cost the American family per year? Whether the steel industry gets a price increase or not. Americans generally are going to pay for the steel wage increase. If the steel industry gets no price increase, it will mean that the tax collections of the government will fall. And if that increase spreads throughout the economy, that fall in tax collections will run over $5 billion a year. And I might add that that runs well over $100 for every family in the country. In other words, every family in the country will pay over $100 a year for the steel wage increases. They'll have to pay it either in a form of higher taxes. If the government must collect more taxes that will let me make this point clear. If the government pays for this wage increase out of tax revenues, whether we get a tax increase or not, the American people will pay because the fundamental, the basic source of inflation, this business of somebody reaching his hand into your pocket and taking something out is the government spending more than it takes in. And the major effect of no price increase in steel will be that the government will spend even more than it expects to in relationship to what it takes in. All right. In the face of all this, Mr. Backman, Dr. Backman, we are decontrolling. We are removing controls from our economy. We are allowing credit controls to be removed. We are allowing price controls to be removed. We are permitting steel to be used as much as people want to use it, aluminum, so on and so forth. Do you find any significance in this trend? Well, it's interesting to me to find the administration going to Congress and saying they need a tight price control law at a time when they are lifting controls and at a time when they are getting rid of credit controls, which are really basic to the whole problem of price rises and inflation. Of course, it's an election year. That might have something to do with it. Well, Dr. Backman, I'm very much sure I'm sure that our audience very much appreciate your views and thank you, sir, for being with us. The editorial board for this edition of the Lawn Jean Chronoscope was Mr. William Bradford Huey and Mr. Donald I. Rogers. Our distinguished guest was Dr. Jules Backman, Professor of Economics of New York University. It seems like a nice idea. On the wedding day, the bride and groom give watches to each other. If you are planning a wedding, you may be glad to know that recognizing the social acceptance of this custom, Lawn Jean has produced an exciting series of duets. Exquisite Lawn Jean watches in matching styles. Each bride's watch, a diminutive replica of the groom's watch. Exchanging watches is likewise a growing custom between husbands and wives for anniversary gifts. To honor the bride and groom, to honor the graduate of the class of 1952, to honor your husband or wife on your anniversary, give a Lawn Jean the world's most honored watch. 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