 The world's most honored watch is Laun Jean. Laun Jean watches have won ten World's Fair Grand Prizes, twenty-eight gold medals and more honors for accuracy than any other timepiece. Laun Jean, the world's most honored watch, is made and guaranteed by the Laun Jean Whittenall Watch Company. It's time for the Laun Jean Chronoscope, a television journal of the vital issues of the hour, brought to you three times weekly. A presentation of the Laun Jean Whittenall Watch Company, maker of Laun Jean, the world's most honored watch, and Whittenall, a 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. Lawrence Pertig, columnist for the New York World Telegram and Sun, and other Strip's Howard newspapers, and Mr. William Bradford Huey, editor of the American Mercury. Our distinguished guest is the honorable Morris J. Tobin, United States Secretary of Labor. In this spontaneous and unrehearsed discussion, the opinions are necessarily those of the speakers. Mr. Tobin, I believe that you've been Secretary of Labor in the Truman Cabinet for about three years. Is that right, sir? That is correct, Mr. Huey. And you are from Massachusetts? Native born, lived there all my life. Tonight, sir, I think that our people would like some of your views on inflation. There is some of us in the country who are afraid that labor unions are partially responsible for our inflation. Now, what are your views on that, sir? Well, I would say that labor unions have been most cooperative in establishing a stabilization program in the country. Labor unions, the AF of L and the CIO, appeared before committees of Congress, recommending a controlled program that would stop an inflation. They agreed to accept wage stabilization, and I would say that if there is one segment of the economy that deserves praise for their cooperation and support of the program and the legislation for stabilization, that credit should go to the trade unionists of the country. Now, Mr. Tobin, the leading unions have escalator clauses. Their wages go up as costs go up. Now, when that happens and costs increase, prices go up again, and since there are only 16 million members of labor unions and only a few of those have escalator clauses, wouldn't you say that those who have the escalator clauses are profiting at the expense of those who haven't? Well, any program has to be approved by the wage stabilization board, and I would say that the formula that has been laid down by the wage stabilization board is one that will protect the country from inflation unless the cost of living advances beyond its present level. Well, Mr. Tobin, Mr. Defense Mobilizer, Charles E. Wilson, estimated himself that the defense effort will take 20% of our national product within the next year or so. Now, that means we'll all have to consume less. Now, if we all have to consume less, and if certain members of the strong labor unions get the same amount, won't the other suffer? It doesn't mean that we will have to consume less, Mr. Fertig. At the present time, about 7.5% of total national production is going into defense. It is estimated that the maximum, according to the figures I've seen, would be 20% as near enough, but the estimate I have is 18%. But we must remember that we had room for expansion within the economy, that we're going to have a substantial increase in steel production within a year and a half. It will be up 20%. We're having a tremendous expansion in aluminum production and most of it being produced in the standby facilities that were abandoned during the war. Rubber facilities and the like have been taken back, but by increased work week and the like with existing facilities America could superimpose upon the economy before Korea 12 to 15%, I would say. Mr. Tobin, no nation in the world has ever increased its production in one year. Anything like that figure, our normal increase would be at the rate of 2.5% a year. We might get up to 3 or 3.5%. But 18% or 20% is impossible, and if that is impossible, and we must consume less, and certainly if there's a hot war, we'll have to consume less, then escalator clauses are definitely inflationary because everybody has to pay more as wages go up and prices go up, and those few people profit at the expense of the others. Isn't that true? Well, let's take a look at some of the other factors that have contributed to inflation. Our wholesale commodity price index went up 56% in a period of about 3 months. And as a financial editor, you know that that is so... Who means the spot price, not all commodities? The overall spot price... The limited number of commodities. A very limited number, not all commodities. Quite substantial. It runs to about 50 items. Well, I think much less than that. And in a short period of time, that went up 50% with no controls of any kind whatsoever. Now, the increased productivity increases that you refer to, that the escalator clauses based upon increased productivity have been defended by Mr. Wilson, the president of General Motors, as not an inflationary factor because he expects through increased efficiency to have these small and they are trivial increases based on increased productivity amounting to a very small sum each year. He expects an efficiency in his operation to take up that increased cost. Mr. Secretary, to sum up on this point, sir, do you anticipate increased more inflation in the country? On the basis of the present stabilization law, unless it is amended as recommended by the president, I expect to see a decided increase in the inflation. We've had a slight decline last month, but we have not begun to feel the full impact of the defense program as has been pointed out by Mr. Fertig, and that's going to be constantly on the rise. It's going to create a greater purchasing power in the hands of more workers. There's going to be an increased work week. It's gradually going to go up the scale. And as a result, with this increased purchasing power, unless there are firm price controls, we are headed for inflation and the cost of living is going to go up decidedly. That's the next point I wanted to make, sir. You, as a matter of fact, you expect the cost of living to go up. Unless the cost of living under any circumstances, I think we will have a creeping inflation. But what I would like to avoid is a runaway inflation. And I believe that if the amendments that have been proposed by the president are enacted, that we have an excellent chance of stopping a runaway inflation, slowing it down to a creeping inflation. And you think that the labor unions are doing that part to forestall that inflation? I do think that they deserve the credit of the support and approval from the people of the country for their willingness to submit their own salaries and wages to a wage stabilization board. When they walk out of the last board, Mr. Tobin, because they weren't getting everything they thought they should get, they didn't really cooperate 100%, did they? In a democracy, cooperation works two ways. They did come back. They had strong differences as to the basis upon which the wage stabilization board should be set up. But remember, they did favor stabilization, whereas many other factors in the economy, many of the big business people of the country, many big business people did try to support a sound stabilization program. And yet some of the most powerful big business people of the country were against controls of any kind whatsoever. But you forget to state, Mr. Secretary, that the attitude of people who are against controls is simply this, that inflation is caused by an increased supply of money. And if the government, which is the only one who can increase the supply of money, increases it, there will be higher prices, whether there are price controls or not. Price controls never work when the government inflates the money supply. Mr. Secretary, at... No, I'd like to make the money in circulation increased all during the last war, but we had a most effective set of controls that resulted in but a slight creeping inflation during World War Number Two. As contrasted with World War Number One, when we had one of the wildest inflations that America has ever seen. World War Two, black markets and unavailability of materials and all that. Black markets came in the very latter end of the war. The black markets became rampant, I would say, after the termination of the European phase, up to the time that controls... And no might, Mr. Secretary. In November of 19... Let's be honest about meat. Meat was deliberately held off the market. In the month, the whole month of October of 1946, there was no question about it. You could travel from one end of America to the other and you couldn't find meat in the counters. I've heard that excuse before, Mr. Secretary, but it doesn't sound right to me. Well, I want to pack something else up to you. You couldn't get soap and the day after controls were taken off, there wasn't a star in America that didn't have all the soap that the American people wanted. Let me ask one last question. There was a great strike pull at that time and it was most unfortunate that the American people were most unfortunate and created a great inflation. There were tens of thousands of people involved in the meat process, they all didn't enter into a collusion and strike and the President himself, President Truman himself, was forced to say that price controls don't work on meat and they don't work on anything else when you need them, Mr. Secretary. There was one of the greatest strikes ever perpetrated by big business in America when they were bound that they were going to get controls off and they did hold off commodity after commodity that did appear on the shelves of American grocery stores the moment that the controls were taken off and that was in the month of October 19, November 1946. Well, thank you so much, sir, for being with us this evening. The editorial board for this edition of the Laun Jean Chronoscope was Mr. Lawrence Fretig and the Mr. William Bradford Huey. Our distinguished guest was the Honorable Morris J. Tobin, United States Secretary of Labor. On a clear night, if you lift your eyes to the starved jeweled heavens, you share the feelings of a privileged man who stood in awe of this wondrous display and sought to read his destiny and its life. It's a fact that the ancient astrologers were the first to stimulate interest in the art of accurate timekeeping. We at Laun Jean are grateful that the founders of the Laun Jean factory elected to make watches of only the finest quality and that the generation preceding ours faithfully carried on the principles of the founders. In 85 years of watchmaking, Laun Jean has acquired not only reputation and honor, but the fine watchmaking skills that come only from generations of experience. The Laun Jean watches now being shown by fine jewelers throughout the world reflect in every detail of performance and beauty the perfection that Laun Jean watches have attained which explains why Laun Jean alone among the world's fine watches has won ten world's fair grand prizes, twenty-eight gold medal awards and equally important highest honors for accuracy from the great government observatories. Throughout the world, no other name on a watch means so much as Laun Jean, the world's most honored watch. Premier product of the Laun Jean Wittner Watch Company since 1866, maker of watches of the highest character. This is Frank Knight reminding you that beginning this week our program is brought to you three times weekly, Monday, Wednesday and Friday. So won't you join us Friday evening at this same time for the Laun Jean Chronoscope, a television journal of the important issues of the hour broadcast on behalf of Laun Jean, the world's most honored watch and Wittner, distinguished companion for the world on a Laun Jean. Sold and serviced from coast to coast by more than 4,000 leading jewelers who proudly display the emblem agency for Laun Jean Wittner watches. This is the CBS television network.