Memorandum from Harold L. Enarson to John Steelman

January 9. 1952 Memorandum to Mr. Steelman From: Harold L. Enarson Subject: Next Steps in the Steel Dispute Now that the labor dispute in the steel industry is before the Wage Stabilization Board, and the strike is postponed 45 days, there is a tendency to relax and simply await developments. This would be dangerous since as yet the White House has no known strategy by which to counter the assault by the steel companies against the price line, or specifically, the industry earnings standard of the Office of Price Stabilization. The wage aspects of the "steel case" are by no means the heart of the crisis. The clamor about "puncturing the wage ceiling" is uninformed. There is no "ceiling. Actually the Board has a series of policies, some of which would allow increases in the present case. The Board has not yet developed a complete policy on "productivity" and presumably the productivity factor will be recognized in the Board's recommendations. The disputes in steel are extremely complicated both as to non-economic as well as economic issues. Concessions made on the union shop and other issues could pave the way for a relatively low general wage settlement recommendation which the companies would be inclined to accepte- if they could get their way on the price side. In short there is good reason to believe that the Board can handle the present dispute without doing violence to the wage stabilization program--t though the companies and the press will charge the contrary regardless of what the Board recommends. But the recommendations by the Board, even if privately acceptable to the companies as well as the union, will not resolve the labor dispute. After the Board has reported, the real nature of the steel crisis will be laid bare. If the companies persist in their present attitude and policies, they will refuse to sign a contract with the union until they win substantial price concessions from the government. The strike against the companies was inevitable since the companies would engage in no bargaining whatsoever. The concealed strike- and the one which should give us the most concern==is the strike of the steel industry against the OPS industry earnings standard. The steel industry feels it is in a strong bargaining position; it will probably settle the labor dispute only when the government yields to its price demands. Thus the real crisis comes as a test of price policy. The companies have made no secret of their position and not much of a secret of their expectations. In a typewritten statement, couched in the third person, the companies told Mr. Ching the "granting of any further wage increases to their employees at this time would be contrary to the best interests of the workers, the companies and the nation as a whole, because it would set off another round of ruinous inflation which would injure everyone" and that "any further increase in costs in the steel industry would necessarily require an equivalent increase in steel prices.' (Underlining supplied) The key word is equivalent; the companies bar gaining demand is for a completé pass-through