Memorandum on Steel Dispute

MEMORANDUM OBJECTIVE: 1. If possible, reconeile and maintain both of the following: (a) Settlement of the labor dispute without a strike. (b) Continuation of principle of cost absorption in adjust- menta under price control. 2. If not possible to maintain both, then develop all the informa- tion and feel of the situation necessary to a sound judgment about which way to give, at the last decisive moment. SUGGESTED OUTLINE OF ACTION: 1. Dispel any steel companies' ideas (a) that they can gain advantage by playing Wilson, Putnam, Arnall, and White House off against each other, or (b) that they can count on Wilson to get them the price increases they want. This means setting up a single Administration "command post" or "negotiating tean" and letting both labor and management know who and what it is. All the present open doors must either be closed, or must lead into the same room. Under all circunstances, the best available candidate to lead the team is John Steelman. Associated with him openly or covertly could be Arnall and an outsider, perhaps Dave Cole, to do intensive casing and contact work with the parties. Arnall is needed on the tean because it's his OX that may be gored, because he controls the technical experts, because he has savvy, and because if we're to keep him, come what may, he ought to be in on all the plays that lead to the end of the line. Cole would be useful to take the direct heat and detail contact work off Steelnan-also because he is highly regarded by and very well acquainted wi th both management and labor in this industry, and knows how to work for the President. 2. Dispel any steel company ideas that Government wants peace at any price. Create a tmosphere of uncertainty about Government's willingness to take a strike and Government's intentions if there is one. People should start scurrying around drawing up seigure orders and bills and checking them all over town. Grave looks and mutters in the direc- tion of the reliable labor reporters. Attorney General confers with someone about seizure. Memories of Krug contract with Lewis in 1947 should be revived, or companies should have reminders that retroactive pay increase goes on