(3 of 3)
BLOUGH argues that the dollars corporations earn as profits have remained virtually stable for ten years, while wages have more than doubled throughout U.S. industry. In steel alone, employment costs have jumped at the compound rate of 7.9% each year since 1940. The industry still made a profit of 6.3% on its sales last year (an even better 8.7% for U.S. Steel), but Blough argues that profits still fall far short of the cash needed for expansion. U.S. Steel alone had to borrow $600 million in the last five years. As for inflation, Blough considers congressional suggestions of wage and price controls "sheer nonsense." Nor does he agree with McDonald's argument that the best way to fight inflation is to cut prices, starting with steel. He cites the fact that U.S. Steel cut prices $1.25 a ton in 1948 when inflation had pushed living costs up 14.5% the year before. Costs kept climbing so fast that the price cut had to be canceled within three months. Says Blough: "The problem isn't prices; it's costs."
To Blough, the issue is vital in view of the global challenge facing U.S. industry. Says he: "We are only in the first skirmishes of a battle of production that is destined to rage for many decades. Whether or not America emerges triumphant depends in large measure on the virility of American industry. And industry's strength depends directly on our ability to win the understanding of Government, of labor leaders, of investors in a national effort to encourage the investment of capital necessary to develop and acquire the finest tools of production on earth."