|82. Radio and Television Address to the American People on the Need for Government Operation of the Steel Mills|
April 8, 1952|
[ Broadcast from the White House at 10:30 p.m. ]
My fellow Americans:
Tonight, our country faces a grave danger. We are faced by the possibility that at midnight tonight the steel industry will be shut down. This must not happen.
Steel is our key industry. It is vital to the defense effort. It is vital to peace.
We do not have a stockpile of the kinds of steel we need for defense. Steel is flowing directly from the plants that make it into defense production.
If steel production stops, we will have to stop making the shells and bombs that are going directly to our soldiers at the front in Korea. If steel production stops, we will have to cut down and delay the atomic energy program. If steel production stops, it won't be long before we have to stop making engines for the Air force planes.
These would be the immediate effects if 'the steel mills close down. A prolonged shutdown would bring defense production to a halt and throw our domestic economy into chaos.
These are not normal times. These are times of crisis. We have been working and fighting to prevent the outbreak of world war. So far we have succeeded. The most important element in this successful struggle has been our defense program. If that is stopped, the situation can change overnight.
All around the world, we face the threat of military action by the forces of aggression. Our growing strength is holding these forces in check. If our strength fails, these forces may break out in renewed violence and bloodshed.
Our national security and our chances for peace depend on our defense production. Our defense production depends on steel.
As your President, I have to think about the effects that a steel shutdown here would have all over the world.
I have to think about our soldiers in Korea, facing the Chinese Communists, and about our soldiers and allies in Europe, confronted by the military power massed behind the Iron Curtain. I have to think of the danger to our security if we are forced, for lack of steel, to cut down on our atomic energy program.
I have no doubt that if our defense program fails, the danger of war, the possibility of hostile attack, grows that much greater.
I would not be faithful to my responsibilities as President if I did not use every effort to keep this from happening.
With American troops facing the enemy on the field of battle, I would not be living up to my oath of office if I failed to do whatever is required to provide them with the weapons and ammunitions they need for their survival.
Therefore, I am taking two actions tonight. First, I am directing the Secretary of Commerce to take possession of the steel mills, and to keep them operating.
Second, I am directing the Acting Director of Defense Mobilization to get the representatives of the steel companies and the steelworkers down here to Washington at the earliest possible date in a renewed effort to get them to settle their dispute.
I am taking these measures because it is the only way to prevent a shutdown and to keep steel production rolling. It is also my hope that they will help bring about a quick settlement of the dispute.
I want you to understand clearly why these measures are necessary, and how this situation in the steel industry came about.
In normal times--if we were not in a national emergency--this dispute might not have arisen. In normal times, unions are entitled to whatever wages they can get by bargaining, and companies are entitled to whatever prices they can get in a competitive market.
But today, this is different. There are limitations on what wages employees can get, and there are limitations on what prices employers can charge. We must have these limitations to prevent a wage-price spiral that would send prices through the roof, and wreck our economy and our defense program.
For more than a year we have prevented any such runaway inflation. We have done it by having rules that are fair to everyone-that require everyone to sacrifice some of his own interests to the national interest. These rules have been laid down under laws enacted by Congress, and they are applied by fair, impartial Government boards and agencies.
These rules have been applied in this steel case. They have been applied to the union, and they have been applied to the companies. The union has accepted these rules. The companies have not accepted them. The companies insist that they must have price increases that are out of line with the stabilization rules. The companies have said that unless they can get those increases they will not settle with the union. The companies have said, in short, that unless they can have what they want, the steel industry will shut down. That is the plain, unvarnished fact of the matter.
Let me tell you how this situation came about.
The steel companies and the steelworkers union had a contract that ran until December 31, 1951.
On November 1, 1951, the union gave notice that in view of the higher cost of living and the wage increases already received by workers in other industries, the steelworkers wanted higher wages and better working conditions in their new contract for 1952.
The steel companies met with the union but the companies never really bargained. The companies all took the same position. They said there should be no changes in wages and working conditions--in spite of the fact that there had been substantial changes in many other industries, and in spite of the fact that the steel industry is making very high profits.
No progress was made, and a strike was threatened last December 31.
Before that happened, I sent the case to the Wage Stabilization Board. I asked them to investigate the facts and recommend a settlement that would be fair to both parties, and would also be in accordance with our rules for preventing inflation. Meanwhile, I asked both sides to keep the steel industry operating, and they did.
The Wage Board went into the facts very thoroughly. About 3 weeks ago, on March 20, the Wage Board recommended certain wage increases and certain changes in working conditions.
The Wage Board's recommendations were less than the union thought they ought to have. Nevertheless, the union accepted them as a basis for settlement.
There has been a lot of propaganda to the effect that the recommendations of the Wage Board were too high, that they would touch off a new round of wage increases, and that a new wage-price spiral would set in.
The facts are to the contrary. When you look into the matter, you find that the Wage Board's recommendations were fair and reasonable. They were entirely consistent with what has been allowed in other industries over the past 18 months. They are in accord with sound stabilization policies.
Under these recommendations, the steelworkers would simply be catching up with what workers in other major industries are already receiving.
The steelworkers have had no adjustment in their wages since December 1, 1950. Since that time the cost of living has risen, and workers in such industries as automobiles, rubber, electrical equipment, and meatpacking have received increases ranging from 13 to 17 cents an hour.
In the steel case the Wage Board recommended a general wage increase averaging 13 1/4 cents an hour in 1952. Obviously, this sets no new pattern and breaks no ceiling. It simply permits the steelworkers to catch up to what workers in other industries have already received.
The Board also recommended a 2 1/2 cent wage increase to go into effect next January, if the union would agree to an 18-month contract. In addition, the Board recommended certain other provisions concerning such matters as paid holidays and extra pay for Sunday work. The steel industry has been lagging behind other industries in these matters, and the improvements suggested by the Board are moderate.
When you look at the facts, instead of the propaganda, it is perfectly plain that the Wage Board's recommendations in the steel case do provide a fair and reasonable basis for reaching a settlement on a new management-labor contract--a settlement that is consistent with our present stabilization program. Of course, neither party can ever get everything it thinks it deserves; and, certainly, the parties should bargain out the details. But in the present circumstances, both the companies and the union owe it to the American people to use these recommendations as a basis for reaching a settlement.
The fact of the matter is that the settlement proposed by the Board is fair to both parties and to the public interest. And what's more, I think the steel companies know it. They can read figures just as well as anybody else--just as well as I can or anybody in the business. I think they realize that the Board's recommendations on wages are reasonable, and they are raising all this hullabaloo in an attempt to force the Government to give them a big boost in prices.
Now, what about the price side? Is it true that the steel companies need a big increase in prices in order to be able to raise wages? Here are the facts.
Steel industry profits are now running at the rate of about $2½ billion a year. The steel companies are now making a profit of about $19.50 on every ton of steel they produce. On top of that, they can get a price increase of close to $3 a ton under the Capehart amendment to the price control law. They don't need this, but we are going to have to give it to them, because the Capehart amendment requires it.
Now add this to the $19.50 a ton they are already making and you have profits of better than $22 a ton.
Now, what would the Wage Board's recommendations do to steel profits? To hear the steel companies talk, you would think the wage increase recommended by the Board would wipe out their profits altogether. Well, the fact of the matter is that if all the recommendations of the Wage Board were put into effect, they would cost the industry about $4 or $5 a ton.
In other words, if the steel companies absorbed every penny of the wage increase, they would still be making profits of $17 or $18 a ton on every ton of steel they made.
Now, a profit of $17 or $18 a ton for steel is extremely high. During 1947, 1948, and 1949, the 3 years before the Korean outbreak, steel profits averaged a little better than $11 a ton. The companies could absorb this wage increase entirely out of profits, and still be making higher profits than they made in the 3 prosperous years before Korea.
The plain fact is, though most people don't realize it, the steel industry has never been so profitable as it is today--at least not since the "profiteering" days of World War I.
And yet, in the face of these facts, the steel companies are now saying they ought to have a price increase of $12 a ton, giving them a profit of $26 or $27 a ton. That's about the most outrageous thing I ever heard of. They not only want to raise their prices to cover any wage increase; they want to double their money on the deal.
Suppose we were to yield to these demands. Suppose we broke our price control rules, and gave the steel companies a big price increase. That would be a terrible blow to the stability of the economy of the United States of America.
A big boost in steel prices would raise the prices of other things all up and down the line. Sooner or later, prices of all the products that use steel would go up--tanks and trucks and buildings, automobiles and vacuum cleaners and refrigerators, right on down to canned goods and egg beaters.
But even worse than this, if we broke our price control rules for steel, I don't see how we could keep them for any other industry.
There are plenty of other industries that would like to have big price increases. Our price control officials meet every day with industries that want to raise their prices. For months they have been turning down most of these requests, because most of the companies have had profits big enough to absorb cost increases and still leave a fair return.
The paper industry has been turned down. So has the brass industry, the truck industry, the auto parts industry, and many others.
All these industries have taken "no" for an answer, and they have gone home and kept right on producing. That's what any law abiding person does when he is told that what he'd like to do is against the rules.
But not the steel companies--not the steel companies. The steel industry doesn't want to come down and make its case, and abide by the decision like everybody else. The steel industry wants something special, something nobody else can get.
If we gave in to the steel companies on this issue, you could say goodby to stabilization. If we knuckled under to the steel industry, the lid would be off. Prices would start jumping up all around us--not just prices of things using steel, but prices of many other things we buy, including milk and groceries and meat.
You may think this steel dispute doesn't affect you. You may think it's just a matter between the Government and a few greedy companies. But it is not. If we granted the outrageous prices the steel industry wants, we would scuttle our whole price control program. And that comes pretty close to home for everybody in the country.
It is perfectly clear, from the facts I have cited, that the present danger to our stabilization program comes from the steel companies' insistence on a big jump in steel prices.
The plain fact of the matter is that the steel companies are recklessly forcing a shutdown of the steel mills. They are trying to get special, preferred treatment, not available to any other industry. And they are apparently willing to stop steel production to get it.
As President of the United States it is my plain duty to keep this from happening. And that is the reason for the measures I have taken tonight.
At midnight the Government will take over the steel plants. Both management and labor will then be working for the Government. And they will have a clear duty to heat up their furnaces again and go on making steel.
When management and labor meet down here in Washington they will have a chance to go back to bargaining and settle their dispute. As soon as they do that, we can turn the steel plants back to their private owners with the assurance that production will continue.
It is my earnest hope that the parties will settle without delay--tomorrow, if possible. I don't want to see the Government running the steel plants one minute longer than is absolutely necessary to prevent a shutdown.
A lot of people have been saying I ought to rely on the procedures of the Taft-Hartley Act to deal with this emergency.
This has not been done because the socalled emergency provisions of the Taft Hardey Act would be of no help in meeting the situation that confronts us tonight.
That act provides that before anything else is done, the President must first set up a board of inquiry to find the facts on the dispute and report to him as to what they are. We would have to sit around a week or two for this board to report before we could take the next step. And meanwhile, the steel plants would be shut down.
Now there is another problem with the Taft-Hartley procedure. The law says that once a board of inquiry has reported, the Government can go to the courts for an injunction requiring the union to postpone a strike for 80 days. This is the only provision in the law to help us stop a strike. But the fact is that in the present case, the steelworkers' union has already postponed its strike since last December 31--99 days. In other words, the union has already done more, voluntarily, than it could be required to do under the Taft-Hartley Act. We do not need further delay and a prolonging of the crisis. We need a settlement and we need it fast.
Consequently, it is perfectly clear that the emergency provisions of the Taft-Hartley Act do not fit the needs of the present situation. We have already had the benefit of an investigation by one board. We have already had more delay than the Taft-Hartley Act provides.
But the overriding fact is that the Taft-Hartley procedure could not prevent a steel shutdown of at least a week or two.
We must have steel. We have taken the measures that are required to keep the steel mills in operation. But these are temporary measures and they ought to be ended as soon as possible.
The way we want to get steel production-the only way to get it in the long run--is for management and labor to sit down and settle their dispute. Sooner or later that's what will have to be done. So it might just as well be done now as any time.
There is no excuse for the present deadlock in negotiations. Everyone concerned knows what ought to be done. A settlement should be reached between the steel companies and the union. And the companies should then apply to the Office of Price Stabilization for whatever price increase they are entitled to under the law.
That is what is called for in the national interest.
On behalf of the whole country, I ask the steel companies and the steelworkers' union to compose their differences in the American spirit of fair play and obedience to the law of the land.
NOTE: Earlier that day the President had signed Executive Order 10340 "Directing the Secretary of Commerce to Take Possession of and Operate the Plants and facilities of Certain Steel Companies" (3 CFR, 1949-1953 Comp., p. 861). This order was ruled unconstitutional by the United States Supreme Court on June 2.
See also Items 83, 103, 110.
Provided courtesy of The American Presidency Project. John Woolley and Gerhard Peters. University of California, Santa Barbara.