The Atlantic Report on the World Today: Washington

ON THE WORLD TODAY

THE only reservation about the appointment of General Marshall as Secretary of State is that he is a military man. But a military man does not necessarily have the narrow outlook known as the military mind. General Eisenhower hasn’t, nor has General Clay, who is running our affairs in Germany, and those who know General Marshall are confident that his intellectual processes have breadth and penetration.

Marshall is a born statesman. To his natural gifts there is joined an experience in foreign affairs, both as Chief of Staff and as Mr. Truman’s special emissary to China, which gives him a very special qualification for the Secretaryship of State. In China he has seen eye to eye with the State Department. There has been close accord in policy, which Marshall himself helped to draft; and in the working out of it, the admiration expressed for Marshall by Foreign Service officers is unbounded. One of them said a week before the appointment: “Just as schoolboys nowadays read Caesar’s Gallic War, so schoolboys fifty years hence will be reading Marshall’s dispatches from China.”

With China of major importance in our relations with Russia, it is significant that the new Secretary is thoroughly briefed in Far Eastern affairs. Hitherto, nobody in the State Department above a Division head has been to China.

Mr. Byrnes has built for himself a unique standing with the American people as a man who has the knack of dealing with the Russians. His going was really due to ill health. There was no question of differences on policy, though Mr. Truman in the past has had personal difficulties with Byrnes.

The readjustment is bound to be difficult. Relations with Russia are singularly personal, and Marshall will have to build up his contacts with Moscow to get over an initial period of suspicion.

Mr. Truman reports

The President in his report on the State of the Union came to grips with the problem of the Executive’s relations with an opposition Congress. He does not conceive his duty to be acquiescence in Congressional government. The impression in the first weeks after the election was that he would be a rubber-stamp executive. But shelving the veto power would have distorted the lawmaking process set forth in the Constitution.

It is now clear that President Truman intends to live up to the demands of his office. In this respect he will be following the example of another President — Hayes — in a parallel situation. Although both houses were against him, Hayes did not hesitate to use the veto. And he was generally able to muster the necessary one third plus one to back his veto.

Our economy: balanced or dipping

The report of the Council of Economic Advisers is being assiduously studied for signs of the ideology of the advisers. Already the President has taken issue with the Council’s cagily-worded suggestion of “a dip in 1947.” The President’s economic report based on the Council’s conclusions is being studied by a joint committee of Congress.

Edwin G. Nourse, Leon H. Keyserling, and Dr. John D. Clark are the members of the Council of Economic Advisers. Mr. Nourse is chairman and is best known, for he was vice-president of the Brookings Institution. His views, judging from his writings, are rather orthodox, and the Council’s report bears the imprint of his philosophy. The report disavows the ability of a government of limited powers to maintain economic stability. This is a job for labor and management.

The government can help, of course, but only in a minor degree. The pump primers get exceedingly short shrift. Such advocates of “this single-track doctrine of fiscal policy” are likened to the men of ancient Rome who dispensed bread and circuses.

Nathan analyzes for the CIO

The Council’s report appeared on the heels of a report made to the CIO by Robert R. Nathan, a New Deal economist. This again was an innovation. The CIO, preliminary to its current campaign for general boosts in wages, asked Mr. Nathan to survey the national economy. The result was a heap of statistics and charts by way of justifying CIO demands.

Mr. Nathan points out that rising prices are feeding profits and reducing the buying power of wages. He argues that corporate profits before taxes now are as high as “at the lushest period of war prosperity” and that corporate profits after taxes are about 50 per cent higher than at the war peak and “utterly without precedent in our national experience.” After taxes are paid, corporate income today is up 183 per cent, he claims, whereas private wages and salaries have increased only 150 per cent. He argues that the present balance between wages and profits is unsound, and can only result in depression.

Mr. Nathan finds that manufacturing industries could now give production workers a 21 per cent increase in pay without a price increase, without any further expansion in volume, and without reducing return after taxes on net worth to a rate below that of 1936-1939. Industry as a whole, he feels, could easily stand a 25 per cent increase in wages on the same basis.

One trouble is that Mr. Nathan’s remedy envisages the American economy as a single corporation. In point of fact, it is composed of millions of enterprises, all with different balance sheets. Some can afford to give a wage increase, others cannot. Even within a single industry there are variations.

The Council of Economic Advisers reminds the country of this variety of performance. It says that jobs depend upon very specific wage-pricecost relations. Other objections to the Nathan Report are now providing a battle of economic theory. The National Association of Manufacturers issued an appraisal of the report which protests in detail that Mr. Nathan’s argument “is based on misrepresentations of economic facts and fallacious economic reasoning.” The NAM analysis blandly concludes, “ Economists, like all others, are entitled to be wrong on occasion. Mr. Nathan has overexercised his license in this respect by being wrong on every point in his analysis.”

Second thoughts on labor

Labor legislation is by all odds the number one item before the Eightieth Congress. A good deal of rethinking on the subject is going on. For instance, Senator Ball, who used to believe in compulsory arbitration and the closed shop, has turned thumbs down on both. He now believes they are abridgments of personal liberty.

Others feel that the basic principle of labor legislation should be to keep the government out of the process of collective bargaining. Labor courts and fact-finding boards result in government regulation of the economy. Another principle animating some of the legislators is’that all that needs to be done is to revise the Wagner Act to put labor and management on equal footing, and to require labor unions to open their books.

At a time when big wage demands are being formulated, the unions are prosecuting claims for portalto-portal pay. Literally billions of dollars in back pay and damages are involved.

The Supreme Court set the ball rolling at the instance of John L. Lewis. In the Jewell Ridge coal case it held that the Fair Labor Standards Act required that time spent in traveling underground from the mine portal to the level at which coal is mined must be paid for.

The Supreme Court followed up this ruling with the Mount Clemens Pottery decision. Here it held that the time spent by employees walking to their jobs after punching time clocks or doing certain preliminary tasks must be paid for as working time, “regardless of contrary custom or contract.” Soon afterward a flock of suits were filed on the basis of this decision. The confusion is incredible.

In some cases a composition of the claims against fresh wage demands has been made, but there is no such relief for many employers, especially those in states where there is no protection from statutes of limitation. The need is for some fresh determination of working time. This will mean a revision of the Fair Labor Standards Act to offset a decision of the Supreme Court which, unless corrected, would have the effect of putting a good deal of American industry in bankruptcy.

The customers say “No”

Such uncertainties put a question mark over business prospects for 1947. Already there is a softening of prices which may be the prelude to general recession. In this case, however, the price readjustment is held by many to be a healthy correction. Many prices last year went out of line, particularly those of farm products and of construction.

The President in his message to Congress inveighed against manipulation by giant organizations. He said, “Whole industries are dominated by one or a few large organizations which can restrict production in the interest of higher profits and thus reduce employment and purchasing power.” This criticism is based in part upon the rigging of butter prices by the New York milk producers. Mr. Truman calls for a rigorous enforcement of the antitrust laws.

In recent months there has been much greater watchfulness on the part of individual consumers and considerable buyer resistance. Price and quality have again become criteria, and the feeling is that this is all to the good for the national economy. No longer can things be sold at any price over the counter. High-priced furs have dropped as much as 50 per cent. Jewelry, silk lingerie, men’s lounging robes; expensive handbags, umbrellas, and wool dresses; and other luxury items were sold by department stores in pre-Christmas clearance sales at drastic markdowns.

We are out of the reconversion woods, according to the final report of the Civilian Production Administrator, John D. Small. This outcome has been accomplished without any letdown in employment such as was predicted a year ago. Indeed, we finished the year with employment at 58,000,000, or 6,000,000 above that of V-J Day, and 14,000,000 more than in the prosperous year of 1939.

It is not the leveling off of prices that will promote recession, but uncertainty and consequent underinvestment arising out of strikes and the threat of strikes and the elaborated absurdity of portal-toportal demands.

Italy needs help

How we shall implement our credit and relief policy abroad is brought sharply into focus by the Italian appeal for aid. A sum of $100,000,000 is supposed to be set aside for stricken Italy. But the ExportImport Bank insists that Italy is a poor risk, like Austria and Greece, whom we are likewise pledged to aid under our post-UNRRA policy. This policy Mr. Byrnes laid down late in November. It envisages help for our friends among the world’s democracies, not only on humanitarian grounds but also on those of high policy, on a unilateral basis.

All reports concur that the democratic position is slipping in Western Europe. This is particularly the case in Italy, whence a mission headed by Premier de Gasperi arrived in Washington in the new year, bearing a strong plea that assistance be granted promptly. Food is short. Materials are lacking. The combined effect is a setback to the anti-monarchist victory in the elections last June, when the Christian Democrats under de Gasperi were voted into the saddle of a coalition anti-monarchist government. It was at Mr. Byrnes’s suggestion that de Gasperi came to Washington, and a movement is on foot to make the resuscitation of Italy a project for the whole hemisphere. To this end the delegates of the Pan American Union have entertained de Gasperi. The Latin American countries can help to siphon off Italy’s surplus population, while the United States can give the Italians the credit and goods of which they stand so sorely in need.

France, too, needs more help. Her application for a loan from the World Bank has now been filed, complete with documentation, and it is likely to be the first advance of the new institution.

It would seem as if Canning’s saying that he had called the New World into existence to redress the balance of the Old has a fresh application: the New World may have to redress the balance of the Old, if only to guard its own Atlantic approaches, let alone prevent, in Jeffersonian policy, the subjection of the continent to one power.

THE MOOD OF THE CAPITAL

Only by a miracle will there be the coöperation that President and Congress have pledged. Even in foreign affairs Senator Vandenberg has injected an ominous note. He says that bipartisan unity is strictly confined to the treaty-making in Europe. He omits Palestine, the Far East, Latin America.

The broad public regard for General Marshall eases the way for those who would create a genuine bipartisan policy. The General’s new job ought to reassure the statesmen of other lands in this respect, regardless of what they may think about our appointment of military men to high civil posts.

The Republican penchant for special investigations into the Roosevelt era bodes ill for Executive-Congressional collaboration. Partisanship demands its day. If there were more good will, a way to better coöperation is available.

The Democrats have set up a Senate Policy Committee. If the Republican Steering Committee would consult with this Democratic committee. Congress would then have the nucleus of the joint legislative-executive council contemplated in the La Follette-Monroney report. Incidentally, Speaker Rayburn prevented the inclusion of the council idea in the La Follette-Monroney bill. He said, “These young men are trying to take away my powers,” and cut out the council item.