Smiting the Foe

(5 of 6)

"Good! Good! Very Good!" If Jack Kennedy and his warriors had not already known the place to concentrate their fire, they knew it then. Every New Frontiersman who had a friend, old college mate or former colleague in the steel industry was summoned to join in an all-out campaign to persuade the holdouts to keep on holding out. "Everyone in the Administration who knew anyone called him," said a White House aide.

One of the biggest companies that had not yet announced price increases was Chicago's Inland Steel, the eighth biggest producer. With a solidly established position in its own market area, Inland could afford to go its own way; furthermore, Inland's Chairman Joseph L. Block is a member of Kennedy's Labor-Management Advisory Committee. So Inland was an obvious target for Administration phone calls. Commerce Under Secretary Edward Gudeman called his longtime friend Philip D. Block, vice chairman of Inland. Labor Secretary Goldberg called his old acquaintance Leigh B. Block, an Inland vice president. The day after Blough's press conference, Inland Steel Co. announced that it had decided not to raise prices "at this time." Said John F. Kennedy when he heard the news: "Good! Good! Very Good!"

With Bewildering Speed. For Roger Blough, the news was bad, bad, very bad. Inland's decision just about wrecked any hopes he had of winning the fight. But even with the outcome all but decided, the Administration kept bludgeoning away. Defense Secretary McNamara announced that he had directed his department to give procurement preferences "where possible" to steel companies that had not raised prices. Providing a persuasive example of what that could mean, the Navy's Bureau of Ships announced that a $5,500,000 order for steel plate for Polaris submarines had just been awarded to Lukens Steel Co., a firm that had not upped its prices. (Ordinarily the order would have been divided between Lukens and the nation's only other producer of that type of steel—U.S. Steel Corp.). Prices on the New York Stock Exchange that afternoon showed how traders felt the struggle was going: Inland Steel was up, U.S. Steel down.*

The end came with bewildering speed. Only 48 hours after Kennedy's press-conference onslaught, Bethlehem Steel Corp., the nation's No. 2 producer, announced that it was rescinding its price increases "in order to remain competitive." A few hours later, a thoroughly beaten U.S. Steel announced that it, too, had decided to withdraw its increases "in the light of competitive developments today and all other current circumstances." The other six steel companies that had raised their prices joined in a precipitous rush to surrender.

Like Milquetoasts. The President was magnanimous in his moment of victory. In canceling their price increases, he said, the steel companies "are serving the public interest, and their actions will assist our common objectives of strengthening our country and our economy." But Ad ministration insiders let it be known that the Justice Department was not calling off the grand jury investigation — even though Inland's decision to refrain from raising prices, and the swift collapse of the U.S. Steel camp, would appear to demolish any argument that U.S. Steel wields monopolistic power to set prices.