1948 - Commerce

Commerce

A communist-bloc Council for Mutual Economic Assistance created January 18 at Moscow tries to further economic cooperation between the Soviet Union and her satellites. Poland joins a week later.

Congress raises the salary of the president from $75,000 to $100,000 per year January 19 with a tax-free allowance of $50,000 for expenses (see 1909). The salary will double in 1969 and double again (to $400,000) beginning in 2001.

Detroit banker Joseph (Morrell) Dodge, 58, arrives at Tokyo February 1 to help occupation authorities deal with Japanese economic woes. Having headed the U.S. Joint Price Adjustment Board, served under Gen. Eisenhower as financial adviser to the military government at Berlin, and under Gen. Clay as finance director for U.S. forces in Germany, Dodge works with finance minister Hayato Ikeda, 49, to stop the nation's inflation and balance its budget, but more than 2 million people are laid off as radicals derail trains and sabotage the occupation's efforts. The Far Eastern Commission terminates Japanese reparation payments May 12 to spur Japan's lagging economic recovery (see 1950).

New York banker-financier Thomas W. Lamont dies at Boca Grande, Fla., February 2 at age 77.

An Income Tax Reduction Act becomes law April 2 over President Truman's veto and gives further impetus to inflation.

A Foreign Assistance Act passed by Congress April 3 implements the 1947 Marshall Plan. The act authorizes spending of $5.3 billion in the first year for economic aid to 16 European countries, creating the European Recovery Program (ERP) and Economic Cooperation Administration (ECA). Studebaker boss Paul G. Hoffman is appointed Economic Cooperation Administrator of the ERP, President Truman and Secretary of State Marshall have designed an accountable and transparent mechanism for sending aid to needy nations, and although Congress has authorized spending of $17 billion the ERP will spend only $13 billion.

Former Chinese foreign minister T. V. Soong moves to San Francisco. Now 54, he has invested in U.S. securities and amassed a fortune of close to $100 million.

U.S. unemployment reaches 5.9 percent, up from 3.8 percent last year. Some 360,000 U.S. soft coal workers strike from mid-March to mid-April demanding $100 per month in retirement benefits at age 62.

United Automobile Workers (UAW) president Walter P. Reuther barely survives an attempt on his life at Detroit April 20 as a shotgun blast leaves his right arm crippled (see 1949). UAW workers at General Motors plants accept a slight wage cut as a business recession produces a decline in the cost of living (see 1948). GM grants an 11¢-per-hour wage increase to the United Automobile Workers. The contract signed May 25 by GM's Charles E. Wilson, now 57, and the UAW's Walter P. Reuther, now 40, includes a cost-of-living clause based on the Consumer Price Index of the Bureau of Labor Statistics (see 1913; 1949).

The average American steel worker has $3,000 per year to spend after taxes, the average social worker $3,500, a high school teacher $4,700, a car salesman $8,000, a dentist $10,000. Typical prices include a new Cadillac for $5,000, a gallon of gasoline 25¢, a man's gabardine suit $50, a 10-inch table TV set $250, a pack of cigarettes 21¢. Typical food prices: pork 57¢/lb., lamb chops $1.15/lb., Coca-Cola 5¢ per seven-ounce bottle, milk/21¢ qt., bread 15¢/lb., eggs 80¢/doz.

U.S. production, employment, and national income reach new highs, but renewed strikes bring a third round of inflationary wage boosts.

Labor movement veteran Agnes Nestor dies at Chicago December 28 at age 68, having seen U.S. workers win an 8-hour day, a minimum wage, and an abolition of child labor.

Economic conditions are so depressed in occupied West Germany that few people have any expectations of improvement; in Lübeck many mothers must wrap their infants in newspapers because there are no diapers, but the economy begins what many will call a "miraculous" postwar recovery as economist Ludwig Erhard, 51, reforms the currency. Germans line up June 20 to exchange their old Reichsmarks for new Deutsche marks, printed in the United States (each person receives 40, and business enterprises receive an additional 60 per employee). A group of industrialists quietly approached Erhard 5 years ago and asked him to create a plan to salvage the economy in the event (which seemed more and more likely) of an Allied victory; his work came to the attention of Gen. Clay, and he announces an end to most rationing June 21, letting market forces govern (see 1957). Moscow takes offense at the action and orders a blockade of Berlin.

The Israeli pound becomes legal tender August 16.

French gold reserves fall to 478 tons, down from 5,000 in 1932, and the war-weary nation adopts protectionist measures (see Schuman Plan, 1950; Monnet, 1953).

Britain's House of Commons votes November 17 to nationalize the steel industry.

Wall Street's Dow Jones Industrial Average falls to 161 at midyear, down from 193 a year earlier, but while most consumer prices drop, housing and healthcare costs increase. The U.S. cost-of-living index reaches a record high in August (173 against 1935-1939 average), but the 80th Congress resists President Truman's repeated appeals for anti-inflationary legislation. The Federal Reserve's Board of Governors orders curbs on installment buying. The Dow Jones Industrial Average closes December 31 at 177.30, down from 181.16 at the end of 1947.