Prize Pupil

Roosevelt & Recovery had raised wages. New steel prices, up $3 to $4 per ton, had raised the cost of basic raw material. So last week the Automobile Industry, prize pupil of the President's Recovery class, raised its prices.

Chrysler led off by upping the price of Plymouth $25 to $45, Dodge $45, Chrysler sixes $40 to $55, Chrysler airflows $100 to $130. DeSoto was left unchanged. Then Studebaker added $25 to its "Dictator" and "Commander," $50 to its "President." General Motors swung into line with increases of $20 to $30 on Pontiac and Chevrolet, $65 to $130 on Buick, $35 to $65 on Oldsmobile. Cadillac V-16s went up $300, La Salles $100. Hudsons went up $5 to $75, Graham-Paiges $50, except one model. A few independents left their prices unchanged, including Packard and Nash--and Henry Ford.

Once again Henry Ford seized his chance to use the industry for his sounding board. Others could do as they liked, said he, but the price of Fords would stay where it was. To a representative of Dow, Jones & Co. (financial news service) he declared: "When prices go up, business goes down. . . . There is nobody who can pay the increased prices except our own people; and if they have not the price demanded they simply don't buy. But this is all too simple for the great economic minds that direct our affairs. .. . ". . . We are making a part of everything we use and from this nucleus we can readily expand to take care of any or all of our requirements, if necessary. . . . "When wages are increased and prices held down, it simply compels the heads of concerns to work harder. . . . Increasing prices is a lazy way to make dividends."

Keeping the price down was obviously more to Henry Ford than an economic principle. He had already got a head-start in 1934 production while the tool & die strike bedeviled other motormakers last autumn. He had been making some 5% of his steel, could and probably would make more. Smartly he had stalled off labor troubles by raising wages long before the other companies.

Henry Ford's course was straight and clear. But General Motors' price-upping seemed to conflict momentarily with the views of one of its own high priests of industrial economics. Vice President James David Mooney, in charge of exports, had declared in his book The New Capitalism published scarcely two months ago: "High prices, particularly if they are out of balance, tend to destroy the interchange of goods, and cause a starved flow of goods to consumers. Such prices destroy purchasing power, dry up demand, create unemployment, and lower the standard of living.''

How much motor production has already been stimulated by Recovery was plain when figures for the first quarter were released last week. Chrysler had shipped 167,842 cars in the first quarter, against 58,347 for the first quarter last year. With stacks of orders still unfilled, General Motors had produced 316,604 units, nearly 100% more than for the first quarter of 1933.

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