Off Dollars, on Points

This week the 400,000 grocery stores of the U.S. will be well on their way through a violent financial transition. To all grocers, for the duration, ration points will be a lot more important than dollars & cents.

The transition to the new currency began with sugar and coffee. This month came the rationing of canned goods. On March 29 meats, hard cheeses, fats, oils and canned fish will be added.

As a result the grocery trade, which in 1942 did an estimated business of $15 billion, in 1943 will do a business of some 168 billion points. The big figure brings little cheer to the grocery trade. Grocers will handle a smaller volume of goods than last year. And doing business on point currency is 1) expensive, 2) complicated. It adds to a highly complex money economy the rules of trading in wampum or sea shells.

Housewife to Wholesaler. As expounded by OPA, point rationing sounds easy: 1) The Government issues ration books and stamps to the public, and assigns specific point values to foods. 2) The housewife turns the stamps over to the grocer in exchange for goods, and the grocer, in order to replenish his stocks, sends the stamps along to the wholesaler. 3) The wholesaler turns these coupons over to his bank (where they are eventually destroyed) and gives him credit for the number of points they represent. 4) With this credit the wholesaler draws a check in favor of the canner or producer.

In practice the new currency runs into dizzying complications. To get the system going, OPA had to print 150,000,000 ration books. The Government Printing Office enlisted the help of 19 printing companies. The job involved printing more stamps (30 billion--all made counterfeit-proof) than all the postage stamps issued by the U.S. in the past twelve years.

Bushel Baskets. With the new books now distributed, the public is allowed to spend 48 points a month on canned foods (blue stamps), and will be allowed to spend 64 points a month on meats, cheese, etc. (red stamps). This means that the grocers of the land will handle about 14 billion points a month, involving some 3.5 billion coupons.

To cope with the new money, grocery-men employ various devices: in Los Angeles a small store uses a cigar box with four compartments to sort out its stamps. In Atlanta another small grocer has his children work nights, and devotes all of Sunday to the job. In Philadelphia recently OPA failed to provide enough of the gummed sheets on which grocers are supposed to stick their ration coupons before turning them in to the wholesaler. As a result, salesmen of wholesaling houses came in with their pockets stuffed with ration coupons, dumped them into bushel baskets. The baskets were presented to the bank for counting; the bank turned the mess back to OPA.

Ration Banking. OPA, under its humanizing policy (TIME, March 22), is now working hard to simplify the system. With the cooperation of the nation's 15,000 commercial banks, it has set up a broad system of ration banking such as Britain practices. Under this system, the small corner grocer can open ration point accounts in the bank and turn in coupons for credit. He may then draw a check on his account and present it to his wholesaler for more goods instead of giving the wholesaler a peck of coupons. More than a million ration accounts will mean more work for the hard-pressed banks, already short of tellers and clerks. But OPA will cover the additional banking costs.

Sad Case of Prunes. OPA is also laboring to readjust mistakes in the point system. Now that the normal workings of the market are eliminated, OPA must guess at the relative values of commodities. Inevitably it makes mistakes--e.g., the case of prunes.

Originally prunes were given a rating of 20 points a pound--equivalent to nearly half of a housewife's total monthly point allowance for canned goods and dried fruit. Naturally, few prunes were bought. OPA dropped the price to twelve points, apparently still too high. Last week one large eastern wholesale house found itself with 2,500,000 Ib. of prunes on hand, and no takers.

Whither the Grocer? Considering the size of the U.S., and the variety of the U.S. diet, rationing was bound to be more complicated in the U.S. than in Britain. Actually it is working a lot better than the gloomy grocery trade had expected. But there will be casualties. Despite the fact that national income is expected to soar to $140 billion from $120 billion, the grocers' gross this year will be down by 40-50%; his profit margin may be shaved from about 5% to about 3% of sales, due to increases in costs. As many as 50,000 small marginal grocers may go out of business entirely. But the U.S. public will get fed--and better than any nation in the world, complications, points and all.

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