First Straw

In the dark price picture, there was one bright spot last week. Chrysler Corp. announced price cuts ranging from $25 to $55 on all Plymouths. Hudson Motor Car Co. counteracted this somewhat by raising its prices from $25 to $69 a car. And U.S. Steel's Benjamin Fairless, who has been under most pressure to reduce prices, went out of his way to deny that Big Steel had any intention of reducing prices now. Not till current bargaining with C.I.O.'s United Steelworkers is over, said he, could Big Steel think of any price changes. Chrysler, which is currently bargaining with C.I.O.'s U.A.W., apparently thought that its increasing production would permit the cut.

Thanks to the high production, in general, the Department of Commerce estimated that 1947's first quarter net profits for U.S. industry were at the rate of $15 billion, 25% over 1946. Even the cautious New York Times was moved to anger by the gouging it considered that it was taking. In a special dispatch from Quebec, the Times talked about the "enormous profits" Canadian paper companies were making, showed that net profits of New York's International Paper Co. had risen 270% since 1943, that profits of another company had risen 500%. But the price of newsprint was boosted again last fortnight.

Greatly perturbed by all this, Macy's President Jack Straus warned in full-page ads last week: "Unless prices are lowered, we believe that a business recession is probable." But Macy's itself made no broad price cuts in cost-of-living items. Ironically, retailers and manufacturers were clinging to high profits as a hedge against the recession which they feared high prices would bring.

While they were hedging, many businessmen were uncomfortably aware that a turning point in the boom had already been reached. Easter shopping had been far smaller than expected. Though price rises kept dollar volume 10% higher than last year, unit sales were actually lower. Many a retailer, scared by his high inventories, was canceling orders. But the real bellwether was "soft goods" (textile) production. Most businessmen had kept their eyes on it, figuring that a drop in production there would be the first sign of a recession. Last week the drop came (see below).

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