Uncorked

Regulation W, the wartime credit curb which required buyers to plunk down one-third in cash and pay off the rest in 15 months, expired last week. But as the installment credit bottle was uncorked, most businessmen seemed to have lost their taste for the heady stuff.

Sears, Roebuck and Montgomery Ward cut their down payments to 10% and extended payment time on the balance to 18 months. But the credit agencies were more conservative. Said John J. Schumann Jr., whose General Motors Acceptance Corp. last year advanced $411 million on the sale of automobiles and other GM products: "It behooves . . . banks and other financing agencies to use their heads as never before." At a meeting of the District of Columbia Bankers' Association the Federal Reserve Board's M. S. Szymczak warned that if bankers permitted the credit structure to get topheavy, as it had in the '20s, "you will again be the scapegoats."

The bankers did not need the warning. The American Bankers' Association had already asked its 15,000 members to stick to the one-third deposit in automobile financing, soft-pedal loans in other lines. Consumer credit now totals $11 billion, far above any prewar figure. With personal income running at $194 billion, the U.S. could support more credit, but no one knew how much more. Some thought that the danger mark was at $17 billion.

Less precise but more emphatic was Edwin G. Nourse, chairman of President Truman's Economic Advisory Council (see NATIONAL AFFAIRS). Unless consumer credit expansion was checked, said Economist Nourse, "the hopeful 1950s would revert to the distressing conditions of the 1930s." Nourse had a powerful ally in Senator Robert A. Taft, who said he would support a bill to put Regulation W back on the statute books. If U.S. businessmen took too big a swig from the bottle, they would soon find the cork back in.

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