The Bad Old Days

When American Woolen Co.'s President Moses Pendleton rose before his stockholders in Springfield, Mass, last week, he was wearing such a long face that the stockholders braced themselves for bad news. It came fast enough. The company's new orders, Pendleton reported, had sagged by mid-March to $11 million, less than one-sixth their 1948 level. As the news reached Wall Street, a wave of selling dropped American Woolen's stock 6 1/8 points to 28 5/8, the lowest since 1947.

For Moses Pendleton, a hulking Connecticut Yankee who had started with American Woolen in 1903 as a clerk, all this sounded like the bad old days. From 1925 to 1946, American Woolen made the goods for one out of every six men's suits in the U.S. But the wool industry, in general, was in a slump until the war years, and American paid no dividends on common stock. Then, as 10,000,000 ex-servicemen rushed to buy their first civvies, American Woolen found itself so prosperous that in 1946 it declared a $12 common dividend, saw its stock soar from 29 1/2 to 70 3/4. In 1948, it rang up the biggest sales ($197 million) in its history and earned $15.88 per share. But now, said Pendleton, American Woolen, like other weavers, was in a double squeeze that was choking off sales.

U.S. retailers, unable to move men's suits, wanted lower prices. Australian fine wool, said Pendleton, was so high that he could not cut prices.

In New England, where the textile slump had already caused some 20,000 to be laid off, there was one bright spot. The U.S. Air Force awarded contracts for $20 million worth of woolen cloth. To get the business, mills had slashed their bids close to cost, in some cases below it. The catch was that the prices, as much as $1.25 a yard lower than those on civilian goods, were sure to increase the demand of retailers for cheaper goods.

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