PX Pruning

Army & Navy service stores have been a money-saving blessing to righting men during wars. But they have often proved a money-losing headache for private businessmen in peacetime. After World War II ended, the post exchanges and ships' service stores kept right on selling so many items at less than retail prices that private merchants complained loudly enough for Congress 'to hear them. Military stores, they said, were peddling luxury goods, like fur coats and watches, tax free; groceries were being sold at wholesale prices in direct competition with local merchants, and large numbers of servicemen were buying goods for civilian friends.

Last week a House Armed Services subcommittee found the squawks justified. Though the armed services had shrunk about 85% since war's end, the stores were still doing a whopping business. During 1948 the Army, Navy, Air Force and Marine Corps operated 589 stores in the continental U.S., grossing $331 million at wholesale prices (at the normal retail markup, plus excise taxes, the gross would have been $500 million, or more).

Part of this volume, the committee found, had indeed come from luxury goods. Example: The Marine PX at Quantico, Va. had refrigerators, $250 cameras, television sets and outboard motors in stock.

The stores were also operating a big mail-order business in the form of "special orders." Originally, special orders were designed to help servicemen buy furniture below retail prices, on the theory that they moved their household effects frequently and that "three moves equals one fire" in wear & tear. Not much furniture was sold, but plenty of orders were filled, many for officers with a taste for diamond rings, fur coats (tax free), sterling silver and automobiles.

The subcommittee found no reason why service stores should be exempt from excise taxes, ordered the stores to start collecting the tax. It also ordered the armed services to: 1) abolish all commissaries by Jan. 1, wherever adequate civilian facilities are available; 2) cut out all special orders; 3) keep luxury items off the shelves. The three services agreed to do so. Estimated loss to the military stores: 50% of their gross business.

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