Loosened Belt

U.S. businessmen have long known that rearmament's tightest pinch on civilian production would come in 1952's second quarter. But last week, when the Defense Production Administration allocated the quarter's supplies of metals, manufacturers learned that the pinch will not be as tight as they had feared. Reason: the "stretch-out"in the arms program enabled DPA to reduce the additional 10% cut in metals which had been scheduled. Instead, steel will not be cut at all; copper and aluminum will be cut only 5% on the average. And even "less essential" producers (aluminum blinds, cigarette lighters, etc.) will now be allowed as high a rate of production as anybody else. Thus, many civilian-goods makers will still have enough materials to turn out almost 50% of their pre-Korea output.

There were signs last week that automen may do even better. Automakers, who had been among the hardest hit by the cutbacks, last week found that many types of steel had suddenly become abundant. Although they had originally been promised only enough metals to turn out 800,000 cars in the second quarter, it now looked as if they would meet their "permissible" DPA quota of 930,000 cars and trucks.

There were so few signs of other scarcities last week that wholesale and retail prices were slashed right & left. Wholesale prices are now 5% below their level of a year ago.

The OPS has set up a commission to study the whole price situation to see what controls can be removed. Actually, prices are decontrolling themselves so fast that many ceilings are meaningless.

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