Too Much, Too Soon?

It was the most dramatic price cut of the year. For months clothiers had watched men’s suits pile up on the shelves and racks in their stores. Last week Crawford Clothes, Inc.’s Joseph Levy, one of the biggest sellers of men’s clothes, slashed prices 20% across the board.

Crawford Clothes was not the only clothier to take drastic action. In Chicago, Robert Hall Clothes bought up a manufacturer’s entire stock of $50 flannel suits, and bragged in full-page ads that it was “shooting the works for $19.95.” Retailers remembered their old maxim: sales of men’s clothes are the first to fall; then women’s, and then children’s. They also remembered that the post-World War I slump began with a drastic retail price cut (John Wanamaker’s in 1920).

In spite of the sagging market in men’s clothing (as well as in some textiles and lumber), not even clothiers were ready to say last week that they had caught the first whiff of recession. But they (and other retailers) were keeping a worried eye on inventories. It was not so much that sales were falling off; it was that supplies were catching up with and in some lines even overtaking the public’s need.

On the Shelf. Appliance sellers, among the hardest hit by the Government’s credit curbs, complained that refrigerators were backing up on them; radio stores were only saved by the boom in television sets. A West Coast furrier, on a scouting trip to New York, discovered that his fellow furriers were keeping their stockrooms bare, rushed home and cut his prices 15-20%. Shoe manufacturers, some of whom had already cut production, were also talking of post-Christmas price cuts as high as $1 a pair. Many another manufacturer who last year had to stall off customers was now ready to deliver at a day’s notice.

Even the automobile industry was gradually gaining on its backlog. Though raw materials were still scarce and dear (see below), the industry last week chalked up another production record (122,717 cars and trucks). In Chicago, used car dealers were cutting prices up to $500 a car.

Up the Tree. But the real inventory problem was not in industry but on the farms—and in those products not supported by the Government. Near Palisade, Colorado, bronzed Harold Motz looked over his 15 acres of peach trees, complained: “I’m losing money for the first time since 1932.” Motz had picked all his peaches, but “a lot of the boys,” he said, “just left them on the tree. They just didn’t sell well.” In the rich San Luis Valley, farmers estimated that a quarter of a million crates of lettuce and 70,000 tons of cabbage had been plowed under or fed to livestock. Despite an 11% cut in apple production, some 5,000,000 bushels of apples will go to waste this year.

The farm glut had its compensations. Many New York butchers last week cut the price of top-grade beef from 85 to 69¢ a pound, and trimmed prices on some 20 other meats. Businessmen knew that lower food prices meant more cash released for other purchases. But even those who saw no recession ahead agreed with the U.S. Chamber of Commerce: “We now face the difficult task of … checking inflation without precipitating contraction.”