PRICES: Flexible Ceiling

Because Leon Henderson removed its price ceiling, the long slumbering cotton grey goods market woke up with a bang last week. In only two days an estimated 25,000,000-30,000,000 yards of print cloths —more than a week’s capacity production —were sold in Manhattan’s Worth Street, biggest volume since July. By week’s end the huge cotton textile industry had hung the “Sold Out” sign on 90% of its fourth-quarter output; many mills (especially those making tough work-clothing denims) were booked through Lincoln’s birthday.

Officially, Henderson had not abandoned his ceiling on cotton grey goods; he had merely unhitched it and tied it to raw cotton prices. For every .44¢ a Ib. change in cotton prices (up or down from 15.99¢) the price of cloth can change ½¢ a Ib. (starting at 43¢ for Class A print cloths).

But since cotton prices have no ceiling —and are not likely to get one—cotton goods in practice have no ceiling either.

This odd scheme marks the end of a four-month fight between Leon Henderson and the cotton mills, is one of the biggest pieces of humble pie Leon has yet eaten. When he fixed his original textile ceiling, Henderson had his eye on cotton speculators (among them the mills), overlooked the fact that in the long run prices of cotton and cotton goods go together like Mutt & Jeff. Before the revisions, the basic goods ceiling was 43¢. But this price was set in July when cotton was 1-2¢ cheaper than it has been since. Thus for months the cotton goods markets slumbered as mills turned away hundreds of clamoring buyers rather than sell at prices they thought too low.

Henderson’s explanation for his flexible ceiling: “It is a special plan to meet a special situation.” But this week businessmen wondered about the next “special situation.” Good guess: woolen goods.