PRICES: The MPR-330 Battle

The $57,000,000 W. T. Grant Co., with 492 retail stores in 40 states, last week began a fight to the finish against a seven-month-old OPA regulation that has the whole dress business in an uproar. Grant, with eight other large retailers,* is faced with court action for violation of OPA’s regulation MPR-330.

The Regulation. MPR-330 provides that no seller of women’s and children’s coats, suits and dresses may carry a higher price level than his top line in a 1942 base period (usually March). The praiseworthy purpose: to keep low-priced goods of any kind in circulation. This blinks the unhappy fact that one hundred $20 dresses gross as much for any seller as 1,000 dresses at $2, but OPA hoped that the big low-price retailers most affected by MPR-330 would force their thousands of suppliers to continue to make and sell cheap merchandise.

The Pyramid. But goods at almost any price grew scarce. MPR-330 had an upside-down effect: it began to squeeze out of the market OPA’s favorite price policemen—the big-volume, low-unit-cost chains. By OPA’s own admission, women’s coats & suits that wholesaled for $6.75 in 1942 now sell for $8.75; $1.37½ rayon dresses are now $2.25, etc. One big Manhattan chain surveyed the fall market last week, found that whereas 108 manufacturers made coats to retail at $7.98 in the spring of 1942, there are none today; 128 made rayon dresses to retail at $1.98-$2.98 v. eight this fall.

Despite some black-market shenanigans, most of the price increases have been perfectly legal under OPA’s regulations, because normal profit margins are allow able, and higher fabric and labor costs pyramid from textile weaver to manufacturer to retailer.

The small manufacturer, caught be tween OPA and skyrocketing costs, can legally do one of two things, provided his gross margin fits OPA definitions. He can : 1) drop his low-priced lines and concentrate on the higher ones; or 2) if he has no higher ones, he can go out of business on his old lines, open up as a new company the next day. So can any shoestring retail er. The department or specialty store with many price lines is also unaffected : it can just drop the unprofitable low ones.

But the big retailer or chain that never carried higher-priced goods before is high & dry on the pyramid’s peak. If a J. C. Penney store’s top dress price last year was $5.98, and if there are none made today to sell at that low a price, Penney can only stop selling dresses.

The Defense. W. T. Grant’s answer to OPA’s complaint concentrated on this manifest absurdity. The answer pointed out that under MPR-330, 37 Grant stores are forbidden to sell a $10.98 coat that 401 others could still carry because they never sold coats before. Just for good measure, the defense also alleged that the whole Price Control Act, not to mention MPR-330, violates the Fifth (“due process”) Amendment of the Constitution.

While Grant specifically denied OPA’s charges, the trade guessed that they (like the other eight companies) might have been forced into some technical violations of the regulation. Reason: MPR-330 (aimed at spring merchandise) came out last February, long after their spring lines had been bought.

Thus OPA’s legal chances looked relatively good if the courts insist upon a narrow ruling; the chains place their main bets on a ruling that deals with economic principles as well as practice.

The Consumer. Win, lose or draw for the chains, the consumer is out in the cold. W. T. Grant, et al., would not go broke even if they had to stop selling women’s and children’s clothes entirely. But the low-income consumer would still be with out cheap new clothing to buy. OPA recognized this dilemma. Last week its new general manager, ex-Adman Chester Bowles, told his press conference: “We plan to do something about the dis appearance of the $1.98 dress.”

OPA (in conjunction with WPB’s Office of Civilian Requirements) plans to make the $1.98 dress reappear by admitting that it can no longer be made to sell at $1.98. OPA is now deliberating about raising ceilings on the lower level of clothing prices and clamping down harder on higher levels, while WPB is working out a program for allocating cheap textiles to low-price-line manufacturers. This did not sound like the same OPA that also announced a new cost of living rollback last week. It sounded as if OPA had emerged from the Looking Glass Land of MPR-330.

-H. L. Green, McCrory Stores, G. C. Murphy, J. J. Newberry, Neisner Bros., J. C. Penney, F. W. Woolworth, Montgomery Ward.