Help for a Giant

General Motors Corp., which once thought it could weather the storms of reconversion alone, was calling for help last week.

Back in 1945 Board Chairman Alfred P. Sloan Jr. proudly announced that General Motors' postwar expansion, likely to cost $500 million, would be paid for "out of general corporate resources." G.M. had $596 million in cash and Government securities for the job. Last week G.M.'s wad was so close to being shot that the company announced it would soon try to raise $100 million by floating a million new shares of preferred stock. G.M.'s cash on hand had fallen to $160 million (see chart), and this only three months after G.M. had borrowed $125 million from insurance companies.

Where had all the money gone? Since

December 1945 some $200 million had gone into G.M.'s inventories, which had swollen out of all proportion to production. Easy-to-get parts had piled up while G.M. waited for hard-to-get parts with which to make cars. Another $242 million had gone to reconvert and expand plant facilities. And G.M.'s stockholders had taken another big bite; dividends had totaled $70 million more than G.M. earned.

The biggest trouble was that G.M.'s costs were racing along while production was in low gear. The strike had cut G.M.'s sales for the first quarter of 1946 to $74 million (v. 1940-41 sales of $500 million per quarter). And after the strike was settled, G.M.'s increased labor force (400,000 employes v. 274,000 in 1941) produced half as many cars as the company had put out before the war.

If G.M., one of the biggest U.S. corporations, needed cash, Wall Streeters wondered how some of the less well-heeled companies were getting by--and when they would put out their hands. This week they got part of their answer: General Electric Co. announced that it had arranged for long-term loans totaling $150 million, a bank loan of $50,000,000.

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