Peace?

Few towns of 15,000 population are as famed as Newburyport, Mass. In Revolutionary days it was the home of "Lord" Timothy Dexter, who made a fortune selling warming pans to the West Indies. It has great square houses stretching more than four miles along its elm-shaded High Street, its restaurants specialize in clam chowder. In the late '20s, a buffoon of a mayor named "Bossy" Gillis put Newburyport on many a front page with his antics: he festooned his ridgepole with chamber pots, planted tombstones for his political foes in the front yard, finally went to jail for criminal libel.

Last week Newburyport was in the news again. Across Pleasant Street in front of the City Hall fluttered a huge banner:

NEWBURYPORT LEADING THE NATION--LOWERING PRICES FIGHTING INFLATION.

What had happened was that a 47-year-old hardware merchant named John Swanson had, like millions' of his fellow citizens, begun to brood about the high cost of living. Unlike most of his fellow citizens, he did something about it--not much, but something. He wrote out an advertisement--"Let's roll 'em back, Bub"--and took it to the advertising manager of the Newburyport News.

Otsego to Sherman Oaks. He might just as well have taken a box of kitchen matches, considering the wildfire he started. Within three days Newburyport's merchants agreed to cut prices at least 10% across the board. Newburyport went on a buying spree. Within four days, sales in individual stores had climbed from 20% to 80% above normal. The news spread, and the "Newburyport Plan" was put into operation in many another town--Otsego, Mich. (pop. 3,428), Franklin Park, Ill. (pop. 3,007), Liberty, Mo. (pop. 3,598), and Sherman Oaks, Calif., where merchants had kindled the same idea by spontaneous combustion.

Across the land, people read about Newburyport, and many hoped that their own merchants would soon do--or be forced to do--the same thing. The President of the United States, who likes nothing better than to commend a citizen for a small job well done, heaped his praise on Newburyport.

Main Street or Wall Street? Was it as simple as all that? Not exactly. Harry Truman's own ex-haberdashery partner in Kansas City, Eddie Jacobsen, said: "I'd love to cooperate with President Truman in every way, but I can't cut prices on nationally advertised merchandise which is marked at a fair price." The Newburyport merchants knew that their plan would never work permanently unless the price reductions were backed up all the way along the distribution and production belt. They got a tentative promise of a 10% reduction from some wholesalers, but they had no sign that manufacturers would do the same.

In New York, ex-Mayor Fiorello LaGuardia sneered: "A big fuss is made because a small town is putting out signs reducing prices. A reduction in prices does not come from Main Street, but Wall Street."

The Little Flower, as usual, had a bit of demagogy caught in his larynx. But he did make the point clear that in a complicated modern economy a little rejiggering at the tail end--the retailer's outlet--will not overhaul the whole machine. A few manufacturers' price cuts were made last week, but with a slight air of hollow ballyhoo.

The Newburyport Plan had dramatized the hunger of the U.S. people for price cuts; it had also slightly obscured the fact that some basic prices--notably food --were on a slight downgrade.

But in the same week that Newburyport caught the imagination of the people, something happened which seemed to assure the U.S. that there would be no great overall price reduction for some time. Four titans of U.S. industry--Big Steel, General Motors, Chrysler and General Electric--signed contracts with union labor for wage increases at the now magical figure of 15-c- an hour.

The wage rises were probably the next best thing to price cuts. It was quite true that they boded ill for people on fixed income: they meant that a cheaper dollar was here to stay. But they could also mean that, with comparatively uninterrupted production, the national income would level out at somewhere near its present $176 billion figure. The increased wages would be a cushion of purchasing power against a recession. The security of the labor market made business' cost estimates solid.

The signing of the four wage agreements was the firmest guarantee of industrial peace which the U.S. had had since the end of the war. The nation was now in the midst of a fairly well-behaved boom; it had something approaching "normalcy." Would it continue? Many were sure that a recession was just ahead. The biggest danger lay in a slackening off in building construction (see BUSINESS), and a drop in foreign trade. The U.S. people, world-famed worrywarts, fretted and fumed over their economic future. There would be dislocations ahead. But the general outlook for the U.S. and its economy was good--the more so when compared with that of Europe (see below).

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