Unseasonal Weather

One balmy day last week, a Manhattan housewife shopped for her summer clothes. In one store she eyed a cotton dress, turned on her heel when she saw the $40 price tag. But before she could get away, the saleswoman stopped her; the dress had just been marked down. The new price was $15; the customer took it.

It was no isolated case. Summer clothes in stores all over the U.S. were going at bargain rates. In Atlanta, Rich's offered $4 cotton dresses (40% below last year). In Nashville, Harvey's department store slashed all its prices by 35% to 40%. Manhattan's Gimbel Bros, put on sale $1 million worth of summer merchandise at cut prices. In Chicago, Mandel Brothers sold $18 summer dresses for $7. Montgomery Ward & Co. also swung a sharp ax. It cut prices from 10% to 40%; washing machines were off 10% to 15%; porch furniture, 10% to 23%.

Such price-cutting near the peak of summer buying had not been heard of in years. But sales were still under last year's. Retailers were hastily trying to clear out old merchandise, notably textiles, as new, lower-priced dresses reflecting the wholesale price cuts of the past few months came in. For the first time in seven years, women could buy neat, fashionable dresses for less than $11.

Loans Down. In the overall picture, the price cuts were part of what Manhattan's Guaranty Trust Co. called the "very moderate" recession. The sizable cuts were largely confined to soft goods, lumber, a few other commodities (in the futures market, May wheat hit a flurry of .selling which sent it down 6-c-) and such surplus items as radio-phonographs, which were cut up to 40% by Magnavox.

Catching up with the "moderate recession," the Federal Government thought it time to ease more anti-inflation controls. The Department of Commerce lifted export controls from 500 items, including many foods and appliances which had become surplus. The Federal Reserve Board, for the fourth time in three months, eased credit restrictions. It reduced bank reserve requirements 1% and 2%, depending on the size of the bank--thus freeing about $1.2 billion extra cash for lending. But FRB's move was not likely to boost the volume of loans: businessmen had carefully cut their borrowing by $1.5 billion in the last 14 weeks.

Prices Down. Many a businessman was beginning to realize that the way to get consumers buying more again--and start up production in slack lines--was to make some more price cuts. Last week Lew Hahn, general manager of the National Retail Dry Goods Association, put this feeling into words.

Said he: "Manufacturers and retailers have no more important approach to the problem of rebuilding volume than early price reductions. It would appear that many appliance retailers have found their sales off as much as 50% [in 1949]. However, [price reductions] are about the one thing the manufacturers are unwilling to face . . . Relatively little has been done to meet the public's demand for lower prices. The only question seems to be whether industry will move in quickly and do the needed thing or whether it will invite a couple of seasons of bad business and then finally have to take even deeper cuts."

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