Pre-Fire Sale

Although it has done some positive good, the so-called Newburyport Plan (popular misconceptions to the side) has not brought about general price reductions. Nor was it intended to. Essentially, the ten percent retail price reduction movement is a somber, out of season, post-Christmas clearing sale. Many merchants, rightfully fearful that shoddy, overpriced good would rot on shelves, to be written off as complete losses, saw the light and began selling at wholesale cost. The resultant waves of buying have emptied shelves at no net loss. While a plasma infusion to the store-keeper, this phenomenon has no effect upon real prices.

For as almost everyone knows by now, raw material, labor, and manufacturing costs set basic prices, which, in turn, are marked up as goods flow towards shops and consumers. Business men and farmers are well aware of this. But, with unholy naivete, they still hope to sense the imminent price crash in time to slow down or temporarily halt production, having squeezed enough profits out of exorbitant prices to tide them over. This gamble lay behind the NAM's successful war against the OPA last year, and it is this same gamble that seems dangerously close to being lost in the near future.

The warning signs are already out. As dress factories in New York and woolen mills in New England close down, manufactures report that buyers are holding back orders, waiting until the last possible moment to take advantage of price trends. Business men talk of halting production so that an artificially created goods shortage will keep prices up. But this approach makes even less sense than the removal of price controls did last year; for the present reluctance to buy is not based upon a surplus of goods but upon a surplus of the wrong kind of goods. Making liberal allowances for increased raw material and labor costs, the inferior merchandise dumped in the seller's market this past year has been priced completely out of line with any inherent quality.

In short, manufactures will either have to reduce drastically the price of goods they now make or greatly improve merchandise quality at present price levels. Food and raw material prices need to be eased down, mark-ups on goods reduced, and smaller profits accepted all along the line. Merchandise quality must once mere reflect competition and not indifference. And labor, having gained its wage demands, must rid itself of the 1930's philosophy of stretching out the work. Newburyport has been great fun for the storekeeper, but the real job begins with the producer. If he delays further, a price crash, recession, and unemployment will follow the Forth of July skyrockets into the national view.