Business: Pie and Jalopies

Last week was National Cherry Week (as it is annually because of Cherry-Chopper George Washington's birthday). It was also whole or part of "National Defense Week," "National Orange Week," "Better American Speech Week," "National Horace Heidt Record Week."* Last week, too, the biggest U. S. industry revealed that it would for the first time appropriate a week for its special pleading: in Manhattan President Alvan Macauley of the Automobile Manufacturers Association announced that all U. S. motorcar makers would join in spending $1,250,000 to make March 5-12 "National Used Car Exchange Week."

Late in January, A. M. A. President Macauley (Packard) and a group of other automotive presidents including Ford's Edsel Ford, Chrysler's K. T. Keller and General Motors' William S. Knudsen were closeted for nearly two hours with President Roosevelt. No one would reveal then or last week precisely what went on, but it was admitted that the President said something must be done to haul the bemired automobile industry out of the slump.

Practically all automobile makers except Henry Ford belong to the A. M. A., and Ford Motor Co. almost always holds aloof from cooperation with the rest of the industry in any national enterprise. A. M. A. President Macauley was therefore greatly surprised to receive a visit from new Ford Sales Manager John Raymond Davis only ten days after the White House conference. Sales Manager Davis had a plan for joint action by all the makers including Ford. The A. M. A. directors took only 45 minutes to give it their okay. A straight-forward promotional scheme, the Ford plan means a one-week blare of 170,000,000 separate advertising messages via radio, magazine, billboard and newspaper aimed solely at selling used cars.

About one-third of U. S. motorists have never owned a new car, and for every new car a dealer sells he generally expects to have to handle one and a half to two used cars. When the used car market bogs down, dealers therefore are virtually frozen. Normally there are 500,000 used cars on the market. Last week there were about a million, 800,000 in the hands of the 46,000 new car dealers, the rest in the lots of independent used car dealers. Price cuts of ten to 25% on jalopies (trade parlance for worn-out cars) and the big batch of cars older than two years kept the used car turnover in January almost the same as January a year ago, but the total inventory remained excessively high, particularly in late models. Automotive men are agreed that if about a fifth of the used cars can be disposed of, new car sales in turn will pick up.

The seriousness of the situation was indicated by the fact that last week new car output was only 56,677 against 115,360 for the same week last year. It was also indicated by General Motors' announcement of a pay cut of 10% and up for all salaried employes. Some 50,000 people will be affected, saving G. M. nearly $10,000,000 a year. Biggest cut of all was taken by G. M. Chairman Alfred P. Sloan Jr. In 1936 G. M. paid him $561,000 ($150,000 salary, $411,000 bonus). At the present rate of earnings he has little likelihood of getting a $411,000 bonus this year, and by last week's pay cut a $150,000 salary would be reduced to $111,000.