Business In I960: Tough Prosperity

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surplus. In 1960 it was hard to make a dollar, though still possible for businessmen who were willing to learn new and harder disciplines. Many a corporation in such industries as food and electronics set alltime records. But overall, as one businessman said feelingly, "it was tough prosperity." Troublesome Abundance. The tough prosperity was brought about by a great change in the U.S. economy and in the position of the U.S. in the world. Gone for good was the easy-selling postwar market, which three previous recessions had failed to slow appreciably because needs were still so great. In 1960 the consumer had most of the things that he needed—and sometimes two or three of each. In the past ten years the U.S. has built more than 57 million new cars for its citizens, more than 12 million new homes. As he looked about him, the U.S. businessman was confronted with an abundance of many of the things he sought to sell.

Even more important, the consumer in 1960 showed himself increasingly choosy about his purchases, more wary of advertising claims, more disenchanted with such cherished business concepts as planned obsolescence — if the change was made just to make last year's model look outdated. "I've got a good refrigerator in my kitchen," snapped a Denver housewife.

"Why should I buy a new one just be cause the manufacturer adds some silly U.S. industry had an embarrassment of riches—in the form of equipment that it could not use. After spending about $170 billion since 1956 on new plant and equipment, industry had surplus capacity almost everywhere. U.S. manufacturing as a whole was operating at less than 80% of capacity in September v. a preferred range of 90% to 100%. Had industry overbuilt? Most businessmen did not think so. The surplus was insurance against the day when, they all felt, demand would soar once again.

Nonetheless, the smart retailer, viewing this situation, considered it only natural to cut his inventories. Slackened demand enabled him to get his goods on short order, so he shifted the inventory burden to the wholesaler and manufacturer. The massive shift was a major factor in the slowdown; industrial inventories dropped from an accumulation rate of $11.4 billion in 1960's first quarter to a net decline of $4 billion in the fourth.

Businessman's Administration? It was remarkable that in the face of such reversals the U.S. economy managed to hold as steady as it did. But it needed bounce.

Would the new Administration in Washington supply some? Although Jack Kennedy at first talked of a whirlwind "100 days" of new legislation on the Roosevelt model, his appointments and pronouncements since the election showed that he was well aware that today's problems are not those of the Depression, which called for radical Government action. They are problems that business itself, given the right climate, may go a long way to solve. With several top businessmen in the Cabinet, the Kennedy Administration will be more of a businessman's administration than business had expected.

One of the new Administration's first moves was unspectacular to the public but vitally important to businessmen.

Last week James M. Landis, former dean of the Harvard Law School, teed off in a scathing report on the regulatory agencies on many of the very things that businessmen have