The Economic Picture
A condensed report on business today and how
present trends affect the Coin Machine Industry.
The verdict of business leaders seems pretty certain now that the first half
of 1950 will show a much better level of prosperity than had been expected.
Most of the reports available at this writing say the level of optimism among
business leaders is high and has been improving steadily.
The reports of corporations and business finns for the first quarter of the
year were a decided tonic. Profits are rising and dividends have flowed freely.
Industrial activity has been gaining in most fields.
Some of the major firms in the coin machine trade have helped to swell
the tide of favorabl e reports for the first part of the year. Automatic Canteen,
ABC Vending Corp., Rowe Corp., Mill s
Industries, Wurlitzer and oth ers issu e fina,,-
cial reports that are published in financial
papers and all have been good.
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Automatic Canteen's report showed a
drop in earnings but the report added that
vendor sales have been gaining this year.
Rowe revealed that its operating division
in cigarettes had enjoyed excellent busi-
ness, while the machine manufacturing end
had not shown such good earnings. Mills
and Wurlitzer have been advan cin g steadily
in their financial position.
Operators should share in this general
optimism but most of them that report to
THE REVIEW still say the costs of doin g
business take the joy out of the high level
of earnin gs, and high pri ces on everything
are still a discouragement. Th e operating
level is high but costs are also hi gh.
The general busin ess picture at prese llt
seems to hang on the followin g major
fa ctors :
1. Corporations generally have plenty of
working capital and are not having to bor-
row to expand; many industri es also have
good back logs of orders.
2. Th e pri ce level hold s high and stable.
This is a debatable point, of course.
3. Governm ent mon ey is widely sprea d to
industry, busin ess firms and farm ers. This
is a highly debatable point, also.
4. Banks, insurance companies and the
governm ent are beginning to provide loans
to small firm s som ewhat on th e basis th a t
bi g firm s ca n get loans. Th is is th e most
constru ctive move in th e whol e business
picture and thinking peopl e wonder why
banks and insura nce com panies waited so
ma ny years.
There are som e unan swerable question s
in th e general pictu re:
1. There is no way to tell what defense
spending and war talk is doing to the
people and to business in general. At
present, it seems to be a mighty support
to ma intaining prosperity.
2. The price level is high and is rising
again. The peopl e are divided on thi s
point.
3. Produ ction capacity of the nation's
industries and factories is greater than
present output and the total level of em-
ployment is not gainin g as fast as popu-
lation.
These big questions come home to op-
erators in many ways but time seems to
he th e only thing that will bring an
answer.
A review of som e of the many reports
on the economic pi cture follows:
AUTOMOBILES-Here, the reports con-
tinue to be very favorable, in spite of the
Chrysler and other strikes and the return
of gray market pri ces on some cars. Pro-
duction and registration reports show good
increases from month to month. The gen:
era! outlook is promising.
Rubber gets higher and tire prices also
advance; rubber recently reached a postwar
high in foreign supply centers. As suggested
in this column last month, gasoline prices
have a rising trend; th e big oil companies
say th eir costs continue to rise so gasoline
pri ces are in creased. Gas stations , report
increased sales this year compared with
last year.
BUSINESS FIRMS - Busin ess failures
hit a postwar hi gh in March but th e rate
was still littl e more than half the rate
in 1939 ;. more recent l"eports suggest that
th e l"ate of failures has dropped off. Retail
store failures, including drug stores, seem
to be leading in the failure trend. Region-
ally, th e rate of failu res in March was
hi ghest in th e Rocky Mountain and P acifi c
Coast states.
CREDIT- Th e volum e of deba te on thi s
subj ect seems to have dropped off in the
l ast month. Th e moves of banks a nd in-
surance companies to offer more fav orabl e
loans to small firm s is considered important
and will lead to better credit terms in
many lines of busi ness, even reachi ng th e
coin machine business. Retail stores are
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