Music Trade Review -- © mbsi.org, arcade-museum.com -- digitized with support from namm.org
MlfflC TMDI
VOL. LXXI. No. 15
Published Every Saturday by Edward Lyman BUI, Inc., at 373 4th Ave., New York.
Oct. 9, 1920
Single Copies 10 Cents
$2.00 Per Year .
The Readjustment in Business
T
HE readjustment in business and industry, which has been practically under way since last Spring,,
has been markedly accelerated during the past two weeks, owing to the price reductions made by lead-
ing manufacturers in the textile, lumber, leather and various other lines. The. real bombshell, however,
was the announcement by Henry Ford of a cut in the price of his cars, followed by similar announce-
ments on the 'part of other automobile manufacturers. In fact, every day the newspapers print reports which
illustrate most convincingly that a general readjustment of prices is evident throughout the country. Naturally
piano manufacturers and merchants are keenly -interested in this development and are endeavoring to deter-
mine just how this question of price readjustment will affect the music industry.
It is claimed for Ford and the other automobile manufacturers that they found only sufficient orders
on hand to keep their plants busy for a month or so and consequently cut prices with a view to sacrificing some
profit in an effort to increase production. In other words, smaller profits on a greater number of cars. Con-
ditions in either the textile or automobile trades can be accepted as a basis upon which to judge what may
happen in the music trade. Clothes have been bought regularly and frequently by the average citizen. He has
seen $18 suits jump to $50 and $35 suits to $100. He has had the increased cost of clothes brought to his
attention practically every day, and a 150 per cent or 200 per cent increase in cost has served to provoke him to the
point where he has regarded a rusty suit as a badge of honor.
Automobiles can only be absorbed up to a certain point, and, with some sections supplied at a ratio of a
car for every seven persons, it is realized that there must be a slowing up in demand as the final point of absorp-
tion is reached. The Ford plants alone are credited with a capacity of 3,500 cars a day, which, if correct, shows
an annual capacity of over a million automobiles, or almost three times the number of pianos and players pro-
duced annually. This is not figuring in the output of other manufacturers of automobiles.
In considering music trade conditions it must be remembered that the point of absorption is far from
being reached. Not being an article purchased at frequent intervals the moderate increase in piano prices has
not been so apparent to the public. These two factors, therefore, cannot be calculated to influence any price
readjustments in the trade.
" Although some piano merchants declare that the public has shown an inclination to slow down on buy-
ing, there is yet to be received a report to the effect that the public refuses to be sold. It simply means a
readjustment of sales practices, and the injection of some more energy. Any price reductions in the trade
will not come first from the manufacturers. That is quite evident, for their-supplies and labor costs are fixed
until well after the first of the year at least. Production costs are fixed because it is necessary for the piano
manufacturer today to stock up with supplies to take care of his requirements for several months, to offset the
delays due to slow transportation, the reduced output of supply factories, etc. Not until present supplies are
exhausted, and that will be after the first of the year, can any change be expected logically as a result of pos-
sible lower costs in that direction.
One manufacturer at least declares that any price readjustment must begin with the retailer, who in
some cases has been making a most generous profit, particularly on pianos and players not covered by fixed list
prices. The retailer, declares this piano man, must be satisfied with a more moderate profit on standard lines
of instruments, making up the difference in an increased volume of sales. These increased sales will mean
increased production by manufacturers and a considerable lowering of production cost per instrument. Other
manufacturers have taken occasion to concur in this opinion, more of which will follow later.
But the fact remains that the situation has caused, and is causing, considerable thought on the part of
those who are connected with the trade. The necessity of finding a quick solution will, of course, depend upon
just how far this tendency towards price adjustment really goes.