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"To the extent that any price increase granted a manu-
facturer passes the 20 percent point, however, retail prices
are increased so that the dealer's dollar margin is not
impaired by such increase. To illustrate, were a manu-
facturer granted a 21 percent wholesale price increase, the
dealer would absorb the cost increase between 13 and 20
percent; but would pass on the actual amount to the
additional one percent."
The (/Husk jf/iade
REVIEW
Mr. Mills Enters a Vigorous Protest
I
Established 1879
CARLETON CHACE, Editor
E. L. Easton
Alexander Hart
Associate Editor
Technical Editor
Betty B. Borin
Circulation Manager
Published monthly at 510 RKO Building, Radio
City, 1270 Sixth Avenue, New York 20, N. Y.
Telephones: Cl rcle 7 - 5842 • 5843 • 5844
Vol. 104
OCTOBER, 1945
No. 10
Business —As We See It
UST to give the industry an idea how patience can
be tried when dealing with the OPA we are going
to recite herewith the experience of William A. Mills,
Executive Secretary of the National Association of Music
Merchants. On July 5th, Mr. Mills wrote the OPA pro-
testing the absorption of manufacturer's ceiling price in-
creases by the retail merchant.
Eighty-four days later on Septem-
ber 27, Mr. Mills received a reply
written over the signature of Daniel
L. Jacobs, Head of the Radio and
Miscellaneous Unit, Durable Goods
Price Branch. In this letter Mr.
Jacobs stated therein that "OPA's
study indicated that retailers could
absorb 20 per cent cost increase
before their margins would be re-
duced below 1941 realized levels,
and this additional "absorption
potential" is utilized in cases where
increases" beyond the general 13
Chose
percent are authorized under para-
graph (d) of Revised Order 2525. Eor example, were a
manufacturer's wholesale prices increased from 13 percent
to 20 percent over March 1942 levels, no change would be
made in the dollars-and-cents retail prices for his pianos,
the retailer absorbing the seven percentage point difference.
J
10
N protesting vigorously this latest OPA ruling, Mr.
Mills prefaced the factual part of his reply to Mr.
Jacobs with: "The statements I am about to make may
seem facetious and somewhat cynical. I do not mean them
that way. The situation with us is too serious, but the
mere fact that a letter that we wrote on July 5, is not
acknowledged until September 25, apparently because you
have been too busy with other things seems to be the
finest kind of argument for decontrol of the relatively un-
important piano industry, unimportant in relation to the
entire economy. Confusion would be eliminated, produc-
tion stimulated and re-employment assured if OPA would
concentrate on those items which are of more immediate
concern to the entire population."
"I have yet to talk to a responsible business man who
did not have a sympathetic understanding of the problem
faced by OPA. It is to our own interest to control infla-
tion. The present pricing policy of OPA, however, retards
production, accentuates scarcities and delays that time when
OPA says it will withdraw control; that is, when produc-
tion is equal to demand. Under the present pricing policy
the only time that production would be equal to demand
would be as the result of an expanding wave of unem-
ployment due to lack of jobs opportunities. Supply would
equal demand because of the public's inability to buy. Our
letter of July 5. was written because our members were
asking for information. It makes impossible effective co-
operation when such delays occur.
"With equal sincerity I say to you that despite any figures
that you have collected it is absurd to think that a retailer,
on the basis of normal operation or at any other time for
that matter, can, without loss, absorb a 20% increase in
price. We think we know something about the operation
of a music store. We have discussed this problem with all
types of operators—large and small, metropolitan stores
and small town merchants. It just can't be done.
"An independent survey made by Dr. Jules Backman of
New York University found that of all of the grouns studied,
the highest average operation was in the music field. Most
department stores with their high speed operation and fre-
quent turnover, with a good percentaeg of their sales rep-
resenting consumer convenience goods, have operating
ratios higher than the 34% currently being allowed on
some lines of pianos. Even if it were true that some stores
could operate on the basis of a 20% absorption, it would
represent a hardship to a very large percentage of the
entire industry.
THE MUSIC TRADE REVIEW, OCTOBER, 1945