Music Trade Review

Music Trade Review -- © mbsi.org, arcade-museum.com -- digitized with support from namm.org
There'll Be Good Business This Fall
But Merchants Must Go and Get it.
I
N everything we say here this after-
noon about Fall 1951 business pros-
pects, we're taking it for granted
that the American people and its elected
representatives will not take the cease-
fire in Korea as a signal to let up in
our efforts to strengthen ourselves and
our allies.
Now, what does the Korean cease-
fire mean for Fall 1951 business? First,
we want to go on record as saying that
in spite of the cease-fire, the second
half of this year will be dominated by
an inflationary, not a deflationary trend.
We said so back in April at the 20th
Amos Parrish Executive Clinic held in
New York—and those of you who
weren't there ought to make sure that
you are there at the 21st Executive
Clinic scheduled for October — along
with close to a thousand other top
retailing and manufacturing executives.
We said back in April that, in Fall
production, employment, income, prices
and sales would be well above Fall
1950 levels. Nothing that's happened
since then has given us good reason
to change our minds.
At a time when retail inventories al-
ready were high and nobody was rush-
ing to buy anything, we pegged that
optimistic forecast to two big facts:
1. A defense program whose size is
unprecedented in peacetime, and
2. A record rate of investment by
private industry in new plant and
equipment.
Now, we're not saying that the cease-
fire will have no damping-down effect
upon inflation. The world situation
continues to be critical. But we've
gotten so used to international crisis
and threats of war that we almost take
them for granted. The cease-fire, there-
fore, undoubtedly means a psychologi-
cal letdown which must affect the busi-
ness situation.
Defense Spending to Continue
Even though the guns in Korea have
been silenced, the defense spending
planned earlier for Fall 1951 will pro-
ceed pretty much as scheduled before
the cease-fire. Defense orders, defense
production and defense spending will
be the biggest factors in Fall 1951 busi-
ness.
We're wound up now to the point
where even the cease-fire can't show up
THE MUSIC TRADE REVIEW, AUGUST, 1951
by JAMES R. LAMB, Sales Manager of defense orders so heavily is that
Amos Parrish & Company, Inc.
long before production begins on many
New York, N. Y.
or most of these orders, the very fact
J.IMKS K. LAMB
in any immediate slowing of the produc-
tive mechanism for defense—even if
we wanted it to—and we don't. At
this very moment, American industry
has orders outstanding for $32 billion
wo th of defense supplies, equipment
and facilities. Thus far. with all the
hullabaloo, only about $10 billion worth
of military supplies and equipment has
been delivered to the Armed Forces in
the entire period since the Korean war
began. Compare this with the $42 bil-
lion of orders added to the books since
the war began—including the $7 billion
on order when the Korean war began—
and you will see that only one-quarter
of the defense material ordered thus far
has been delivered. Three-quarters re-
mains to be delivered.
During the past year, the Defense De-
partment has had placed at its d'sposal
.for supplies and equipment about $46
billion to build up our own and our
allies' defenses. The President has
asked that the Department be given an
additional $49 billion for procurement
of military equipment in the coming
12 months.
That's $95 billion of order-placing
power in the hands of the Armed Forces
within two years. The Armed Forces
will order close to $50 billion worth of
defense goods within the next 12 months.
The reason we stress the importance
that they've been placed means increased
demand for money, materials and man-
power. That is even more true if a
big loan goes along with the order—•
and very often it does.
As for actual deliveries of military
supplies and equipment, right now
they're coming through at a rate of
about $iy<> billion a month. That's
more than double the rate before Korea.
But it's only the beginning. For by
June 1952, military goods will be pour-
ing off the assembly lines at a rate of
$4 billion a month.
Much of the defense effort is just
emerging from the order-placing and
tooling-up stage. Next comes the big
push—actual volume production and
delivery—and we're going to see it from
now on. Deliveries now are running
at an annual rate of less than $20 billion.
By the end of this year, however, they'll
be running at an annual rate closer to
$40 billion. And by June 1952, that
figure will be closer to $50 billion a
year.
Defense Spending to Double
These are the latest available esti-
mates on the size and pace of the defense
program. They take into account the
effects of the Korean cease-fire. They
assume a slightly slower pace of order
placement than we might have seen
had we continued using up supplies
and equipment in actual combat. They
also make allowance for the fact that
defense orders and expenditures have
been running about 20% behind sched-
ule and have a linger wav to go before
reaching the peak than had been planned
originally. In other words, it's a con-
servative estimate that defense spending
in the next six months will be about
double what it was in the past six
months. Defense spending in Fall 1951
will be four or five times the amount
of such spending in Fall 1950.
The size of the defense program as
mapped out, means that the Federal
Government in Fall 1^51 will need a
substantial increase in income to avoid
running at a deficit. Right now. how-
ever, it looks as though the increase
it will get will be less than is needed
to cover the increased defense costs.
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