The Caledonian-record. [volume] (St. Johnsbury, Vt.) 1920-current, 1922-04-22
Why Present Lists Can
not Be Further
Reduced

| y
if his sales are enough to keep his
plant busy.
| The American public has seen
price wars many times in the laJ
quarter of century, but usually
! these were between very few
concerns, admittedly trading at a
loss in order to wear down and fl
nally destroy a competitor. This
sort of war gave the public a
thoroughly good article at bar
gain price for a short time, but
the public footed the bill when
the war was over, the victor, be-
ing freed from opposition, was
then able to do what he liked with
the price or the quality or both.
At the present time there has
been a price-cutting war in the
motor industry which is gradually
Pickering out, but it was not at
all the same sort of war as that
of the old fashioned fight for the
| domination of some market or
other. The old trade wars were
usually wars of aggression, wars
fought after years of preparation,
years of filling the war chest, fol-
lowed by a campaign with march
| es, counter marches, sieges and
excavations true to the military
model. But this, the automotive
imbroglio, is the struggle for eX-
istence against the common foe of
decreased demand.
A man must have certain
amount of food, if he is to stay
alive, and an industrial concern
must have corresponding
amount of business In industrial
situations like this one, two things
happen: First of all, prices are
cut down till cost of production
and selling price balance. To go
below this point and trade at
loss is possible in war of ag-
erosion; it is suicide in a war for
survival. Then, if this amount of
price reduction does not cause
revival of trade, the quality of
the article suffers so as to permit
a further drop in price. In the
case of the automotive industry,
a drop in quality would be doubly
suicide.
One of the most prominent men
in the industry, speaking at the
annual meeting of the Society of
Automotive Engineers, in Janu-
airy, said that one of the troubles
was that automobiles of the past
few years production were too
good. He meant that machines,
like lathes or drill presses, for
example, were replaced just as
soon as new types appeared do
ing better work more economical
ly. Just as long as tools go on
improving, it pays to junk the old
equipment before the original ma
chinery is worn out. 1t is an in
contestable fact that those of US
who have bought new cars every
year or two have done SO chiefly
because the new models were so
much better than the old ones,
more comfortable, better perform
ing, and so forth. If improvement
slows down, then buying will just
naturally slow down, too, except
for the fact that with every inn
provement in economy and dura
bility the market is enlarged.
The truth of the contention
that the economic bottom price
has been reached is fairly well
supported by the condition of the
used car market. A man owning
car which cost him $1,000 in
1919 found last summer that to
buy new one, giving his old car
in trade, would cost him say
$1,000, the old car being valued /
at $500, and the price of the new
car he wanted being then $500
instead of $4,000. Today the new
price is, let us say, $1,000, but the
trade-in value of his old car has
dropped corresponding amount,
so he will still have to pay $1,000 |
to get new car.
The new car, because it is new
will give greater satisfaction, it .
will be a little more economical .
in upkeep than the old one ever
was, and a good deal more econo- ]
mical than the old car is now, in
its considerably used condition
By no conceivable turn of the
wheel of fate can the value of the
old car increase, it is practically
certain to drop still lower. For a
good many months past, stabiliza
ton of price has been reached on
this basis, and it is proper basis
to take, because great majority l
of new car sales involve u used
car trade.
Whatever happens, the automo-
bile industry has some struggles
ahead. The war brought an OK
cess of demand above what would
have been, had there been no war.
The industry is equipped for the
volume of production that would
probably have been suited to 1920
or 1885 had development proceed
ed along a smooth curve. De
mand has been above normal, 1T
is now below normal, but with a
little greater activity it will come
back to its proper place on the
curve, and that proper place is
thought to be a demand of about
so per cent of the production IA
cilities existing. This position
of affairs will ensure the public
getting absolute maximum value
f0r money for a good many years
to come. If prices fall, it will be
because cars become smaller, or
lighter, or simpler. Cars essen
tally as they are today will never
be cheaper than their present
nriCeS make them.