Evening star., 1941-12-30

Henderson Places
Ceiling on Prices
OF Cigarettes
Acts After Manufacturer
Refuses to Rescind
Proposed Increase

BY the Associated Press.
Price Administrator Leon Hen
derson today baked a proposed in
crease in the manufacturer price
of Lucky Strike cigarettes by an
nouncing a sales ceiling at the level
prevailing December 26.
The American Tobacco Co. had
announced Saturday that the price
would be increased 81 cents, to $7l0
a thousand, Mr.. Henderson claimed
the increase was sought to main-
tain earnings at the current level
in the face of higher taxes, but
the company declared that increased
manufacturing costs, exclusive OF
taxes, necessitated the rise.
Mr.. Henderson's Office Of Price
Administration had asked the COM
pany to rescind the increase, con-
tending that far more exhaustive
studies would have to be made to
Justify an increase.
Other companies manufacturing
cigarettes did not boost their prices.
Mr.. Henderson said he was pre-
pared to extend the scope of the
price fixing order to take in jobbers
and retailers if necessary TO prevent
an increase in the price of cigarettes
to the public.
Limited Data Offered.
Mr.. Henderson. after a meeting
with high officials of the tobacco
company, said the company mad
offered only limited data" in justi-
fication Of the price increase.
George W. Hill, president OF the
company, later released, without
comment, extracts from text OF a
statement he had made at the con-
ference.
In it he asserted that the increase
notice to the trade provided for
their procuring a two weeks supply
at the old rate and therefore there
is practically that amount OF time
available for further investigation
of the justice and fairness Of the
price advance, full details of which,
as to the American Tobacco Co.,
have already been furnished to the
Office of the Price Administrator. y
The statement also contended that
"the entire amount of the price
increase represents higher costs,
without additional profit"
o. P. A. officials contended that
anv price advance could be justified
only on the basis of far more
exhaustive study than the tobacco
company presented, "in view Of the
highly favorable earnings position
of the company and the substantial
price advance involved"
Seeks to Protect Public.
Mr.. Henderson said his primary
purpose in the forthcoming price
order was ito prevent an increase
in the price of cigarettes to the
public"
II wholesalers and retailers fail to
cooperate in this purpose. he ADDED
o. P. A. will enlarge the scope OF the
schedule to include price maximum:
at the retail and wholesale levels, a!
well as the manufacturers price.
THE o. P. A. request was reason
able" Mr.. Henderson said in for
NAL statement. The corporation
merely was asked to withhold tn
advance until proper studies could b
made. 1t refused. Preliminary evi
dence indicates that the earnings o
the American Tobacco Co. befor
taxes are near record levels and tn
company. partly as a result of tn
stimulating effect of defense ex
penditures, is enjoying a boomtim'
volume Of sales.
Under the circumstances, ant
considering that the Lucky Strike
increase might involve advances or
the part of other manufacturers. o
P. A. is compelled to issue a sched,
ule of maximum prices for cigarettes
at or about the levels OF December
26, l94l.'