Evening star., 1942-05-10
Market Hints
Benefits From
Stable Prices
Some Investors More
Hopeful, but Many
Remain Gloomy
By FRANK MacMILLEN,
Wide World Business Writer.

NEW YORK, May e-With little
more time to study the country's
new price ceiling system and the
spread of consumer rationing, Wall
Street came through this week with
a mild upward furry in stocks, the
first lift of consequence in months.
But at the same time businessmen
admitted continued confusion as to
how the country's swift moves Of the
past fortnight we're going to affect
their enterprises.
The conviction appeared to be
growing that in many cases develop
ments would be unpleasant for the
individuals concerned, even though
necessary for the country. For
others investors appeared more
hopeful than a week ago.
The stock market, a mirror CT
business thinking, but foggy one
in recent months. managed a cau-
tious advance after slipping fairly
steadily since February.
Since most Of the shares traded
are those of major corporations.
financial quarters thought they
might be witnessing a swing by in
vestors to the idea that profits and
dividends of many big concerns
might benefit more from stable
prices with the implication Of stable
wages than from an upward spiral
of these cost factors.
Taxes Change Situation.
Time was when rising level Of
general prices was considered more
beneficial than not, but that was
before there were such large taxes
to siphon off the cream of profits.
Key corporations in several fields
lately have reduced dividends, de-
spite huge gross volumes Of bust.
ness.
Also seen as possibly significant
clue to the future was the assurance
given here this week to representa-
tives of the women's and children's
cloak and suit industry by DR.. j. K,
Galbraith, deputy price administra-
tor. that hard pressed producers
and sellers would be given last
resort" subsidies rather than allowed
to go out of business because Of the
squeeze of price ceilings.
But many of those who heard CAL
braith concluded that his conditions
were at least as important and far
reaching as his promise.
While he indicated that refine
ments of the original overall hmi-
tations were in the making he said
"the ceilings will not be raised"
Frills Must Go.
The Government would consider
no subsidies. he said, until industry.
by ruthless, rigid economy, had di-
vested itself Of every possible peace
time frill, and he called the present
setup "a luxurious system of retail.
ing, wholesaling and manufacture
ing" |.
The eventual place Of rationing
likewise came up in business dis
cussion as sugar registration was
completed and things got under way
for the limiting of gasoline use.
Rationing, some observers con.
tended, might in the long run pre-
sent more problems Of business ad.
justment than price ceilings, even
though the latter are to the fore
at the moment.
Price freezing at least has safety
valves, they said. In addition to
subsidies and drive to cut frills
from costs, individual hardship cases
can be adjusted and pressure can
be removed from the price level by
soaking spending money up from
the buying public through borrowing
and taxes. =
But rationing, as one observer put
1t, Is "the regulation OF scarcity,
and manufacturers and sellers deal
ing in limited materials can be given
only their share Of the reduced sup
ply.
More Victims Seen.
Thus many small and medium
concerns, whether processing or SELL
ing, looked like inevitable casualties
of the war as their supplies dwin-
died. The automobile and tire deal
ers were the first victims, but others
in the danger zone now, 1t was said,
included many in the light metal
working trades and retailers in .
dozen fields, notably radio. house.
hold appliances and gasoline.
Retailers handling products which
promise to continue in good supply
might do fairly well, even though
price ceilings squeezed their profit
margins, 1t was said. Continued
brisk turnover would help to meet
their overhead.
But fixed costs of operation might
be too much for many merchants
with MT ennl1oh uOods "a sell nh