AAAftermath

In the confusion that followed the death of NRA the stockmarket went into a sharp decline. With this false movement well in mind, the market hesitated for only a few hours after the overthrow of AAA, then surged upward in a series of 3,000,000-share days that last week carried the industrial averages to new highs since November. Thus did business register its long view on the aftermath of AAA.* However, most businessmen were more concerned last week with the immediate results of AAA's passing upon these commodities:

Cotton was the only regulated farm product in which a serious surplus still exists. While the carryover had been cut from 13,000,000 bales to 9,000,000 at the start of the crop year, it was still 4,000,000 bales above normal. And cotton sagged last week, distant futures slipping below 10-c- per Ib. Meantime, elimination of the 4.2-c- cotton processing tax brought trading in cotton textiles to a halt. Prices were cut but not enough to satisfy buyers, who insisted that quotations must fully reflect the saving in taxes. Tire makers, who have been paying some $20,000,000 annually in cotton processing taxes, hoped to maintain present prices, saving the tax for themselves.

Hogs, in the face of the heaviest shipments in more than a year, bounded upward with the outlawing of the $2.25 per cwt. processing tax. Yet pork prices were slashed, and packers were cheered by the prospect of regaining lost volume through lower meat prices in general (see p. 66).

Sugar refiners reduced prices to the full extent of the processing tax, taking orders at 4.75-c- per Ib. instead of 5.3-c-.

Wheat & Corn reacted a few cents last week but grain surpluses are small. Flour was cut as much as $1.38 per bbl. Some bakers cut the price of bread 1-c- per loaf. In addition to having fewer taxes to absorb, biscuit bakers and packaged food concerns will probably gain from bigger volume at lower prices. Last year their attempts to pass the tax on to the consumers made many customers so mad that they organized "buyers' strikes." Starting as a protest against the high price of meat, these strikes were ultimately directed against nearly all high-priced groceries. Last week such users of grains as distillers and corn refiners were considering passing on to the public some of the tax saving.

Tobacco processing taxes were reduced on some grades last autumn, but no cut in cigaret prices followed. While there was talk of a cigaret cut last week, greatest benefit will flow to the tobacco companies, which were never able to pass on the tax in full.

Escrowed taxes, which the Supreme Court ordered returned last week (see p. 17), may prove something of a headache. It is highly unlikely that the corporations which will share this $200,000,000 windfall will be able to add it to surplus without a mighty howl from their customers. In innumerable lawsuits the customers will probably demand rebates on goods purchased since the seller started to pay his tax into escrow.

* Curiously, the Dow-Jones bond averages rose above ico last week for the first time since they were compiled 20 years ago. Low was 65 touched in June 1932.

This file is automatically generated by a robot program, so reader's discretion is required.