End of a Business

Done for the duration is the All-American industry, the symbol of mass production, the maker and remaker of modern America : automobiles.

Nobody could buy a new car or truck in the U.S. last week. Nobody can until a rationing system is worked out--probably by Jan. 15. OPM barred all civilian sales. Furthermore, OPA told Detroit that its January production quota would be its last. By month's end the assembly lines will dead-stop.

Immediate victims of this double coup de grace were 1) some 450,000 auto workers, laid off; 2) 44,000 auto dealers (many of them civic leaders in their communities) and their 400,000 employes. In the dealers' holiday-decorated show rooms last week was the stillness of death. On Manhattan's famed automobile row new-car salesmen were thrown out like last year's license plates; in the huge show places of General Motors, Ford and Chrysler, glistening cars mocked the vacant desks, the muffled telephones. Detroit's 300 dealers fired most of their 3,000 salesmen. In New Orleans and else where big dealers kicked themselves for deliberately holding down sales last quar ter (to keep out of the high income-tax brackets for 1941).

So it was all over the U.S. The employes can perhaps get new jobs. But the hapless dealers must stick to their posts, get rid of the 400,000-plus new cars they hold, pay off bank loans, try to sublet their showrooms to butchers and grocers. In this they will need help. As part of the rationing plan now in the Washington works, dealers will get easy-payment Federal or private loans to carry their new cars until bought by some lucky holder of a ration card.

Not all dealers will quit. Many of the big ones hope to pay the bills with the take from used cars and service. Some well-equipped dealers are even figuring on subcontracted war orders for their ma chine shops. But all saw a future of hard work, little profit.

The Manufacturers. Although its regular business is dead for the duration, Detroit itself was anything but dead this week. The reason for stopping auto pro duction is not merely to save steel, rubber, etc., but to force conversion of Detroit's unparalleled productive plant to war. Last week Detroit was already busy on some $4 billion in war contracts, even after $850,000,000 deliveries in 1941. This week the automotive backlog was boosted to a titanic $9 billion, thus making Detroit the No. 1 U.S. munitions maker (No. 2: aviation with $6 billion).

This astronomic increase came out of a Washington confab between the auto makers, the Army & Navy and SPAB. First official announcement came from Chrysler which said it had been asked to triple its tank output (its tank arsenal is already the world's largest), double its output of anti-aircraft guns. One sign of total collaboration-to-come between Detroit and Washington: G.M. created a new War Emergency Committee under Vice Chairman Donaldson Brown, and sent arch-diplomat Dick Grant to Washington for the duration (see p. 62).

Meanwhile the automakers had wangled an important last-minute concession from Washington: they can make 204,848 more cars this month before they close down. Since this is double the January quota set a month ago, it made the manufacturers feel pretty chipper. Washington did not. Only reason for any automobiles at all in January is that the automakers jiggled the priorities-allocations machinery artfully enough to pile up $213,000,000 in finished and semi-finished parts. None of these parts can be used in war work, so Washington ruefully okayed the quota boost. This will use up $100,000,000 worth of parts; the balance will be put away for spares.

The breaks. Production almost-as-usual in January will also give the automakers breathing time to convert. A year ago "not over 5%" of Detroit's machinery could be used for munitions making; now some Detroit engineers think 50-75% of their machinery can be useful. Last week auto and parts makers set up the Automotive Council for War Production, announced its sole purpose was "pushing the industry's war work to the limit" through joint research, patent exchange, pooled facilities.

When Detroit really gets going on defense, the big outfits may make as much money (before taxes) as on cars. Their sales, at least, will be enormous; the $5 billions in deliveries Knudsen asked for 1942 is nearly twice their sales in a normal peacetime year. But meanwhile the conversion will be painful for everybody.

The U.S. has 28,875,000 passenger cars, 15,000,000 of them less than five years old. If those prove insufficient to keep the U.S. at work, one small factory will be put to making the U.S.'s new cars--all of them.

Even bondholders (of which the industry has practically none) felt the end of the automobile. Since there is sure to be less driving, if only to save rubber, top-notch municipal bonds secured by highway and tunnel tolls went down. Port of New York Authority (Holland & Lincoln Tunnels, George Washington Bridge) 33 last week dropped 5 points to 95; Triborough Bridge Authority 3 1/4s dropped 3 points to 95; Pennsylvania Turnpike 3 3/4s lost 4 points to 96. All were record lows.

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