G. M. Loses

General Motors Corp. last week lost its fight against a rollback of its price increases on 1951 models. To G.M.'s suggestion that the increases be allowed to stand at least until a survey showed they were unjustified, Economic Stabilizer Alan Valentine gave a flat no. His reason: "Earnings of your company in the [third quarter] are running at the reported annual rate of $1.9 billion, as against an annual average rate of $827 million in the best three years prior to 1950." While ESA had "no interest in control of profits arising from increased volume, greater productivity or decreased expenses . . . sellers should not increase prices in order to make greater profits than were made before the Korea outbreak."

Valentine's reasoning made little sense to G.M. Since it had not raised prices since 1948, its greater profit in 1950 had come solely because of its increased volume (25% more cars and trucks than in 1949) and greater productivity. Instead of making greater profits after Korea, as Valentine intimated, G.M.'s net profits were less. In the third quarter, net profits were lower than in the pre-Korea second quarter. In the fourth quarter of this year, net profits will probably be still lower because of higher taxes and costs. Nevertheless, G.M. sent telegrams to 12,000 dealers lifting its ban on the sale of 120,000 new Chevrolets, Pontiacs and Cadillacs at pre-December prices. The corporation said it would give rebates to dealers who had already paid higher 1951 prices. In Canada, where there was no price freeze, Ford and Chrysler announced price increases of 4 1/4% to 6 1/2% on 1951 models.

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