Step This Way, Please!

"Now everybody can own a car! Come and get 'em while we got 'em!" blared a Manhattan newspaper ad last week. In Chicago, Hotpoint advised its appliance dealers: "Be first to advertise and promote a no-down and easy-payment plan . . . Change your ads to scream 'NO DOWN PAYMENT.' " One Los Angeles merchant was so carried away that he posted a "NO CASH DOWN-- SIX MONTHS To PAY" sign over some $3.95 shirts.

What provoked the uproar was the Federal Reserve Board's decision to abolish Regulation W, the control measure which fixed minimum down payments and installments on consumer goods, e.g., one-third down on autos, with only 18 months to pay the rest. FRB Chairman William McChesney Martin had wanted to stick to the ruling despite a 6% drop in retail sales during the first 4 1/2 months of 1952. But he was persuaded to lift it after the twelve regional chairmen warned him that, in their districts, prices were sliding, goods moving sluggishly, and inventories piling up. Now retailers are free to fix whatever credit terms they please.

Free & easy credit got quick results on lagging auto sales: one big Chrysler-Plymouth dealer in San Francisco took orders for 45 new and used cars in a single day, his best in five years. But no big crowds turned up for furniture or household appliances. One reason: the banks, which ultimately set the credit terms offered by retailers, were proceeding with caution. The American Bankers Association asked member banks to go slow on "easy credit" terms. Warned A.B.A.: the terms should at least be strict enough to force the purchaser to pay for his item before it wears out. California's Bank of America cut its 15% down payment to 10% on radio and TV sets, stretched installments from 18-months to 24. It demanded 30% down for autos, allowed 30 months to pay. Manhattan's National City Bank was even more conservative: it left the one-third down payment unchanged, stretched payments by only three months.

Would easier credit end the spring slump that had many businessmen worried? It was still too early to tell, but there were already signs that businessmen, having cut their inventories to the bone, were beginning to end their own buying strike. One furniture maker reported new orders 36% above last year's. The hard-hit textile industry picked up to the point where raw wool prices were on the rise again, and rayon and acetate shipments were up 4 1/2% since March. The wholesale-price average of all commodities turned up 0.1% for the week, indicating a stiffer demand for raw materials. Moreover, construction, long a mainstay of the boom, was still running 5% ahead of last year's level in spite of FRB's failure to remove its Regulation X curbs on building.

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