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Majestic Manufacturing Co,



St.Louis 16, Mo.
May 3, 19U9
(diet. S/2/U9)
Mr* Marriner Eccles
c/o Federal Reserve Bank
Washington, D. C*
Dear Marrinerj


It has been some time since 1 have either seen or heard from you,
but I am taking the liberty of calling the following conditions to
your attention because of their importance to the stove industry,
including this company* You may, or may not be in a position to do
anything about i t , but i f you feel that you can investigate the
matter properly I think you will find a situation that might well
be corrected in the best interests of a l l concerned* The cooking
appliance industry i s operating in the red for the first time in
many years• Most plants are either shut down, or operating on
reduced schedules* Some plants have gone out of business, and others
are going into bankruptcy* Generally speaking, business in this
industry i s worse than i t has been since 1933* At a recent meeting
of representative members of the Industry i t was agreed that two
major reasons are contributing to this condition that emanate;* from
goveimmental sources — 1) Regulation * W , and 2) A lOjj excise tax
» "
on cooking appliances*
Doubtless, Reg. « » was intended to curb inflation primarily, but
i t i s contributing without doubt to the serious condition now existing
in this industry*
The Institute of Cooking and Heating Appliance Manufacturers in the
Shoreham Hotel i s a most effective trade association, and not "mine
run« in any sense. If you should be interested in this matter and
want additional information, Mr* Samuel Dunckel, Managing Director
will be glad to supply any and a l l information you may want*
Briefly, the gas range industry i s off k&% in the first quarter of
19U9 as compared to the same period in 19U8. Factory inventories of
gas ranges have increased 229%* Factory employment i s down 39g. I t i s
estimated that the second quarter will be off about $0% as compared to
last year*
The coal and wood industry i s off $3# for the first quarter. Inventories
are up - employment i s down, and the first half i s expected to be off
about $%



THAN ftD VF/1£><;

Majestic Manufacturing Co.
(page two )
Mr. Marriner Eccles

The combination range industry i s off 60% for the f i r s t quarter with
other conditions comparable to the two cases above mentioned*
The e l e c t r i c range industry i s off 62$ for the f i r s t quarter. The
kerosene range industry i s o f f 8$% in the f i r s t quarter with inventory,
employment and other complications forming a similar pattern throughout
the industry.
Inventories on dealers* floors are high*
If cooking stoves (certainly basic appliances in the home) could be sold
without the remaining controls under Reg* nWt|> we are a l l agreed i t would
be helpful*
I r e a l i z e your relation to Reg. *1P i s quite different fran the excise
tax situation, but I mention the tax situation as a further aggravation
that i s having such a v i t a l affect on this industry at present. W have
a 10$ excise tax on a l l cooking appliances, which was originally Intended
to discourage the s a l e of ranges while s t e e l was scarce* Now that s t e e l
i s p l e n t i f u l , there i s no need whatever for the excise tax remaining in
effect, except, of course, that during the l a s t year or two i t has yielded
a sizeable return to the Treasury* If the excise tax were removed on
cooking appliances, and i f Reg. "W11 did not apply to these items I f e e l
confident the government would be ahead, and the economy, certainly in
this industry, would be more stable*
I realize you are very busy, but I hope you may f e e l t h i s situation i s
sufficiently serious to warrant attention, and as stated above, i f you
should want further d e t a i l s , the Institute office w i l l be very glad to
supply i t * I am sending copy of this l e t t e r to the Institute at the
Shoreham Hotel, and that office w i l l be glad t o be at your service i f
you should want them to aid you i n any way whatever in t h i s connection*
I should appreciate hearing from you regarding the above, and with
kindest, personal regards and best wishes, I

Russell, President
ccs Mr. Samuel Dunckel.

May 12, 1949

Mr* <!• E. itussell, President,
Majestic Manufacturing Co.,
h55® Orustine Avenue,
St» Louis 16, Missouri*
Dear Mr* Hussells
l a t t e r of May 3 i* * most interesting MBMtftJjr upon
the situation in the stove industry and confirms other reports that
w have received regarding th© tremendous downturn that has taken
place. There has beer* an almost revolutionary change in the oomget-

tttv* situation*
While 1 understand that Regulation W as well as th© 10
per cent excise tax stay be faotors in this situation, there are
others of equal or greater isaportanee* Among other things, I understand that the 10 per cent excise tax does not apply uniformly
across the board and that there are complaints of iseqni"^ in this
So far as Hegulation W i s concerned, that is a matter of
Board polioy on whioh there i s nothing that I ean do as an individual Mfttptpf but i t should be noted that under ths l a s t amendment as
to Group B items a l l sales under |100 were exempted, the down payment
requirement was reduced to 10 per cent, and the rtaxtetmi terms of repay»ent were increased to 21* months. A interesting result has bc$n
the volume of vigorous criticism on the ground that these tenas are
too liberal froi*. the point of view of conservative credit grantors
who feel that the Board has embarrassed the© by giving i t s sanction
to such terms*

Witfe m best regards, I m\
Sincerely yours.

M S. Ecoles*