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RANGES AND HEATERS Majestic Manufacturing Co, 455O GUSTINE AVENUE St.Louis 16, Mo. May 3, 19U9 (diet. S/2/U9) Personal Mr* Marriner Eccles c/o Federal Reserve Bank Washington, D. C* Dear Marrinerj c 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 W 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 $% Ft////FIFOS OF RFTTFf? 0AA/GFS FOff MDfPf THAN ftD VF/1£><; Majestic Manufacturing Co. (page two ) Mr. Marriner Eccles The combination range industry i s off 60% for the f i r s t quarter with other conditions comparable to the two cases above mentioned* The e l e c t r i c range industry i s off 62$ for the f i r s t quarter. The kerosene range industry i s o f f 8$% in the f i r s t quarter with inventory, employment and other complications forming a similar pattern throughout the industry. Inventories on dealers* floors are high* If cooking stoves (certainly basic appliances in the home) could be sold without the remaining controls under Reg* nWt|> we are a l l agreed i t would be helpful* I r e a l i z e your relation to Reg. *1P i s quite different fran the excise tax situation, but I mention the tax situation as a further aggravation that i s having such a v i t a l affect on this industry at present. W have e a 10$ 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 m m ccs Mr. Samuel Dunckel. May 12, 1949 Personal 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 regard* 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 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\ y Sincerely yours. M S. Ecoles* *