CHAPTER XII

our product within the purchasing power of the public, and not only that, we had to do something drastic enough to demonstrate to the public that we were actually playing the game and not just shamming. Therefore in September we cut the price of the touring car from $575 to $440. We cut the price far below the cost of production, for we were still making from stock bought at boom prices. The cut created a considerable sensation. We received a deal of criticism. It was said that we were disturbing conditions. That is exactly what we were trying to do. We wanted to do our part in bringing prices from an artificial to a natural level. I am firmly of the opinion that if at this time or earlier manufacturers and distributors had all made drastic cuts in their prices and had put through thorough house-cleanings we should not have so long a business depression. Hanging on in the hope of getting higher prices simply delayed adjustment. Nobody got the higher prices they hoped for, and if the losses had been taken all at once, not only would the productive and the buying powers of the country have become harmonized, but we should have been saved this long period of general idleness. Hanging on in the hope of higher prices merely made the losses greater, because those who hung on had to pay interest on their high-priced stocks and also lost the profits they might have made by working on a sensible basis. Unemployment cut down wage distribution and thus the buyer and the seller became more and more separated. There was a lot of flurried talk of arranging to give vast credits to Europe—the idea being that thereby the high-priced stocks might be palmed off. Of course the proposals were not put in any such crude fashion, and I think that quite a lot of people sincerely believed that if large credits were extended abroad even without a hope of the payment of either principal or interest, American business would somehow be benefited. It is true that if these credits were taken by American banks, those who had high-priced stocks might have gotten rid of them at a profit, but the banks would have acquired so much frozen credit that they would have more nearly resembled ice houses than banks. I suppose it is natural to hang on