Evening star., 1936-12-31
ARMS RACE CASTS
SINISTER: SHADOW
0NWORLD.UPTURN
Further Progress Indicated
Unless tension Brings
War or BreakdoWns.
U. S. RECOVERY SPREADS
RAPIDLY DURING YEAR
Industrial Production in Many
Cases Near 1929 Levels-Labor
Issue Holds Spotlight.
BY CHARLES F. SPEARE.

Spt cial Dispatch to The Star.
NEW YORK. cember 81
NA.N.A).-Were 1t not for the
troubled political situation in Europe
and in the Far East, one might pre-
dict with confidence for 1897 another
year of increasing prosperity and
general recovery of ground lost
throughout the world during the long
depression.
The unanswerable question, how
ever, is whether war will break out
in either or both areas where present
tensions are so severe, or how far ma
tons. weak economically and f1nan-
cially, can avoid breakdown.
The increased pace of the arma-
ment race has most sinister aspects.
With the devaluation of the cur.
rencies Of France. Holland and Switz-
erland last Autumn. a form of money
Stabilization was developed out Of
which came, in the last quarter of
1886. general improvement in COM
modify prices and the substitution. of
natural for artificial methods of reg
ulating the exchanges.
This stop to the process Of deflation
In parts Of the continent Of Europe
has given greater health to markets
elsewhere. It constitutes one Of the
great gains of the past years.
1t Is associated with greater en-
ployment and expansion in basic in
dustries, the reinvestment Of boarded
funds. and, for internal politics, a
more conservative trend.
Recovery Accelerated.
From strictly domestic standpoint,
the year 1896 was notable for the
rapidity with which the recovery
gained momentum and the many ap-
proaches in industrial production to
the high records of 1929. 1t is sig
nificant also that there has been very
little wavering Of the business index
since recovery became an established
fact and not q subject for argu-
ment.
Probably the real turning point in
the depression came in May, 1895,
after the United States Supreme
Court dissolved the N. r. A. This
decision had the effect Of substituting
for sentiment, which was passively
for business expansion, vigorous pol
icy Of action on the part of American
business leaders. In all charts Of
business activity, there will be found
positive upward trend after the
Spring of 1885. with gains to the end
of 1886 ranging from 40 to 60 per
cent and bringing up the general
average to approximately that in the
Spring of 1880.
It is well recognized, however, that
these high averages reflect the un-
paralleled prosperity of some indus
tries in which consumers goods are
manufactured. Others, identified with
the capital goods market, still lag
well behind normal production. At
the extremes in the two groups are
the automobile industry and the
building industry.
Federal Cash q Factor.
The great distribution of Govern
ment funds for relief and for Fed
eral projects and the payment Of the
soldier bonus have stimulated de.
mand for consumers goods. Contrari-
wise. the slow recovery of the rail-
roads and the prolonged reaction in
real estate values have held back
until recently, important units in the
capital goods trade depending on the
railroads and on building construc.
tions for their profits.
In the closing weeks of 1896, and
anticipated as probable this coming
year, was the tendency to level of
the variations in the business charts
and to bring some of those averages
which have been down to the low
basis of 1920. nearer to others now
above any previously known in Amer
ican business history.
Progress will be made this coming
year in restoring business to an ap-
proximation Of normal because there
is an abundance of money to finance
all legitimate enterprises, because thu
mood of the general public Is ono ol
optimism, and because there Is ar
| entirely different attitude among bust
ness leaders toward the Roosevelt ad.
ministration with respect to their So
(see ARMS RACE, Page B-3).