Evening star., 1938-01-11
MARKET UPTURN
! IS HELD NATURAL
Has Little or No Relation
to General Business
- Outlook.

NEW YORK, Jan. II (NA.N.A.).-
The current upswing in stock prices,
1t is important to keep in mind, Is
largely in the nature Of a rebound
growing out of the situation in the
market itself and bearing little or no
relation to the outlook for general
business. Casting about for an ex-
PLANTATION. 1t is natural for writer's Of
market reports to credit the rise to the
prospect of heavy armament expendi-
lures and/or to the old familiar talk
of imitation" But our armament ex-
penditures have been unusually high
for several years past. and the evi-
dence Is all against imitation"
Some encouragement was derived
from another increase In the operating
rate of the steel industry as estimated
for this week by the Iron and Steel
Institute. That estimate puts the
rate back at about the level of the first
week in December. which appeared low
enough at the time.
More Reliable Views.
AS to the business outlook, views Of
business leaders at this stage are likely
to be more reliable than those of mar
ket followers, whose optimism is
largely derived from the upward course
of prices on the stock tape
Lammont du Pont, chairman of E.
I. du Pont de Nemours &, Co., evident
ly does not go along with those who
are looking for general business to re-
cover as swiftly as if nothing has hap
pened to give it a severe jolting. He
told the Senate committee investigat-
ing unemployment that the forecast
of sales for the first six months of
1888 is % per cent less than In the
first six months of 1887" He said
further that he could not be too hope
full of increased employment In our
company for it is evident that We are
in pronounced recession"
Mr.. du Points figure on sales jibes
pretty well with a recent forecast Of
industrial production made by the
Standard Statistics Co. Based on
tentative estimates, that organization
said it expected the index of indus
trial production for the current quar-
ter to average about 75-a drop Of
more than Is per cent from the first
quarter of 1887 and moderately below
the first three months of 1886. This
forecast" says the summary, makes
full allowance for moderate recovery
in aggregate business activity in Feb
ruary and March,"
Low Level Of SO Per Cent.
Evidence is still being educed as to
the severity of the industrial decline.
The January bulletin of the Federal
Reserve System says that the index
OF industrial production dropped to
low level of about 83 per cent Of the
l923-1925 average in December. In
November the index was 49, and the
average for the first eight months
of 1887 was 1l6. The high for last
year was set in April and May. with
the index at 1l8 for both months. In
August brief upturn in activity
brought the index back to the 118
level But at no time during last year
did the index equal the 1886 peak
of l21, which was set in December
OF that year.
The level of 80. estimated for the
last month of last year, is the lowest
seen since the latter part of 1884, and
is below the best Of that year. as we'll
as below the best of 1888. The mid
summer imitation boom" Of 1888 sent
the index kiting to 100, but it later
came down as fast as it had risen.
(CopyriEht. 1881