Evening star., 1938-11-27
Business sIsDisturbed
By Uncertainty Over
Foreign Exchange
Neor-Term Prospects
Still Very Favorable,
Magazine Reports
Special Dispatch to the Star.


NEW YORK, Nov. 26.-Business
and financial sentiment in Thanks
giving week was subject to number
of cross-currents, according to Busi-
ness Week today, and, taken as a
whole, appeared to be marking time.
The economic factors in the imme-
diate outlook remained highly favor
able; the political factor was i'm
proved by the election; but the in
ternational situation was still the
basis for good deal of worry.
In financial markets this uneasi-
ness was emphasized by the decline
in the pound sterling.
Domestic security prices also
drifted off, influenced both by the
world situation and by the question
of whether prices had not outrun
the prospects for corporate earning
power.
For the rest of 1888, business may
expect some further improvement in
seasonally adjusted measures of
business activity. The Business
Week Index, whose weekly peak in
the summer of 1887 was 1246, and
whose low in the summer of 1888
was 743, rose another point last
week to 1925 preliminary. 1t has
thus recovered Sc per cent of its
total loss.
Continuation Expected.
It should continue to rise without
serious interruption until a recovery
of Sc per cent of that loss has been
registered. A few weeks ago it was
predicted that the peak might not
be reached until the spring, but the
rapid upswing of the automobile in
dustry since the launching of the
new models suggests that it may
come sooner. AS long as the auto
mobile industry produces at its cur
rent prosperity rate of nearly 100,-
600 cars a week. there is little cause
for apprehension as to the general
business curve; and some such rate
is likely to continue through the
rest of 1888, so as to insure the
simultaneous satisfying of the early
demands for new model cars and the
stocking up of dealers for early 1889
sales.
There are those who, encouraged
by the election returns, now speak of
regaining 1897 levels early in 1899
The psychological factor is so i'm
portant and unpredictable that such
a boom could conceivably occur, but
1t is we'll to discount the possibility
for the time being. After all, the
rate of steel activity in the first
months of 1887 was between 80 per
cent and 80 per cent, and any such
rate in the early months of 1889
would come close to being miracle.
And the basic fact remains that, in
several respects, the general eco
nomic situation Is inferior to what |
it was in 1887.
Treaty to Be Tested.
The international picture is def
nitely less encouraging, with the
Anglo-American Treaty still to be |
tested. The farmer is worse off
farm prices are below equilibrium |
and no solution Is in sight. The |
financial condition of the railroads |
has deteriorated since 1887. The
springs of private investment have |
apparently not yet been tapped in
the industrial and commercial fields.
even to the extent of what occurred |
In the 1867 period-which then
seemed small compared to 1925-1929,
but now look large. compared to 1888.
To balance against this, we have |
strongly favorable factors. The mo-
mentum established by business
since June should carry further
at least so long as automobile pro-
duction holds up. The construction
industry is in much better shape
than last year.
october contracts awarded were |
the highest since March, 1881, in the
case of total construction, and since !
May. 1880. in the case of residential
building. The figures for the first |
half of November are less favorable,
but the outlook for next year looks
good in the light of figures for resi-
Dental mortgages passed by the
Federal Housing Administration: an
nouncements by the public utilities,
and contemplated construction con-
tracts compiled by the F. w. Dodge
Corp. Finally, one must mention
again the huge credit expansion and
the possibility of cost reduction in
industry through greater volume