Evening star. [volume] (Washington, D.C.) 1854-1972, 1938-08-20
TENSION IS EASED
IN WEEKS PERIOD
Markets Able to Rally or
Hold Own as War Scare
Fails Again.
pecial Dispatch to The Star.

Special Dispatch to The Star.
NEW YORK, Aug. 20.-During the
last week the financial tension which
had been developing was somewhat
relieved, according to Business Week
today. A second world war did not
break out on August IS or IS, as pre-
dicted, and the markets were able to
hold at or rally from the low points
touched on those dates. In some
fields of business letdown has been
noticed, but elsewhere progress is still
under way. Taken as a whole, the
direction still seems to be forward, and
without break from quarters not now
in sight the present revival movement
should carry through for some months
more.
Freight, Power, Steel.
The preliminary figures which are
available for last weeks productive
activity are mixed but give no grounds
for alarm. Freight car loadings seem
not to have shown the improvement
that has been usual during the sec
ond week Of August. but a look ahead
at the sources of traffic indicates that
the seasonal rise leading to an Oc-
tober peak will be seen again this
year despite momentary Interruptions.
Electric power, after another improve
ment, is at the best figure since the
opening week of 1888 despite a widen
ing of the loss from last year. Steel
activity, bolstered rather by general
rocf0cEi,n in ,t
of more active fall business season
than by important orders from such
big customers as the automobile COM
panies, has passed 40 per cent of
capacity for the first time since last
November. Automobile production
touched It's midsummer low last week,
but the recall of thousands of work
ers to the plants indicates that the
expansion associated with the new
model year is about to get under way.
With stocks of new cars in the hands
of dealers approaching the lowest lev
els in four years. considerable gain in
production Is likely in the next six
weeks.
Retail Sales.
Retail sales have shown a certain
slowing down since midsummer, as
indicated by figures for some of the
reporting chains. This has not car
ried far enough, however, to be really
disturbing. In 1885, 1886 and
1887 August showed a falling of in
department store sales. and this years
hesitation has merely kept pace with
that of preceding years. The 10 per
cent to II per cent declines from
year ago which are being shown re-
main better than the Is per cent
decline registered in May.
If the fundamental outlook for bust
ness is rightly interpreted as being
favorable for the balance Of the year.
both wholesale and retail sales will
again move forward. After burst
of ordering such as characterized late
June and early July lull is not I'M
natural. and it should be replaced in
the fall by renewed activity. accom-
panied by rising prices of industrial
raw materials.
Construction.
Some Of the contrasts which mark
the present trend of business can be
observed in the construction figures
for July. Residential contracts award
ed were 8 per cent above those OF
July, 1937--the first gain registered
this year. Heavy engineering con-
tracts have run ahead of last year
six out of the last seven weeks. but
in every instance privately financed
contracts showed a loss. In other
words, where Government aid is avail
able. the trend is upward. Non-resi-
dental construction, however, has
been sharply lower than year ago.
Factory building in July was down
by more than 20 per cent. In other
words, the privately financed heavy
industries are tagging in the recovery.
Persuading the Investors.
It follows that the motives to pri-
vate investment must be strengthened
in order to make the recovery more
than a short-term consumers goods
revival. This requires in general some
announcement both in the fields OF
politics and of labor. The political
trend is now in the hands of the
voters. Labor being a political power
itself, there is danger that the wage
question also may have to wait on
the election. This applies particu-
larly to the steel industry and the
railroads. In other industries less in
the public eye there is some reason
to believe that labor costs are gradu-
allv being reduced toward level
at which business can be done on
bociS