Evening star., 1938-01-11
ARMAMENT RACE
T0SPUR|NDUSTRY
Possibility Of Larger U. S.
Outlay Regarded as Bus.
mess Factor,
BY the Associated Press.

NEW YORK, Jan. 1.-THE grim
world game Of matching billions Of
dollars for war machinery seems likely
to cut industry in for another big
stake in 1898.
So business analysts were forced to
recognize as the new year headlines
turned the spotlight on increased
armament spending plans of the
United States, Italy and France.
The possibility Uncle Sam may take
a larger hand in the spending was
brought to the fore by the Federal
budget figures for the next fiscal year.
carrying President Roosevelt's COM
ment he may find it necessary" to
ask additional defense appropriations.
The le3s-39 defense estimates, to-
falling nearly q billion dollars, ex-
tended the steady climb of armament
expenditures the last few years, a
trend Of major importance to indus
try, particularly makers of steel, ma
cninery and other basic materials for
modern fighting machines.
Outside the United States, arms
spending has been considered q more
potent force in lifting industrial oper-
ations, notably in Germany, England,
Japan and Italy.
England Speeds Plan.
Last year England stepped up the
spending pace on the start of its Ave-
year rearmament program. World
arms expenditures for 1887 were put
at nearly $4,000, 900 900 in the League
Of Nations Yearbook, nearly three
times the pre-war spending pace.
A chance the pace may become
faster this year was seen in italian
and French naval spending proposals
last week and the hint the United
States may throw more Of its vast
resources into that branch of public
expenditure.
While mounting world expenditures
for war machinery has become an old
story IN financial circles, the New Year
brought it closer home as President
Roosevelt's messages to Congress
played strongly on the defense theme.
How important 1t would be as an
industrial factor, however, remained
to be seen. Actual budget figures
for the next fiscal year showed only
moderate boost over the current
fiscal year.
Most significant in the eyes of busi-
ness analysts was the loophole left
for a step-up in armament spending.
Other Nations Act.
Considering the role it has played
in European industrial nations, arms
outlay in the United States was &C.
cepted in financial circles as a poten-
tial avenue Of government spending
for the double purpose of preparedness
and giving business q lift.
Sustained industrial activity in Ger
many. Italy and England the last year
has been credited in large measure to
the billions poured out for warships,
aircraft, munitions and other sup
plies Of battle. The United States felt
the backwash Of this spending in
record steel scrap exports and demand
for finished metal products and ma
chinery.
Nevertheless. most economists have
watched the accelerating arms race
apprehensively.
They see the strain put on indus
trial plant for production OF war sup
plies in some countries interfering
with normal investment for the COM
forts and necessities of life and
threatening existing standards of liv-
ing. Much Of the spending, they point
out, has been done through use of
credit rather than taxation.
But the arms race has become so
furious. with no signs of an early halt,
the war industries are pictured as
likely to remain one of the chief props
of world business this year.