Evening star., 1939-10-01
Confidence Grows
From Recovery
By O1Den L. Scott.

recovery is rapid and broad.
The month now ending saw what may
turn out to be q near-record rise in the
onicial index of industrial production.
The new month is expected to see
further, almost comparable rise. The
conclusion Of this Governments best ap-
praisers is that, If war continues in
Europe, the year 1910 will be as active
measured by the production index-as
was the year 1929.
Present developments In industry
should settle an argument that has di-
vided this country all during recent
years.
That argument has ragged around the
question Of whether 1t Is necessary for
businessmen to have confidence in the
future before there can be recovery.
the years that, If only Government would
let them alone-if only they could be
given chance to gain confidence with
out having their nerves Jared by Gov
ernment-all would be we'll, with orders
for industry and jobs for the unemployed.
Nothing should be so destructive of
confidence as war. War destroys all
certainty, except the certainty that
nothing is going to be the same again.
War forces more taxation, more Govern
ment controls, more breakdowns in world
exchange, more revolutionary inspiration.
Yet continued war produces industrial
recovery, the recovery that this country
long has sought.
Businessmen are quick to point out
that they do not wish to profit from war;
They let the Nation know that they are
aware that war does make the future
uncertain and does tend to force Gov
eminent to take a stronger hand in
their affairs. They show a realization
that, once war is ended, their real trou-
bles begin.
Still, the point is that, in the face of
that knowledge-with reason for conf
dence to be ejshattered-there is recovery
1t is something other than confidence
that is creating recovery. That some
thing Is the knowledge that the volume
OF Government spending required by war
abroad and by defense at home is going
w 0AAi6 oOOuG q SIOWllS NOluUlc "a OIs
ders and rising volume of activity,
together with rising trend of prices.
This combination spells jobs and profits
and prosperity.
Here. for all to see, appears to be an
answer to the argument about whether
business can recover in the face of a
lack of confidence In the future.
Tho ic toot ;t
and expected volume of Government
spending-or other spending-is large
enough. Confidence apparently grows
from recovery; not recovery from conf
dence.
clear
One is that, If peace should develop
abroad, today's upturn in industry would
rather quickly subside
The other point is that, If war con-
tinues in Europe, the long depression in
the United States will gradually fade.
Recovery to date inside the United
States is based almost wholly upon buy
ing by industry itself. Businessmen sud-
denly discovered that, with war in Eu-
rope, the United States inevitably would
become something Of supply base. Here
is the largest reservoir of idle men and
idle machinery and idle resources.
Realization Of this fact caught Ameri-
can business unprepared. Industry dis
covered that 1t had small stocks of goods
on hand; plant was run down in many
instances; there was an uncertain supply
OF trained labor. Railroads awoke to the
prospect that, If their badly worn out
equipment should be unable to move
goods in prosperity period Government
might intervene. Utilities suddenly
realized that electric power demands
were about to break all records.
The result has been a scramble to
build up inventory and to get in shape
for orders that are expected to develop.
Orders from abroad might not arrive
either as soon or in as large a volume
as anticipated. This could result in a
let-down in few months. But rail-
road buying, utility buying, armament
spending at home, coupled with some
new trade from Latin America and with
continued large-scale Government SPEND
ing means that the longer r-range trend
is higher.
Some Of the Governments outlook
appraisers doubt that the new recovery
will carry through into a prosperity that
will soak up all of the Nations unem-
ployment.
These appraisers point out that. in
the new WARMTH loans barred-Eng-
land and France are going to be forced
to buy rather carefully and to use as few
dollars as possible. They are forced to
husband their resources in the United
States in order not to run out of money
if the war should be long. Lacking huge
war orders, this country-according to
the one view-will stop short OF complete
recovery.
Others among the Governments ap-
praisers, however, think that industry
may be started on real boom.
These appraisers are OF the opinion
that war orders, coupled with prepared
ness orders at home, will prove to be the
spark that will touch of an inflationary
rise. They call attention to the vast idle
bank resources and to the vast pent-up
needs Of industry itself that will be filled
once profits start to appear in some
volume. Already this group Of advisers
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