Evening star., 1939-08-02
Heavy Industries
Still al DISADVANTAGE
Despite Upturn
June Employment in
Consumer Goods Field
Runs Far Ahead
BY j. G. DONLEY.
Special Dispatch to The Star.

NEW 4oIh, Aug. Zine latest
employment indexes compiled by the
Bureau of Labor Statistics show
that, while there was an uptrend in
durable goods industries in June,
such industries are still at a disad-
vantage as compared with consum-
er. or non-durable goods, industries.
The index of employment in plants
manufacturing durable goods stood
at 841 for June, 1889, as compared
with 1873 for the previous month
The non-d durable goods index of en-
ployment was 969 in June, as
against 96.7 for the previous month.
In both cases, the basis of COM
parison is the three-year period,
1923-1925, the average of which is
taken as 100.
The wide differential between
these two indexes continues to stand
in refutation of the arguments of
those who have held for many years
that general business recovery must
begin with the consumer and work
back to the manufacturers of du-
rable, or capital, goods. Those on
the other side of the fence have
argued that a real, broad and
sustained business recovery does not
normally receive its sustaining i'm
pulse from the buying powers of
consumers They insist that broad
and lasting general business recov-
cry will not get under way until
enterprisers with money to invest
begin to build plants and install ma
chinery to manufacture products for
which the demand is prospective
and potential, rather than already
existent.
Usually Suffers Most.
Durable goods employment usual
ly suffers most during depressions,
for then there is halt to industrial
growth while the needs of the popu-
lation remain little changed, except
as reduced incomes curtail buying
of luxury items and force some
scaling down in necessities. When
depressions have run their course,
however, it is normal for durable
goods industries to head into the
sort of expansion which spells prog
ress, carrying such activities to lev
els higher than before the depres-
sion.
The trend of the two indexes of
employment during the deep de-
preston, 1929 to 1928, reveals how
much more acute was the fall in
durable goods production. From a
high point of about 1O3 in 1929, the
durable goods employment index of
the Labor Bureau slumped to about
48 at the low point of 1888. The
drop in the non-durable goods en-
ployment index was much less
severe. From a 1929 high just above
10, that index fell to a 1892 low
point little above II, loss of
some SO points as compared with
the drop of about so points in the
durable goods employment index.
Efforts to bring about general
business recovery by increasing the
purchasing power of consumers had.
the effect of causing rapid recovery
in the non-durable goods employ
ment index. for it rose to slightly
above 100 in the autumn of 1888,
while the durable goods employment
index got up to about St.
Response Began in 1884.
And durable goods employment
did finally begin to respond with
what appeared to be sustained i'm
provement, beginning late in 1884,
and carrying that index up from a
level of approximately 68 to the 100
mark. which was reached late in the
first half of 1887. The non-dura BILE
goods employment index climbed to
a high of approximately 1OS in the
second half of 1887.
When the recession" from the
1887 peak of the recovery came,
however, it turned out to be eX-
tremely sharp. The vulnerability of
the durable goods industry, after a
recovery which had brought about
only fraction of the normal invest
ment of new industrial capital, was
quickly revealed by a drop in the
index of durable goods employment
to around 64, in July, 1888, at which
point it had given up all of its re-
covery from the level of early 1884
The decline in the index of non
durable goods employment was
checked at a level just under 81, in
June, 1898.
Perhaps a more eloquent measure
OF the one-sided nature of the cur
rent recovery lies in the estimate
that l3 leading steel producers
earned only six-tenths of per cent
on their capital investment during
the first half of this year.