Evening star., 1939-09-03
War Boom Predicted,
But Trade Leaders
Dread Aftermath
Businessmen Foresee
Grove Consequences
Of Conflict
BY HENRY PAYNTER.

Associated Press Business Writer.
NEW YORK, Sept. General
war In Europe may bring a tenn
porary boom to important sections
OF American industry and business
on broad scale, some business lead
ers said today.
However. they made it plain that
aside from emotional considera-
tions. they abhor the eventual dis
tortion war wreaks upon the ma.
tional peacetime business economy,
and fear the political and economic
consequences of war.
Most economists agree further
that war boom prosperity is illusory
and IN the long run fantastically
costly.
Moreover, changeover to a war
stimulated economy requires major
readjustment. Food, clothes, may
rise higher than salaries; railway
costs may outspeed rate changes,
and so on. Some businesses may
suffer losses.
A survey of Americas business, in
dustrial and financial situation to.
day, however, indicated that Euro.
pean war conditions might bring al
most immediate stimulation in many
lines of activity.
Consumer Lines Busy.
Consumer goods businesses gener-
ally are humming even now. Latest
Federal Reserve figures show de-
partment store sales keeping we'll
above last years levels, although
still below 1887. Inventories in most
flelds are moderate, and expectation
OF wartime conditions was consid-
cred almost certain to stimulate buy
ing to increase. inventories as q
measure Of prudence.
During the depression years a
major lag in American economy has
been In the heavy industry field.
Here. too, business has been pick
ing up sharply, already feeling to
some degree the stimulation Of for
eign war orders.
Components in the latest Asso-
clated Press weekly index of in
dustrial activity show three major
highs for the current year, in steel
mill activity, residential building and
total carloadings Electric power use,
a ready meter OF. turning wheels in
factories. continues we'll above last
year. The automobile industry is
getting into active production OF
1910 models.
War news brought a speculative
stampede to buy commodities. In
two days. the Associated Press in
dex of IS major staples rose 1.SS
to 65.97.
News from Washington and for
eign capitals indicated that our
own Government might stimulate
buying Of essential commodities, In
preparation of industry for war
participation If it comes, through
the war industries board, and that
foreign nations which could, might
progressively increase buying of
American commodities and prod
ucts.
Credit Restricted.
True, Europe may not be able
to buy all it wants from America.
Existing legislation forbids the ex-
tension of credit to nations which
are in default on previous loans,
which includes England and France,
and also prohibits wartime export
Of munitions of war listed by the
President.
On the other hand, England and
France alone have in the United
States convertible assets of not
less than $4,000, 900, 900, and may
be able to establish in time credit
pools for several billion more by
pledging real and other property
owned in this country by British
nationals. Since hasty conversion
Of British and French assets here
into cash might demoralize our
markets, it was presumed Federal
fiscal agencies would not look un-
kindly upon credit devices which
did not violate the letter of the law.
Moreover, the President has broad
powers in defining munitions Of
war, and it is possible he might
modify the existing list of banned
exports.
Any substantial increase In war
buying by England and France
would set wheels rolling faster in
mines, steel mills, automobile plants,
railways, power plants. In turn
men would be hired, stocks would
be bought, and heavy industry
might once more resume its tradi-
tional place as the main support Of
the national economy.
Even should foreign buying re-
main greatly restricted, wars needs
seemed today almost certain to bring
activity stimulated by our own Gov
ernment's needs.
President Roosevelt's sudden ap-
pointment of the War Resources
Board, headed by Edward r. Stet-
tinius, jr., chairman OF u s. Steel
Corp, and the board activity during
the past week or so, were plain indi-
cations Of the trend.
U. s. Defense Needs Cited.
Some leaders believe that ade-
quate preparation by the United
States itself for war emergency
would require substantial increase
Of existing electric power facilities,
improvement Of the Nations rail-
roads and huge increases Of rail
rolling stock
Utility leaders have made esti-
mates ranging widely between $780,
000,0 900 and 81 ,000, ,O00,0 900 over and
above normal expansion would have
to be spent for new dynamos, power
houses and transmission lines to In
sure adequate power supply for war.
Rail leaders have made estimates
wandering upward from 81 ,000,00O,
900 as the extra amount required to
put American railroads In condition
to meet the wartime requirements
Of October, 1918.
Some business analysts thought
war demands here would come
quicker than In the World War,
when industry did not begin It's long
upward rise until six months after