Evening star., 1939-05-28

DisSssSvIIS lVlS1Su
Economic Outlook
AnnoIist Writer Sees
Arms Race as Big
Initiation Factor
Special Dispatch to The Star.
NEW YORK, May 27-News of
the international economic situation
was on the surface relatively favor
able during the past month, accord
ing to the monthly review by Winth-
rop w. Case in the current issue of
the Annalist Foreign industrial ac-
tivity (outside of Russia suffered
minor decline, but this was due solely
to less than seasonal expansion in
Germany.
international trade in March was
higher, according to preliminary esti-
mates, while surplus commodity
SOOSho WClC 1ul OllCl lCuuCCu. e
important, commodity prices showed
decidedly upward trend, although
how far the increased value of in
ternational trade was due to the rise
in prices and to what extent both
reflected accelerated war prepara-
tions cannot now be answered Ger
tainly however, with the accentua-
ton of the arms race on every hand,
financed increasingly by basically in
f1ationary methods, it would be sur
prising If prices were to remain un-
affected.
World industrial output Russia
excluded continued in March the
decline that has been under way
since December, our revised and re-
computed index declining to 1858
preliminary per cent of the 1928
average from 1854 in February and
1859 in December. The decline dur
ing the quarter Is thus seen not to
be severe, and moreover has been al
most entirely due to the recession in
the United States.
Activity Increases.
Excluding the United States as
we'll as Russia. industrial activity in
creased up to February, when 1t
reached new postwar high of 1924,
according to our revised index. In
March most countries either showed
| increased activity or at least held
their ground, but the failure Of Ger
man industry to expand by the usual
seasonal amount served to depress
our foreign production index to 1921.
Since German industry is operating
close to capacity, the usual addi-
tional seasonal expansion in Ger
many is thus largely precluded, and
the month-to-month movements Of
the seasonally adjusted German pro-
duction index are correspOndingly
distorted. The recession of this in
dex-and with it of the world index
is therefore of little significance.
British and United States indices in
March were unchanged, while the
March indices for Canada, Belgium.
Denmark, Finland, Norway, Poland
and Sweden rose.
THE rise in commodity prices dur
ing April was general, our interna-
tional wholesale composite advanc-
ing to 494 from 493-the first ad-
vance Of this index since May, 1887.
The British, Canadian and Japanese
national indices advanced, while
prices in France, Italy and the
United States on the average were
unchanged. The weekly indices for
Canada, the United Kingdom, France
and Italy showed a continuation of
the upward trend into early May.
Rise More Pronounced.
"The rise in primary commodity
prices was much more pronounced,
as would be expected in view of the
fact that these are the most sensi-
tive, and would therefore reflect
changes in demand conditions much
more promptly. Curiously enough,
In view of the Importance in the pub
lie mind of the arms demand, the
prices Of mineral products advanced
much less sharply than those of agri-
cultural origin. Although there has
probably been some accentuation of
demand generally, most of the rise
appears to be due to causes peculiar
to individual commodities, as in silk,
cotton and wheat.
international trade in March is
estimated to have been the highest
since March of last year. The March
figures customarily show seasonal
advance over the month before, but
the, present advance, according to
preliminary data, was greater than
usual, and our seasonally adjusted
index therefore rose to 400 (pre-
liminary) from 1913 in February and
386 in January. The higher prices
at which goods were moved doubt
less accounted for a part of the in
crease, but there was apparently also
an expansion of the actual physical
volume or quantum of trade.
Stocks of primary commodities,
which measure the supply demand
balance and reflect to q considerable
extent the success Or failure Of the
non-industrial nations in moving
their products. continued their de-
cline during March, according to our
preliminary figures. After declining
steadily since early 1888, the index
had turned up again in mid-le37,
following the bursting of the COM
modify bubble earlier in that year
and rejecting also the development
of the 1878 depression in this coun-
try"
Goins Rule Trading