Evening star., 1939-11-05
Caution Rules
Despite Rush
AtFactoriies
Leaders Still Warn
Against Danger Of
Overoptimism
BY SMITH REAvIs,
Associated Press Financial Writer.

ny SMITH REAVlS,
Associated Press Financial Writer.
NEW YORK, Nov. 4.-Americap
mills and factories pounded away
this week to fill one of the greatest
accumulations of orders in years
while leaders continued to warn
against too great optimism over the
heightened recovery pace.
Some industries, with the prospect
of $1,000, ,000,O in purchases from
the European belligerents dangling
before them, went ahead on plans
for necessary plant expansion but
the peace business maintained In
a measure the caution which became
apparent soon after hostilities broke
out abroad.
Nevertheless, activity was higher
than it has been in any autumn
since 1929 and almost touched the
rate achieved in May, 1887, at the
height of the upswing of that year.
Employment gained and consumer
income rose because of it and be-
cause OF the increased prices which
went to the farmer for his goods.
A. p. Index Climbs.
Measuring the upturn the Asso-
clated Press index of industrial ac-
tivity was boosted to 1915 per cent
OF the l929-30 average compared
with 1863 the preceding week and
the 1887 recovery high of 1886. A
year ago 1t stood at 1876 per cent.
Wholesale commodity prices tended
downward.
Automobile output, steel mill op-
eratlons, textile manufacturing, pro-
ductlon of machine tools, chemicals,
paper board, aircraft, fiat and con-
tanner glass and many durable con-
sumers goods reached proportions
that looked like small boom. Along
with 1t, wholesale and retail trade
increased considerably over last year,
indicating closer balance between
production and consumption than
existed in the early days of the con-
f1ict abroad.
Railroad freight carloadings for
the week ended October %, however.
dropped off from the peak reached
the week before. The heaviest loss
was IN miscellaneous loadings, in
dlcatiVe of the movement of goods
into trade channels. Residential
building awards declined against the
seasonal trend for the first time in
two months.
Consumption Behind.
The Federal Reserve Board, In its
monthly bulletin. while estimating
that in many industries the volume
OF orders on hand appears to be
large enough to sustain activity un-
! til at least the end of the year."
took note of the fact consumption
by individuals, utilization of mate.
rials through outlays for capital
goods, and commodity exports have
increased much less rapidly than
production" 1t warned that "un-
less there is considerable increase
in consumption, the accumulation of
goods which is now under way is
likely to reach substantial propor-
tions.'
Another caution came from the
Bureau of Agricultural Economics,
Department of Agriculture, which
found that 1910 as whole was likely
to experience moderate increase
in industrial activity compared with
1899, but that sharp fluctuations
were likely to occur from uncer-
tainties arising out of the war and
from adjustments that will be nee
essa1y as a result of the accumu-
lation of inventories"
In the meantime the buyine
commissions of England and France,
with the arms embargo out of the
way, prepared to purchase such war
essentials as airplanes, oil, gun
mountings and castings, some agri-
cultural commodities, machine tools
and other articles.
Plane Orders Placed.
First of all to benefit were the
airplane manufacturers, who re-
ceived heavy orders. With present
and prospective bookings it was un-
officially estimated that by the end
OF the year the backlog in the in
dustry would run to as much as halt
billion dollars. That compares
with $15O,000, 900, the value of all
planes and parts delivered in 1888,
SO far this year deliveries have ex-
ceeded last years figure.
Lifting of the embargo places a
burden on the railroads, which must
transport the war-born freight to
seaports without congestion and still
handle the normal volume of domes-
tlc business. In anticipation of it
they have for months been ordering
new equipment, especially cars, loco
motives and rails. This made busi-
ness for the steelmakers and car
builders, as well as providing en-
ployment for thousands of men
Heavy Industry Leads.
1t was In the heavy industry group
that most progress appeared during
the week. Iron Age estimated steel
production at SO per cent of theo-
retlcal capacity, compared with %
per cent the preceding period, with
a total of 1,270,0OO tons of inpots
turned out, a weekly record for steel
output. 1t reported there was no
abatement IN the pressure for SHIN
ments and orders for some products
have piled up to the extent of utiliz-
ing capacity through the first quar-
ter OF 1910. Inventories of finished
steel, 1t was asserted, were not ex-
cessive.
Automobile manufacture was
stepped up to new high for the
autumn rise, despite the virtual
shutdown of most Chrysler plants
by labor difficulties, and was well
ahead Of the 1888 comparative. Sales
continued heavy, dealers reported.
Electric power production for the
week ended October % reached a
record peak as industry made use Of
electricity to keep up to its in.
creased pace. Cotton, woolen and
rayon textile mills were operated
at near capacity. The American
Glass Review said "the indication
that 1889 may see some new pro-
lHI~