Evening star., 1939-01-29
British Difficulties
Impede US. Recovery
Bu ODef1 l.. Scott

A promising business recovery within
the United States, after breaking rec
ords for speed in the months since
September of last year, suddenly is
meeting resistance and some definite
check.
Industry operated at slightly lower
level In January than in December.
The rapid rate Of Unemployment slowed.
Security prices recently. have showed
periods of acute weakness. As result,
the Governments forecasters are re-
assessing the outlook.
Is the present merely an expected
temporary setback after an unusually
rapid rise in industrial activity? Or
are new factors developing that cloud
what had appeared to be a bright,
longer range outlook? y
The official forecasters here are in
clined at the moment to hedge in their
answers. The situation within the
United States is described as very favor
able to an extended period of recovery
after some adjustment in the first quar-
ter of this year. Building of houses
is continuing to expand. The utility
industry is being forced to spend more
money on plants. Government outlays
of borrowed money will run at high
level through 1899. President Roose-
welt is planning few new moves that
could be disturbing to businessmen.
If the course of business in the
months ahead depended upon the do
mestic outlook, the official attitude here
would be uniformly optimistic.
Trouble, If there is to be trouble,
comes from abroad.
European war does not figure prom
inently in the calculations being made
for the current year. The mature view
is that Germany will not precipitate
war, and will restrain Italy from pre-
cipitating war, SO long as gains can be
made without war, with its danger Of
defeat and its encouragement to revo-
luton. Why fight when rewards can
be had without fighting?
Neither does the prospect of finan-
cial blowup within Germany enter into
the calculations. Best informed of the
Government experts heavily discount
the view of impending financial dis
aster in Germany. No such disaster is
expected SO long as the German gov
ernment can control prices and can disci-
pline labor to do the tasks that it has
set out to do. AS yet there Is no definite
sign that the authority of the Hitler
regime can successfully be resisted by
any internal group.
Concern. rather, is over Great Britain
and the position of her currency, with
all that involves.
The British government placed its
reliance on "appeasement" for Ger
many's Hitler and Italy's Mussolini
The British hoped-according to the
dominent view here-that appeasement
temporarily and that time would oper-
ate to temper the demands of the die
tators. The strategy appeared to be
for the British to encourage Hitler
either to slow down or to keep pushing
toward the east and an eventual war
with Russia that would exhaust both
regimes and leave the British Empire
intact and secure.
But, as it turns out, Austria and the
Sudentenland are proving difficult for
the Germans to digest economically.
There is greater demand than ever for
foreign exchange with which to pay for
imported foodstuffs and raw materials
foy jr,di1cfrIy bc{ ,,oi11ipoc Of
tional workers must be fed and new
industries must be supplied. Yet for
eign exchange is proving more diff
cult to obtain. Even internal loans to
finance the vast drive for armament
are not coming as freely as in the
past.
Faced with this situation, Hitler could
slow down on armament or hes could
seek loans from abroad or he could
let his program coast. Also, he could
go more radical by reducing or ending
payment on past foreign borrowing and
by new socialistic measures that would
appropriate capital for the use of the
| state.
Much to the discomfort of the British,
as appraisers here see it, Hitler is TAX
| ing the second and more radical course.
British investments in Germany are
large and still are paying propositions.
The prospect is that they may not con-
tinue for very long to be paying propo-
sitions. And Hitler, instead Of conf1n-
ing himself to Southeastern Europe, is
threatening trouble for the Danes and
the Dutch, thereby adding acutely to
British worries. There even are stories
in very well-informed military and dip
| lomatic quarters in Washington that
Germany and Russia, instead of get
ting ready to fight, may be edging
toward deal in that part of the
world
The British already have huge ond
profitable investments in China nat
are jeopardized. They are uncertain
about what is going to happen to big
investments in Spain after Franco takes
over with German-Italian guidance
Germany is cutting deeply into British
trade in South America.
At home, in Britain, trade is not
what it should be. Any further speed
up in armament will strain the British
economy, yet German plans to build
more submarines and the prospect that
Germanv and italy, with Spain as a