Evening star., 1939-03-27
Business Depressed
By Foreign Tension,
Federal Attitude
Hopkins Appeosement
Program Weakened
F Further in Week
Special Dispatch to The Star,

Special Dispatch to The Star.
NEW YORK, March GA series
OF sharp drops in the stock market
has reflected fears growing out of
the latest European crisis, says
Business Week today. Except that
business activity and profits in the
United States are at a higher level
than they were six months ago,
security prices would have pene-
trated their September lows.
The weeks events seem to make
more probable an eventual solution
of Europe's troubles through war.
but they do not preclude rapid re-
covery in values when. as is prob
able, some temporary settlement is
reached. The extent of this recov-
cry would be limited by the deterio-
ration of confidence in the future
which is bound to result from the
seizure of Czecho- -Slovakia and the
possibly fatal blow to Premier
Chamberlain's appeasement policy.
Real optimism on domestic busi-
ness, SO far as prosperity results
from long-range planning based on
faith in the future, is not possible
To-Day. A recovery of the Business
Week index from its present level
OF SO, or from its prospective spring
low point, which is likely to be closer
to 50, to the los level of the early
winter would now be looked on as
satisfactory, and recovery to ITO
would be cause for real congratula-
ton.
Opposed BY Roosevelt.
"Co-operatlng with the European
Crisis IN depressing financial and
business sentiment has been the
further weakening of Secretary
Hopkins business appeasement pro-
gram.
The Presidents press conference
remarks have indicated opposition
even to the quite moderate tax. re-
forms on which faith had been
pinned. Chairman Douglas last act
on behalf of the Securities and Ex-
change Commission proved to be a
rough rejection of the proposals of
the stock exchanges for amend
ments to the Exchange Act.
"Secretary Hopkins himself, prob
ably chastened by his recent expert
ence. is reported to be studying the
possibility of setting up a set of
regional banks, largely Government
financed and controlled, to lend
money to small businessmen. In
the present state of things, such a
move would be viewed by most busi-
ness and corporation executives and
private investors as the opposite of
appeasement.
With the international and politi-
cal factors as unfavorable as they
are at present, hope clings more
nrmly than ever to the prospects for
a business pickup, based mainly on
new orders received in the last few
weeks. The problem arises as to how
many such orders will be Cancelled
due to the recent deterioration of
sentiment. If the crisis can be
smoothed over again, whether by the
method of Munich or that of a
strong antl-totalitarian alliance, the
pest guess is that these orders will
be carried through into actual pro-
ductlon in the next few months.
Construction Watched.
particular hope for business re-
vlVal from April through July is
placed on the construction industry
Contracts awarded in the first half
OF March turned out to be disao-
pointing, but the broad outlook for
building activity in the next six
months remains good. The contribu-
ton OF the Public Works Admins
tration, under the spending program
adopted last June and only Just COM
ing into full force, will without doubt
be considerable.
AT the peak in July it is expected
that 100000 workers will be directly
employed and that the producers OF
construction materials will be en-
ploylng an even larger number on
orders for P. w. A. projects. After
that month steady drop in employ
ment on these projects is expected
until IS per cent of the workers have
been laid off by midwinter.
The general conclusion from this
pattern of expenditures is that pro-
duction of basic materials will re-
celve strong support from Govern
ment spending in the next six
months, but that thereafter a de-
cline is threatened unless private in
vestment can show unexpected pow
ers Of recuperation.