Evening star., 1939-04-10

Business Week Index
Remains Unchanged
For Fourth Time
European Crisis Brings
Substantial Drop
In Securities
erecial Dispatch to The Star.

NEW YORK, April 10.-During the
last week business has done very
little, Business Weeks index of gen.
eral activity remaining at 80 for the
fourth consecutive time as another
decline in the automobile index was
offset by rises in other components.
Stock and comomdity markets. how
ever, have done a great deal-in the
shape of series of sharp declines
which carried the various indexes
to the lowest point of the year.
The obvious explanation of these
declines is the European crisis, but
it seems probable that the disap-
pointing action of domestic business
has played a role This is indi-
Gated by, among other things, the
fact that the American averages
were at or below their low points
of last September's war scare, while
the London stock market was still
several points higher.
AS late as month ago one might
have explained this by saying that
New York was more awake to the
dangers of the European situation
than London. but the complete
shift in the point of view of the
British people which has occurred
since the fall of Prague excludes
this hypothesis today. Three months
of downward drift, or at least of
sideways movement, in American
business. contrasted with the re-
covery in British industry during
the same period. offers more rea-
sonable explanation.
British Activity Given.
Expanding activity in Great Brit
ain and the other leading countries
whose markets are important to
American industries is great factor
of strength for domestic business.
Expanding activity due to arma-
lnents is, in its short-run effects,
probably an even greater factor of
strength than a healthier type of
expansion, since the former means
that the exports of the country in
question will be neglected, but that
its imports will be kept abnormally
high. In short, the year 1899 should
see a net stimulus of American in
dustry from abroad, if only the po-
litical crisis can be quieted
AS for the possibility of war. the
evidence has not yet rebutted the
opinion that Hitler and Mussolini.
the only men likely to launch one.
are too we'll acquainted with the
mortal danger to which it would
subject their countries. their systems
and themselves, to do so except as
last resort.
They are, of course, prepared to
fluff to the last moment. to nego-
,tiate. to denounce, and to use every
means of economic and propagan-
distic and even quasi-military war
except outright hostilities against
coalition of powers. If this opinion
is justified, the world may have a
long period of crisis ahead. The
cutting of the Gordian knot prob
ably is still far of.
Pessimism Overdone.
In such crisis period short rt-range
plans are hard to keep and long
range plans hard to make. 1t is not
surprising, therefore, that in many
American industries cancellations
have been almost as frequent as
orders since March Is.
Business is back again on a hand
to-mouth basis. But the soundest
opinion is that this pessimism has
been overdone. The inventory situa-
ton and the building situation are
Goth much better than they were a
year ago. when an equally pessimist-
&c sentiment in the spring somehow
turned into an effective optimism in
the early summer.
The upturn this year has doubt
} less been postponed for some weeks
by European events tplus the stag
nation if not destruction of the
business appeasement policy at
home), but, granted that the diplo-
mats will find at least a temporary
solution, it is still going to come.
The forecast previously made that
April would see the turn is in process
Of being disproved week by week,
but within the broader limits of the
second quarter of 1889 it still holds