Evening star., 1939-10-29
Foresees Early End to
First War Boom
By ODen L. Scott.

character of the crackup that appar.
emily is going to occur once todays or
ders are filled and the shelves and ware
houses of the Nation are crammed with
goods.
| Two viewpoints are held by the Gov.
ernments forecasters who know most
about such things.
One view is that the crackup after
the turn of the New Year is going to be
resounding, with telltale indexes of pro-
duction in nosedive that will repre-
sent sharply rising unemployment and
rapidly contracting activity-in short,
another reminder of depression.
The other view is that the crackup
probably will reach low point in March
or April and will represent only a mod
crate decline from present levels, with
only moderate additions to the roll of
the unemployed and without any re-
verse to an underlying trend that will be
upward so long as war continues abroad.
All of the forecasters are agreed that
the first boom is soon to blow up They
disagree on the character of the blowup
and on what comes next
Which side is right will be determined
by two unpredictable factors:
First, whether or not there are going
to be war orders, and, If so, in what VOL
ume and how soon.
Second, whether or not the present
large-scale Government expenditures at
home. coupled with the added income
that is being generated by more active
industry, will touch off a demand that
can absorb today's production at the
price level industry is fixing for its
| products
| On the first point, both groups of fore
casters are agreed. Neither sees much
prospect for large war orders in the
months just ahead. Britain and France.
with continued war. will buy many air
! planes. But Britain and France and
Germany and Canada and others are
going to buy less or not at all of many
other American products. The result is
| that total sales abroad-for some months
| ARE likely to decline or to hold about
level rather than to increase
On the second point, there is wide
difference of opinion.
Those who look for tailspin in indus
| try think that businessmen and workers
are going to raise prices for their prod
ucts at. the turn of the new year. Just
| about the time when production in in
dustry will be pointing down Higher
prices at time when industry is reduc-
ing employment, and thereby reducing
| the income of consumers, can produce a
situation comparable to that of 1887
One group of forecasters thinks that the
crackup in early 1910 will prove even
sharper than that following July, 1888,
and that following May, 1887
| Most Of the Governments forecasters,
however are less pessimistic.
Their view is that Government is 60
ing to sustain income in a way that it
did not do during 1887 They feel that.
so long as war continues, industry is
| going to want to have on hand much
larger inventories than in peacetime
/ They argue that industry is showing re-
stralnt in its urge to raise prices and is
thereby going to permit heavier-than-
| VhpCSlSu SollSulllpliOIl Ol SOOuS. Anu,
with some apologies, they point out that
in wartime there always is a chance that
the Germans will sink some more bat
tleships or drop bombs on key industries
in Britain and France or in other ways
force European nations to spend some of
the billions of dollars that they have
available for spending here.
war does not gather momentum. this
country is in for a rather important set
back in business. On the other hand, if
the war does gather momentum, this
country is going to receive large orders
and to prosper so long as those orders
continue to flow. An appraisal of the
outlook requires an understanding of the
future character of the war-an under
standing that almost nobody can have
The possibility that the war will not
soon gather momentum forces officials
to consider once again the possible meth
DDS of domestic pump-prining
This time the method is ready at
hand.
| \
| hl IldblOIldl UelenS6 now
appears imperative. There is every
prospect that President Roosevelt will
feel lmpelled to ask Congress for impor-
tant increases in the amount of money
available for the Army and the Navy
And there is every prospect that Con-
gress will want not only to vote the dol
lars that the President asks, but more
dollars as we'll
Dollars spent for battleships and guns
and gunpowder and tanks have just as
much effect when spent as dollars spent
for houses for lowincome groups or i'm
proved highways or schoolhouses or
loans to businessmen and railroads for
expansion.
And Congressman and businessmen
and voters who raise the roof with vio-
lent objections when Government spends
money or lends money to improve the
physical plant of the Nation are ready
to jump on the band wagon when Gov
ernment decides to spend money for In
struments of destruction. A debt Gre
ated to improve housing facilities or to
develop an irrigation project or to in
crease highway facilities is viewed with
horror-even when there is a chance of
some repayment. A debt created to build
arms and gunpowder that can be blown
to kingdom come in a few minutes
without even leaving pieces-is viewed