Nogales international., 1940-11-16
We Are In Midst OF "A Boom

NEXT the end of October, a noteworthy event oc-
~ occurred The Business Week industrial acti-
witty index which is one of the standard business bar
ometers, touched 1876. That was seven tenths of a
point higher than the previous atime record which
was reached during the week of July q, back in
tabled and fabulous 1929.
What this obviously means is that are in the
midst Of boom-and boom that will undoubtedly
reach giddy heights before it is DONE Equally OBJ
vious it is not healthy BOOM It is based upon
thing only-war. 1t will stop when and war pre-
parations stop And, like all war booms it is in
flationary in tendency
Dismissing that for the moment it seems clear that
a period of considerable artificial prosperity lies
ahead of Practically all business will be affect
ed. Modern and modern preparedness program
call for unprecedented degree of national effort
For every soldier in uniform there must be half-a-
dozen men Or more behind him in factories and sup
ply depots producing, distributing and handling the
hunderd and one articles that todays soldier must
have if he is to be efficient destroyer In mod
war, in BRIEF the civilian population is much
involved as the actual armies in the field.
Some industries will probaly expand at tremen-
dous rate during the next few years. We have seen
signs Of that already in aircraft manufacture-the
principal makers are working "a hours a day, are
building plantes fast as the necessary labor
and materials can be obtained and have gigantic
quantities of untitled orders hand. 1t was lately
reported that Britain will buy $4,000 additional mill
tary planes in this country, and that our government
will place orders for equal number.
Railroad carloadings will be going up. Electric
power output will necessarily follow the surging in
dustrial production induces. And such basic heavy
industries steel will find their principal problem in
figuring how to keep output up to demand
Normally, great jump in production such as this
would involve gigantic profits That will not be true
this time This year, for instance, many industries
expect that net earnings will be under the 1889 level
even though production is substantially greater
There are number of reasons for that. One is that
commodity costs rising Still another is that it
will be necessary to put larger proportion of gross
income back into plant facilities. And the most i'm
pOrtant reason of all is taxes. We are starting a
twenty thirty blion-dollar arms program on top
of $45OOO0O00O0 national debt and in the face of
the fact that Federal income has been under Federal
spending for eight years. The tax boosts put into
effect by the current Congress are generally regard
ed as but modest start It seems inevitable that far
larger increases will be necessary next year and dur
ing the years to follow. At the same time govern
ment will probably do all it to hold down prices
of finished products and to force industry to absorb
as much of the higher costs it can. Profits must
be adequate, but they won't be great.
It isn't pleasant to think of the depression that
the view Of most economists will follow the wal
boom. History shows us again and again that pros