Evening star., 1940-09-01
Business Registers
Big Gains as First
Year Of War Ends
Election and Bottle
Of Britain Remuin
Greet Uncertainties
BY FRANK MacMILLEN,

tial wartime business gains were
shown today in the Nations eco
nomic balance sheet for the first
year of the European conflict.
Heavy industry moves into the
second war year with operations at
the highest levels for this season
since 1929, with employment in
creasing and the productive ma
chine shifting gears and expanding
to meet the needs of the vast United
States defense program.
The rising tide of arms spending,
for British as we'll as home require
ments, appears to have offset in
business generally the loss of the
great continental market in Europe
to foreign trade.
The upswing in factory activity
which started last May slackened
after the fall of France. but lately
seemed to have regained vigor on
the approach of autumn and mount
ing Federal expenditures.
Business forecasters mostly looked
for sustained industrial activity
through the autumn and winter,
pointing out defense spending prob
ably would not be in full stride
until next year.
Two Uncertainties Seen.
Overhanging business calculations
were two great questions: The out
come of the battle of England and
the November presidential election
These have been cited in some
brokerage circles as largely the eX-
planation for the contrast between
the growing war industry boom and
extreme quiet in Wall Street specu-
lative markets.
After the surrender Of France
stock trading shrank to the smallest
volume in % years and prices barely
moved. This week security markets
displayed an urge to climb with the
business curve. Both stocks and
bonds moved ahead moderately.
But the broad picture IN the
financial district remained one of
cautious waiting. Wall Streeters
sensed the battle of England may
hold the key to even greater world
economic changes than those al
ready witnessed in the Nazi con-
quests on the continent, the dis
ruption of foreign trade. the S10,-
600, 900 900 armament program IN
the United States, the stampede Of
gold here.
British agents have placed more
than s2,000,000,00O in war orders in
this country, the bulk consisting of
undelivered eirplanes. The proper
ton of expC~ts going to British EN-
pire markets has increased sharply
since the closing of continental out
lets, rising to nearly half the total
in June.
In the event of the severing Of
British supply lines. analysts noted,
American industry might suffer a
temporary shock. However. Wall
Street feeling recently seemed to
have become more confident of Eng
lands ability to Withstand the air
blows at her nerve centers.
Most of Ground Regained.
Since the launching of the defense
plans in Washington and speeding
of British buying here, industry
largely has recouped the ground lost
in winter and early spring let
down from the first war stimulated
business upturn last autumn.
The Associated Press index of
industrial activity has risen from
936 per cent of the 1929-30 level last
may to this weeks figure of 1898.
In the first few months of the
war-when there was an excited
scramble to expand inventories in
expectation of a wartime imitation
of priceS-the index shot up from
around SO to about 112.
After the first flush of war buying
in wholesale markets, production
fell off while dealers waited for
consumers to take inventory of
their hands. Meanwhile, heavy in
dustry moved to the front under
the spur of expansion in aircraft,
tools, construction, shipbuilding and
other lines feeling the billions fiow-
ing into armament.
The upsurge in machine-making
industries has been accompanied by
a boom in steel output from about
go to above 81 per cent of capacity
since April. Further gains we're
predicted in steel circles. with pros
poets the industry in the final half
of 1910 might set new production
record, topping the 1929 per-
formance.
Shipbuilders, aircraft, engine, tool
and textile manufacturers have ac-
cumulated large backlogs of untitled
orders, estimated at upwards Of
$4,000, 100000. These we're expected
to keep many factories busy for
months ahead.
Large-scale plant expansion has
started in certain war industries.
notably aircraft, explosives and
engines.
Construction Expands.
Federal contracts for naval, air
and Army works have sent construc-
ton awards in recent weeks to the
IllSIlcSI llg CO III ~ years, dCCOuIlJ-
ing for about half the total. Resi-
dental building-already at the
highest since 1929-has quickened
in communities feeling the war in
dustry boom.
Retail trade reports reveal the
stimulus of increasing pay rolls at
industrial centers. Some districts
show wide gains in trade over last
year, particularly in central indus
trial areas.
The United States Department of
Commerce figured the Nations in
come was running at the rate of ap-
proximately $4,000, 900 900 annually.
compared with S7c,o70, 100000 in
1899.
Armaments are being financed in
part by borrowing. This creates
added purchasing power by expan-
(See BUSINESS, Page B-e0