Evening star., 1940-08-19
Stock Market Fears
British Defeat, but
Remains Calm
Business Week Says
u. s. Has Become
SteeIed for Worst
Special Dispatch to The Star.

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NEW YORK. Aug. 19-Apprehen-
sion lest Hitler's air force crush
Britain's defenses and morale sent
the stock market and sentiment
lower in this country. says Business
Week today. But there was not the
utter panic that followed the Ger
man drive into France People in
the United States have become
steeled to the Nazi war machine;
the idea that Germany might win is
no longer foreign to their thinking.
Indeed, the prevailing attitude is to
expect the worst and hope for the
best. For that reason. a breakdown
in our markets hardly is a logical
outcome of the battle of Britain. A
good deal of discOunting has already
taken place.
Moreover, domestic business has a
months ago the war abroad DOM
mated the American business mans
attitude toward his production
schedules and inventory policies, to-
day national defense is the most
important single force in our in
dustrial life Government spending
adds to consumer purchasing power
and Government orders add to cor
poration backlogs. The combination
is such as to make sharp drop in
business hard to conceive. Unless
the defense program collapseS, it
will
for months to come-though con-
cededly a defeat for Britain, and the
ensuing dislocation of orders and
operating schedules, could result in
temporary break in the business
curves.
Index Turns Down.
Indeed, right now the business
statistics are beginning to show some
signs of fatigue, after their rapid
rise since the beginning of April.
This week, as an instance, the
Business Week Index declined IL
points. Main factor was a decline
in automobile production as more
motor manufacturers finished up
their 1910 assemblies. But the re-
sulting hiatus before 1941 cars roll
of assembly lines tends to over-em-
phasize the letdown in business.
because there is not a corresponding
drop in employment in auto plants.
On the other hand, during the
changeover period. automobile TAX
ingS of steel are minimum. That in
part explains this weeks dip in the
steel rate-the first drop since the
July holiday.
Steel has been due for stabiliza ton
around current high levels of 90
per cent of capacity. Since June.
1889. iron and steel inventories have
increased about l6 per cent as both
steel mills and consumers prepared
against the possibility of delayed de-
liveries. All by itself, this per-
formance might suggest a coming
contraction in the steel operations,
but new orders since February have
been expanding month by month.
Shipments have expanded corre-
spondingly, but private information
to Business Week indicates that
steel backlogs are we'll up to recent
highs. So incentive to curtail oper-
ations is lacking.
Heavy Goods Active.
The general tenor of the Depart
ment of Commerce indexes is of a
piece for most durable goods lines
transportation. equipment, electrical
machinery and machinery in gen.
eral. On the other hand, consumer
goods inventories have not shown
marked expansion. This confirms
the diagnosis made so frequently
here that demand for such products
as textiles. shoes and clothing has
not kept pace with heavy goods. And
it's still proper to call the present
advance in business a durable
goods recovery In time, the ex-
pansion of payrolls by the heavy
goods industries will be translated
into increased orders by retailers
for consumer goods.
In the meantime, building has
definitely joined the ranks of steel
and automobiles as pregenitor of
industrial expansion. Thus the big
three" of the heavy industries are in
there plugging away in unison. In
July, building contracts awarded ap-
preached $400000,000 or at rate
(disregarding seasonal influence) of
81 300, 900 900 year. This is within
range of the highest level on record
SO 900 100000 in 1928.