Evening star., 1940-05-19
Business May Face
Sweeping Changes
In Arms Race
Further DisIocution
Of Foreign Trode
Also to Be Felt
BY FRANK MacMILLEN,
Associated Press Business Writer.


BY FRANK MacMILLEN,
Associated Press Business Writer. ,i
NEW YORK. May 1s-sweepins ,
changes In business activity may re.
suit from the gearing Of the United
States vast industrial capacity to
defense needs and from dislocation'
in foreign trade, Wall Street analysts
said today.
Despite the collapse Of speculative
markets this week and fear In A.
nancial circles the German on
slaught may curtail Europe's ability
to buy in this country, many eco
nomic experts looked for expansion
Of heavy industry under stimulus Of
the greatest arms spending here
since World War years.
Aircraft, shipbuilding, machine
tool, metal and machine accessories
industries were judged in financial
quarters destined for faster action
to supply both home and allied Or
ders, particularly If the allies hold
out In face Of the Nazi effort to
achieve a quick knockout on the
Western Front. Ii
Two More Nations Closed.
The German push across the Low
Countries eliminated from the world
markets. temporarily anyway, two
important trading and manufactur.
ing nations. The Belgian steel in
dustry, . big factor in the export
market, had been selling more than
1000 900 tons abroad, according to
trade estimates.
Holland sold a variety Of goods In
the foreign markets, bought raw
materials end food in this country.
The prospect that the United
States might be called upon to sup
ply much of this loss In export mar.
kets, including steel for the allied
war industries, was only one aspect
OF rapidly shifting economic pic
ture.
With the Mediterranean and the
Balkans threatened by the spreading
war, analysts could only speculate
vaguely on the long range business
significance Of the European up-
heaval. Against the prospects OF
war industry expansion, for instance.
they had to weigh possible effects
OF the abrupt slump In stocks, bonds
and farm commodities.
Values Wiped Out.
The crash-the biggest concen.
trated decline in stocks Wall Street
mas seen since July, 1933-wiped out
Oiulons OF dollars in quoted values.
Merchants, watching the fall in cot
Ton, grains and other farm products
were apprehensive rural buvins
power might be hit unless commodi-
tles rally before growing crops
reach the market.
Inc oreak-through In stocks, After
months Of narrow fluctuations while
tne struggle In the west was stale-
mated, contrasted strikinRly with
!urther evidence of q tardy snrine
business pickup and the PLACING n
aaoltlonal war orders here by the
allies. ~ WIG
President Roosevelt's proposal for
Sl.l82, 900 900 boost in Uncle sam a
oeIense budget helped stem tha tor
rent OF selling, but the scope of
NAE conquest and the breach IN
french defense lines kept specu-
lative markets nervous through IN
week end.
The decline reversed complete,v
the upsurge In speculative markets
at the outset of the fighting last
september, when imitation" ideas
took hold in Wall Street. Then there
was pell-mell rush to build I'm
depleted inventories of raw materials
and goods in expectation of heavy
war orders.
Allied war buying in the mean.
while fell below the expectation Of
many. but there were indications
the burst of fighting In the Greatest
battle OF all time" this week moved
BRUSH and French purchasing
agents to speed procurement plans.
on the heels of President Roose.
vets Dillon dollar defense message
Thursday, 1t was announced actual
orders placed in the United States
Tor the allied account amounted To
more than $1,000, 900, 900 and that
enorts were being made to augment
a1rplane deliveries.
The dual impact Of allied and
United States demand for war planes
was expected to bring great ex-
pansion OF plant capacity In that
busy industry.
Motor Orders Expected.
Detroit and Cleveland areas. cen.
ters OF motor and machine manu-
featuring, anticipated many millions
OF dollars in orders from the arms
program. As partial Offset to this.
Tor the near future at least, some
analysts suggested the decline in
security and commodity markets
may slow retail demand for auto.
mobiles and consumers goods, re.
Gently showing good gains over last
year. ''
shipyards, also near the hilt Of
capacity, prepared for extra effort
on naval and merchant marine
orders.
Rising to the biggest export de-
mand IN many years and q recent
pickup In domestic metal buying, the
steel industry jumped operating
schedules sharply for the second
week. The steel production rate
rallied to around 10 per cent of
capacity.
The May upturn, reflected in rail
loadings, electric power use and
other barometers, lifted the Asso-
ciated Press index Of industrial
activity to 90 per cent Of the 1929 20
level, compared with 93.6 1T the end
OF April and 82.9 a year ago.
How long 1t would take the defense
spending to show up on industrial
lndlces was q matter Of debate.
Some analysts said industry shou6
begin to feel the speed-up within
month or two, considering the
drive for quick action In Conrresa.
The upturn, some contended, wotild
be manifest In employment gains IA
machine, ship building, aircraft and
other industries directly hitched to