Evening star., 1940-12-01
Industry Faces
Big Problems
In Arms Race
Taxes, Prices, Wogee
And inventories All
Receive Attention
By FRANK MacMILLEN,

Associated Press Business Writer.
NEW YORK, Nov. 30.-American
industry whirled along at the swift
est pace in a decade this week. but
businessmen appeared increasingly
pre-occupied with the Pandora's box
of problems presented by a war
geared economy.
Taxes, inventories, prices, wages,
all came in for discussion as busi-
ness moved steadily toward a new
year which appeared certain to set
historic production records.
When Senator Pat Harrison re-
vealed that the administration at
Washington had decided no further
taxes retroactive to 1910 would be
sought from Congress, the news
semed only to have emphasized the
fact that 1941 levies would surpass
even present high rates. Some
Washington quarters predicted an
effort to raise $4,000, 900 900,
peace-time high, by taxation next
year.
Materials i'm Demand.
To rising taxes, was being added
the even more pressing problem OF
pouring into the NAV of the hungry
industrial machine, the fodder OF
raw and semifinished materials nee
essary to keep up and increase its
present rapid tempo.
What this means to the thousands
of factories throughout the coun-
try, and to the markets for many
kinds of industrial raw products,
was indicated by the monthly sur
vey of the National Association OF
Purchasing Agents, whose members
are responsible for the buying
policies of a good part of the coun-
try's leading concerns.
"Opinion persists" the association
said. "that - the haste to fur
nish supplies. ammunition and equip
ment for defense and armament
purposes has many months yet to
run in this country.
consequently. in most lines OF
industry, buyers cannot afford to
do otherwise than have essential
production materials covered well
through the first half of next year.
and in certain items the sooner these
purchases are made the better, even
though rapidly changing price struc-
lures are not anticipated in the i'm
mediate future.
Higher production costs, which
include possible wage increases, cou-
pied with continued high level of
demand, are expected to hold COM
modify prices at present or mod
erately higher levels for some time
to come"
Steel Boosts Talked.
Iron Age, in its field, likewise
referred to the possibility Of higher
costs, saying that steel prices were
bound up with the industry's wage
level. and with the price of scrap
metal. an important raw material.
Scrap, the trade paper noted, ap-
peared definitely on the rise. OF
workers pay it said:
Fresh problems may confront the
steel industry as it enters 1941, nota-
bly, the one of wages. This has not
yet reared its head openly, but be-
hind the scenes are quiet activities
which may result in a demand by
the Steel Workers Organizing Com
mittee for higher wages ."
Wall Street, pre-occupied with the
stock market, traditionally the "ba-
rometer of business" appeared to be
having its difficulties. just as BUSH
nessmen were, in assessing the scores
Of wage, cost and profit problems.
Share Prices Down.
Again this week share prices, on
the average, showed a modest de-
cline while industrial activity went
on to new peaks for such significant
indices as automobile production,
home construction, power output
and freight movement.
The Associated Press index of in
duStrial activity now stands at 1888
per cent of its 1929-30 average, and
some 27 per cent above its low for
this year, in April.
But stock prices, as measured BY
the average of so leading issues. are
Is per cent below the top made at
the beginning of this year, and
have risen only 18 per cent from
the market bottom made in June.
Business Week offered one ex-
PLANTATION, when it said:
Businessmen hold suspect the
current high level of industrial ac-
tivity-not so much because they
think that this is just a transitory
advance in business, but rather be-
cause they fear it will not yield
profits. The feeling is that
higher taxes will cut into corporate
profits and in that way render nuga-
tory the increase in the volume of
business"
Other Factors Uncertain.
Other factors which appear to
make sure judgments of the busi-
ness situation difficult, conversa-
tions with business men and bank
ers here indicate, include:
l. The strength of Britain's power
to resist the axis nations, on which
hinges the length of the conflict and
the immediate fate of a trade in war
materials and supplies with the
United Kingdom, at present bring
ing American business men and
farmers about s1,20o,000,000 an
nually.
2. The ever-present possibility Of
a surprise peace movement, which,
even though apparently remote, has
made for caution.
8. The normal pause which occurs
as business men try to size up the
probable trend of politics and legis-
lation at the start of an administra-
ton, whether newly chosen or re-
plpctad