Evening star. [volume] (Washington, D.C.) 1854-1972, 1940-09-22
Commodities Register
Little Change as
Result Of War
Form Staples Steodied
By Looms and Other
Domestic Factors
Special Dispatc to The Star.

modify indexes only moderately
above their starting point, according
to the Standard Statistics Co. Prac-
tically all of the rise was realized
in the first two months of hostili-
ties, with q subsequent irregular
weakening.
The war failed to develop as most
people expected. Last September, the
betting odds were all on the Allies,
although several years OF fighting
were expected. Central Europe
would be blockaded as in 1914-1918,
according to the consensus, but
many neutral markets on the CONT
nent were to remain open for United
States trade.
Instead, sudden-striking German
attacks have cut one customer after
another from the list, until almost
all of Europe is now included in the
British blockade. One-third of the
United States market for farm prod
ucts has been completely removed,
and the United Kingdom, which &C
counts for another third, has been
striving to reduce consumption of
fOOdStuffS through rationing. Under
these circumstances. 1t is remark
able that agricultural prices in this
country are at all above their pre-
war level. However. any improve
ment may be attributed to Govern
ment loans and other domestic fac
tors, rather than to bullish stimulus
from the war.
Other Groups Higher.
Price indexes for other COM
modify groups stand somewhat
higher than at the start of the war,
with the exception of imported prod
ucts. Aside from Scandinavian wood
pulp, most of the important raw
materials which the United States
obtains from abroad can be OBJ
tanned in areas outside the blockade
zone. Producers have found them
selves in situation similar to that
of the American farmer-many for
mer customers have been removed
by the war Since this country repre-
sents the largest market to which
goods may be freely shipped, it is
natural that heavy supplies have
been pressing for admittance
While no general arguments can
be cited to cover all commodities,
an examination of individual situa-
tons leads to the conclusion that
no major price swings are to be ex-
pected for some time. In some cases.
Commodity Credit Corp. loans
are tending to stabilize the market.
In others. it is the reserve buying
program of the Government. A few
imported commodities have declined
to a point where shipping costs are
placing a floor under the market.
Britain's Fate Awaited.
The biggest uncertainty in the
commodity outlook, at least from a
short term standpoint, is Britain's
fate in the war. Prices showed their
sensitivity to the day-to-day changes
in the battle for the Low Countries
and for France. Buyers fear that
a collapse OF Great Britain might
touch of slump in business and
in commodity prices. The resistance
of the British Isles to air attacks
and the delay in the land attack
has probably helped recent senti-
ment, as 1t has suggested that the
war has q greater chance of being
prolonged for another season.
If the only effect of a German
victory were the closing of the last
democratic market in Europe there
would be little occasion for a slump
in domestic business. Exports to
Great Britain are estimated as only
little above l per cent of the
country's total industrial output
since the start of the war. Even
allowing for the fact that orders on
hand forecast an increase in this
percentage, the Importance of the
trade is comparatively small The
relative loss in the case of steel,
aircraft and few other armament
exports would be larger, but the
country's defense needs are already
overtaxing capacity In these lines
and would probably take up the
slack within a short time
Inventories Increase.
The real menace of a British de-
feat is the potential effect on busi-
ness sentiment and inventory pol
icies in this country. Manufac-
turers' inventories increased during
July for the third successive month,
according to the National Industrial
Conference Board. This carried
stocks past the February peak,
which followed the heavy forward
buying of last fall. They are still
appreciably below the dangerously
high level Of last 1887, but consider
able contraction might conceivably
occur if buyers cut down on new
orders.
Less reduction would be possible
in the case of inventories of raw
materials held by primary pro-
ducers. which are now above the low
point of mid 1887. but below the
highs of 1893 and 1899. Retail stocks
are at comparatively modest levels.
Any interruption in buying by
manufacturers, however, would
probably not be extended. An end
of the war within the next month
or two would apparently be at the
expense Of Britain. The danger of
this country becoming embroiled in
the conflict would be increased and
. this would hardly encourage a
liquidation Of inventories.
Defense Spending Helps.
The national defense program will
act as an ever-increasing stimulus,
which should help to tide over any
temporary slump in business activ-
ity. Total defense appropriations
are now approximately $4,000, OOO,-
600! Although the obvious difficult
e