Evening star., 1940-10-27
Industry Booming
on War Orders
By ODen L. Scott.

boom is based upon war orders from
England and defense orders at home. If
war continues the boom will go ahead
regardless of the election outcome and
without much relationship to the ques-
tion Of who occupies the White House.
At present industry is heavily loaded
with orders from Great Britain. The
volume Of those orders will rise as long
as Britain holds out, because the Brit
ish must look to the United States for
those goods that formerly came from
Europe and for other goods that cannot
readily be produced In the midst of air
attacks. But at the same time. industry
is becoming heavily loaded with orders
from this Government The total for
defense alone is near $4,000. 900 900 with
$4,000 900 ,000more to go. Even this will
be increased when 1941 comes.
Some branches of industry are BOOM
ing today, even before the full effect of
the British and American orders is felt.
This boom has carried the Federal Re-
serve Boards index of industrial activity
to a level substantially above that of
1929. 1t has the steel industry operat-
ing practically at capacity, with new Or
ders flowing in much faster than the
mills can fill the orders now on the
books. 1t has the machine tool industry
so swamped with business that orders
must be filled on the basis of arbitrary
preference. 1t has the shipbuilding in
dustry strained far above capacity 1t
is taxing the productive facilities of an
increasing number Of other industries.
Yet this Governments defense spend
ing is just getting well under way. In
october, the cash flowing out for Amer
lean defense will total about $285, 900 900.
The early months Of l94l will see that
total around s5000OO000. This MONTH
by-month outpouring of cash-an out
pouring that will reach 81 300 900 900 for
all Government purposes in the months
ahead-inevitably will have a strong ef-
feet upon industry and trade. Defense
spending alone will be comparable to
the payment of soldiers bonus month
after month for many months.
The resulting effect will be cumula-
tive, provided the British hold out and
this large and growing export trade.
Not only will industry have war and
defense orders, but it will receive orders
from merchants and from wholesalers
vino will be selling more goods to indi-
viduals whose incomes will rise with the
rising total of jobs and of pay rolls To
fill these orders for consumer goods, in
6nctrU will ho fur
1t is here that one of the worries en-
tiers.
Every effort is being made to in
duce labor TO 60 slow with wage in.
crease demands and to induce industry
to go slow with price increases, at least
until the productive machinery of the
Nation is fully occupied. The hope is
that, if price. rises can be restrained,
huge volume of defense production can
be superimposed upon huge volume of
production of goods used by ordinary
consumers so the Nation can have arma-
ment and domestic prosperity at the
same time. This. however, is a delicate
operation and not assured of success 1t
is an operation entrusted to Leon Hen
derSon of the Defense Commission Mr..
Henderson is trying to do by argument
and moral persuasion what nations at
war do by force So far he has re-
markable record of success.
If the effort to control prices succeeds
this country may have good times, due
to war orders and defense spending,
without having a spree of imitation
That would be very desirable, because it
would make less severe the inevitable
later national headache.
There is some doubt however Wheth-
er voluntary price control will succeed
The reason is that. with continued war,
demands upon industry for production
and pressures upon the labor market for
skilled workers will be so great as to pro-
duce competitive bidding for the avail
able goods and the available labor. Once
that situation appears there are only
two remedies. One is to let prices rise.
thereby acting as an automatic brake
on some kinds of consumption. The
other is to use taxation and other Gov
ernment powers to syphon of purchas-
ing power as a means of reducing de-
mand for some kinds of goods or to place
a ceiling over prices by law.
Certainly the developing boom in
American industry has been handled
with more intelligence and care this time
than previously
Production bottlenecks are being FORE
seen and are being dealt with by Gov
ernment and industry in conference. 1t
may be that if war continues, and if
British demands continue to increase,
there will be need for the Government
to use legal authority to tell industry
which orders must be filled first. In
situation of this kind, the consumers of
the country might wake up to discover
that some of the things they want-such
as new model refrigerators and automo-
biles and radios-may not be obtainable
in unlimited quantities. War industries
would have first call.
All of this seems rather strange in
country that has endured depression al
most continuously since 1929. The
thought of industry so swamped with
orders that the authority of Govern
ment might be required to determine
who can be served first would have been
regarded as fantastic only a few
months ago.
Now the threat of war has caused
70 Untn f1,n eI