The Waterbury Democrat. [volume] (Waterbury, Conn.) 1917-1946, 1940-07-03
War Paradox
For Business
First Half 40
Held Equally Responsible
For Early Slump and
Later Advance
BY ROBERT A. KNOWLToN
United Press star Correspondent

ny MV0EhI n ANVWAAON
United Press star Correspondent
washington, July 3. (UP)-The
war provided a paradox for Ameri-
can business in the first half Of this
year. It was responsible for slump
which set in at the start of the year
and was credited for the gradual
rise which became evident early In
May.
The immediate outlook was for
continuation Of the upward move
ment Of business because Of the
multi-billion dollar preparedness
program but government economists
were unwilling to make any long
range predictions for the future.
The pattern Of industrial trends
during the first half Of the year,
they said, is still vague and con-
fused in several respects. Roughly
business activity reached peak
during the last quarter Of 1889, and
began to decline Just Eefcre the hew
year when war-Stimulated produc-
ton eased of. The decline continued
throughout the first three months
of 1910, hitting a low some time in
mid-April. Since then, there has
been a steady, If slow and uncertain,
rise.
Many Markets Lost
This picture the experts said, is
substantially correct, but far from
complete. Individual trends have
risen, domestic consumption has de-
clined. Not only must the so-called
war boom" be taken into consider
alton, but the loss Of the Scandina-
Wan, Mediterranean and Low Courl-
try markets must be given its full
Importance. The Allies accelerated
their purchases of war materials
during May and June, but on the
other hand export sales Of consumer
goods declined.
During January, the decline In
operations Of primary manufactur-
ing industries was influenced by the
decrease in the flow of new bust
ness, which gas below the rate OF
production. Activity was sustained
however, in plants producing ad-
yanced manufactures-mainly pro-
ducers' goods-in which lines very
substantial untitled order totals hac
been carried over into the new year
During February, the downward
trend continued, with some indica.
ticn of leveling of during the last
ten days of the month. The reduc-
ton in new business remained
rather general, with orders restrict
ed and below production levels
Backlogs of untitled orders, however
were reduced, while foreign ship
ments. allowing for price changes
rose to approximately the 1871
levels.
Decline Slows Up
While the business drop continued
during March, the rate OF decline
was less rapid than during Januar!
and February. The volume Of indus
trial output during the month wa
approximately at the same level a
during August, 1899, with few dur
able good Industries rising, either b.
virture of a continuing flow OF or
ders resulting from the war or be
cause of previously accumulated
backlogs. Income payments 70 IN
dividuals tended lower, although
still standing above the genera
levels for the fall Of 1889.
Business Low Set In April
Business and manufacturers
reached a low for the year durinl
April, with residential construction
the one field to show even mod
erately improved outlook. Retail
trade volumes continued below tn
levels reached in the closing month
of last year, and seasonally ADJUSTED
freight traffic was reduced. tn
paper and pulp industry, however
received a substantially enlarget
volume of new orders, mainly be
cause of the cutting of OF Scandi'
navian supplies.
The month of May started on
inauspiciously for business. Aimee
reyerses during the early days o
the month brought a sharp breal
in security and agricultural prices
The quick industrial response u
national defense needs, however
frightened the outlook considerably
and prices rallied strongly. Govern
ment defense expenditures and IN
creased private investment ON capl
tai funds more than offset the drol
caused by events abroad.
Preliminary figures for June CIV
every indication that the late Ma!
rise is continuing. National defer1s'
needs, and increased governmental
spending, are on the upgrade. Will
the loss Of foreign markets Il
Europe is more than offset by Alice
needs and the increasing share o
the United States in the Latil