Evening star., 1941-01-12
|ndustryGets
Of
Vast Drive
Budget Foreshodows
Largest Production
In U. S. History
By FRANK MACMILLEN,

NEW YORK. Jan 11.-When Pres
ident Roosevelt this week presented
a budget providing for arms eXpen-
ditures that may run to more than
81 900, 900 900 a month before mid
1912, he practically presented indus
try with blueprint for the greatest
production in American history.
The factories of the United States
are running at the swiftest pace on
record. Standard indices of produc-
ton. such as that of the Federal
Reserve Board, are topping the
peaks of 1929.
Yet defense spending is only get
ting under way The Government
now is pouring into the myriad
goods of war about 100000 900 a
month.
The Presidents request for So
800 100000 for military and naval
uses in the fiscal year starting July
l, and his prediction that we would
need S27 900 100000, or even more,
for similar purposes over the next
three years, envisages a rate OF
spending more than double that at
present
Observers Confused.
BY presenting a budget in which
the non military expenditures Of
Government were balanced by antic-
cipated revenue, the arms program
assumed the role of pump priming"
which relief and civil works have
occupied in the Nations economy in
recent years. But never were relief
and similar outlays on the scale now
contemplated for arms.
So vast was the prospect opened
by billions for armament that most
business observers. while not sur
prised, were confused by the multiple
facets Of the problem.
The question of profits became
even more of an enigma as the new
higher taxes loomed. But many
businessmen regarded as significant
the Presidents assurance that what
he sought was progressive taxes
out of higher level of national in
come
To some commentors this seemed
an indication the administration
planned to gear its tax policy closely
10 the rising industrial curve and
counted on increased profits to pro-
vide increased tax money.
On the side of the physical output
Of goods, too, the Presidents mes
sage raised questions which pro-
duction men have been busy ex-
amining
Bottle -necks" Cited.
With "bottle-necks" already in
existence in some lines and with
/ Government spending in the mills
and factories due to more than
double in coming months. produc-
ton managers had much to think
about.
The giant United States Steel
Corp. was reported in trade circles
to be operating this week at lO2
per cent of theoretical capacity,
with the rest of the industry only
little behind it.
/ Iron Age noted that several long
idle steel plants, considered more
or less obsolete. were being brought
back into production.
The Pennsylvania Railroad an
nounced one of the largest rolling
stock construction programs in re-
cent railroad industry with the re-
mark that it was looking ahead to
1912 and 1943.
These and other straws appeared
TO show the way the l94l wind was
blowing as the first full business
week of the year ended
Only the apparently remote
chance OF an early peace seemingly
could change the picture of record
performance for mills and factories
that most business observers saw in
the huge arms budget.
Industry continued to build plants
to meet the growing defense drive.
This was major factor In the
weeks engineering construction
awards total of S64 900 900. which
was l45 per cent higher than the
same week last year, and was the
third highest weekly total since de-
fenSe spending began.
Price Controls Studied.
The problem of controls to keen
the big defense fund from initiating
the general level of prices came in
for renewed discussion.
immediate cause was the request
OF defense authorities to the scrap
metal trade to put S20-a-ton cell
ing on scrap steel prices, several
dollars under the figure now pre-
Valling at Pittsburgh Scrap is one
of the principal ingredients of steel.
Outcome of this request" was still
IN doubt, but businessmen in many
lines were watching developments
as clue to how far the Government
would use voluntary" price con-
trolls. or how far it might go in in
voking its legal powers to hold
prices
In Wall Street, where the "inf1a-
ton aspects of unbalanced Fed
eral budgets have long been dis
cussed, the record request for funds
was received with comparative calm.
The totals, which had generally
been fairly accurately forecast,
brought hardly stir in the stock
market. A creeping advance i'm
mediately following the message
was largely erased as the week
closed. Instead of worrying about
the budget. most traders appeared
interested in a minor bull market in
railroad stocks and bonds, as the
arms program promised sharply
rising traffic totals.