Evening star., 1941-06-01
Nation Reaches
Turning Point
In Arms Race
Business as Usual
Discarded for New
Defense GouIs
Special Dispatch 10 The Star.


NEW YORK. May 3l.-This week
marked a turning point in the coun-
try's war effort, according to Business
Week in its analysis of the business
outlook today Business as usual"
goes out the window. and defense
production is to be speeded up all
along the line in race against tims
and Germany.
This national policy comes as no
special surprise, it is stated. Secre-
tarles Hull, Knox and Stimson, in
previous pronouncements, had fore
cast the temper of President Roose-
velts speech. And then, on the eve
of the fireside chat, Donald M. Nell
son, o. P. MS director of purchases,
directed the Nations attention to the
fact that you can't stop a panzer
division with row of electric re-
frigerators."
Business Week has pointed out be-
fore that priority policies will be
determined by bomber and ship
production scheduleS-after airplane
and shipbuilding companies get what
they need, other defense industries
will get materials, and after that
will come civilians" This weeks
developments - the Presidents
speech, the battle of the Hood and
the Bismarck in the North Atlantic,
and the North Atlantic. and the Ger
man attacks upon Crete-only make
that prediction more emphatic and
more inclusive.
Restrictions FOreseen.
The consumers durable-goods in
dustries are bound to suffer as
olrect consequence. More and more.
materials and supplies normally used
IN the production of automobiles.
refrigerators, washing machines. and
(outslde defense areas residential
dwellings will be restricted to arma-
ment requirements.
And don't be taken aback II pro-
duction of 1912 model passenger cars
is cut so per cent or even more. in
stead of the announced 20 per cent,
The only reason more drastic cur
tallment has not already been for
mally set is that wholesale lavoTs
would result, and defense officials
are trying to avoid temporary en-
ployment dislocations in Detroit and
other auto cities.
But once airplane. tank and other
ordnance plants are ready to abb
sorb the auto workers, passenger
car assemblies will decline much
more Sharply than the 20 per cent
plan would suggest. That accounts
IN part for the current high rate
OF production. Manufacturers are
taking no chances on a sudden
prlorltles order which would curtail
thelr receipts of steel. tires and
parts. So they have been pushing
output TO the limit-to build up
stocks OF cars on hand.
Auto Reserves Fade.
Actually, however, stocks are not
being bSilt up-for the obvious res-
son that car owners, too, have been
aware OF the trend toward all-out
war preparations. They have been
getting new cars while the gettings
good, rather than wait for the 1e42
jobs.
Result: New cars are selling
faster than the auto companies can
make them. For instance. in April.
sales at $4,000 reduced dealer in
ventories by 10000. This month
-unhampered by Strikes-manufac
turers have brought car and truck
assemblies for the domestic market
up to $4,000 units. But the high
sales rate continues, so that in
ventories will be reduced by about
10000 to $4,000. AS a matter of
TACT. the chief deterrent to sales
mas been the shortage of field stocks,
Not only will the intensified war
effort result in prioritieS on mate
rails and supplies in the consumers
durable goods industries. but also
1t will have some effect on produc-
ton of consumer non-durable goods
only not so soon or so directly.
Large consumer goods companies
usually have their own machine
shops and there are numerous big
companies which manufacture ma
chlnery for consumer goods indus
tries. These may be called upon to
turn their tools to ordnance. In
the long run, this will affect pro-
ductivity and costs.
Buying Power Rises.
Curtailment in consumer goods
output, however, will not prevent
either the national income or the
total amount of consumer goods
available for purchase from rising.
On the whole, there is still plenty
of capacity for expansion of output
in the non-durable consumer goods
| field.
incidentally, the Business Week
index rose to new high this week.
Thus recovery from the effect OF the
coal strike has now been completed
and the advance-promised four
weeks aegean now be said to be
under way.