Evening star., 1941-01-01
Rush Operations
Held Inevitable
Through Year
More Jobs and Wages,
But Modest Profits
Are Forecast
Bv FORREST II. GRAVES,

Editorial Director CsmorldEe Associates.
More goods will be produced IN
l94l. more people will be at work,
more money will be paid out IN
wages and salaries than in any
previous year in the Nations his
tory.
In these respects it will be A
boom topping any boom. wartime
or pea time, of the past The
boom atmosphere will influence re-
tail trade, automobile sales and
home building.
But this boom if boom" We
should call it. Will not swell on
any buoyant tide Of business con-
fdence. Business and industrial
earnings will be steady and SUBJ
stantial but taxes and the force OF
public opinion will prevent duph-
cation of the record profit margins
of old. Business profits will be con-
servatively appraised in the stock
markets. equity prices may rise,
probably will but the expansive
/ boom time atmosphere will invade
Wall Street only in sporadic gusts.
Nor is the farmer destined TO be
greatly benefited. The home market
will be good Prices Of the big
cash crops will trend upward, but
slowly. The loss Of export markets
and the Increasing Surpluses VIII
keen gains in farm income mod-
estlv reflective Of the better home
market and the effect OF the Federal
farm program.
War Shapes Business Course.
There is another curious facet TO
this boom" Although more than
10000 900 people will probably be
gamfullv employed at the end Of
l94i. 5000 600 more than in tho peak
month Of 1929 there will still be
an unemployment problem which
the Federal Government cannot lg-
more.
The course Of American business
in I94l is obviously shaped by the
war abroad and the gigantic drive
a home. Only one development,
however. and that one lnCOnCelv-
ably remote. would cause a major
alteration in the course now sNt.
A complete British victory III l94l,
British dictated peace and the
LIQUIDATION of the NaZl government
might bring the defense drive TO A
halt and throw an entirely new set
Of factors into the American busl-
ness situation.
No Reversal Of Trends.
Should Britain fall in l94l, tie
American economy would be af-
fected in many ways. and Amerl-
can business might have to redraft
MANY of its policies and practices to
meet the unpredictables of the fn-
ture But the instant effect could
only be TO intensity the defense pro-
gram to an "all-out" degree. It
could hardly interrupt for an in
slant the aCceleratin2 pace of Amer
lean production machinery.
Even if the United States be-
came directly involved in war. II Is
unlikely that the quick result would
be drastic reshuffling of the ele-
mentS outlined. Taxes would bite
still farther into the national in
come and some consumer buying
might be curtailed Priorities and
price controls would be made actual.
But the rise in production. in en-
ployment and in pay rolls would not
be reversed under any early-War
stage conditions that can be fore
seen.
In the calendar year 194l the
Government will make actual cash
IF q
billions of dollars. The rate in the
last six months viii be higher, for
cash expenditure of 10 billions is
the estimate for the Governments
1941-42 fiscal year beginning July /.
10 Billions for Munitions.
The British government is believed
to have something over 2 billion
dollars worth of material on order
here and British and Canadian pur-
chases of machines and munitions
in l941 will be only limited by the
ability Of American producers to
make commitments.
It seems safe TO say. therefore,
that within the next II months at
least 10 billion dollars will go TO
American industry above and be-
yond regular civil expenditures
which. in turn, will be stimulated
nightly by this surge of additional
money through the veins and vein-
lets of business.
Businessmen. large and small are
almost too aware that all this pres
ent and prospective activity rests on
no sound basis. Their fears of the
climax are in some cases, acting as
a brake on the national defense
program by causing them to pro-
Ceed with possibly too-great caution
in the construction of production
facilities in excess of normal peak
( requirements. They fear taxes. i'm
media'ely and postwar, and many
know from personal experience the
painful cost of overeXpansion.
Spirit of Prudence.
This attitude is understandable.
Aside from its possible effect on the
defense program it is also healthy.
Many previous spiralS of expansion
had no truly healthy motivation,
so 1t was discovered afterWard. In
! these periods. however. caution was
usually jettisoned early; fears re-
garding inflated prices and inflated
credit were dismissed as traitorous.
Otherwise than in the hesitancy
to enlarge physical equipment abb
ruptly. the spirit of prudence is
noteworthy. The sudden injection
of so much extra buying would
ordinarily send prices a-kiting. The
Government has not instituted
actual price controls BY observa-
ton publicity and agreement, how
ever, most prices of raw materials,
| capital goods and consumer goods
have been held TO moderate in
Creases. And with the approval and
cooperation of the majority of busi-
ness managers. Lumber prices have
got out of line, but the general
| (See PRODUCTION, Page CID