Evening star., 1941-09-02
Business Is Warned
Defense Drive 10
Be Intensified
Controls to Tighten,
Problems Of Transition
Period Tackled

NEW YORK, Sept. 2.-Business is
still in a period of transition. says
Business Week in its analysis of the
outlook; a period in which o. P. A..
c. S. and o. p. M. straighten out
problems of priorities and alloca-
tions and try to lease over" disem-
ployment in durable consumer goods
industries; in which Congress at
tempts to formulate tax and price
control legislation: in which the
Army, Navy and the President map
plans for ID rapidly increasing aid
to Britain, Russia and China and
% accepting the consequence,
meaning the risk of actually enter
ing the war.
In the meantime, the magazine
states, businessmen should get ready
for reintensified defense effort:
stricter control over supplies of all
types; direct allocations of materials
to non-defense industries; potential
drafts of skilled labor from monde
tense pursuits to defense: Govern
ment occupation of plants whose
output is halted by labor disputes,
as at Federal shipbuilding.
; Squeeze at Its Worst.
Probably the squeeze will be at
its worst this year. Basic supplies
steel, synthetic rubber, chemicals,
aluminium, etc.-are now being re-
quired by defense industries in ever
increasing quantities, and much of
the increased production of these
basic raw materials is still "on
paper" So non-defense industries
feel the pinch.
And as that happens, disemploy-
ment is bound to occur in auto
mobile, refrigerator and other con-
sumner durable goods manufacturing
centers. Ultimately, however, as
raw materials become more abun-
dant-as new basic supply plants
come into operation-the produc-
ton squeeze may abate somewhat.
And later on, some lifting of the
Q. P. A. c. SO. P. M. ceilings on
passenger cars, refrigerators, etc,
may be possible. That time. how
ever, is a year to 18 months off at a
minimum and it may bring about an
ironical development.
Persons who had lost defense
Jobs probably will have found work
in armament plants which begin
operations in the next six months
or so. So, when and If supplies of
metals become less tight and make
consumer durable goods expansion
possible, labor shortages may take
up the squeeze where priorities left
of.
Some Slackening Likely.
To date, the rapid expansion in
durable goods production has been
accompanied by a rise, though much
less pronounced, in non-durable
goods output. And presumably such
rise might be further extended,
as consumers-restricted in their
purchases of automobiles, refrigera-
tors, etc.-turn to other types of
consumption goods, such as suits,
dresses, overcoats, blankets, various
home furnishings, shoes and so on.
Yet manufacturers of woolens and
worsteds, textiles and shoes are not
as optimistic as they were some
months ago. There is a feeling that
consumers may have overbought
during the recent buying wave, and
that future sales and hence produc-
ton may suffer.
In shoes, for instance, output has
been outstripping even current high
sales, and some letdown is now
talked about. Moreover, hide i'm
ports may be limited by shipping
space.
In woolens and worsteds there is
no lack of demand, either current
sor prospective. But shipping space
for raw wool is a problem, and
skilled labor is growing scarce as
workers are being drawn off into
higher-paid defense industries. In
cotton textiles some temporary
abatement of civilian demand is
possible. Nonetheless, in all at
tempts to measure civilian demand
during the defense effort, one con-
CCpU 10 Uuy1llk
power will be Herewith defense
employment and pay rolls on the
rise. And If consumers cannot buy
durable goods, then their propensity
to spend will spill over into nom
durable goods. Thus, declines in
retail sales - hence output of
clothes, shoes, household furnish
ings, ETC., are likely to be short
lived.
incidentally, the Business Week
index dropped for the fourth sue
cessive week. 1t is now more than
points down from its July rs top
of 1903. But this by no means in
dicates a reversal in the longer
term uptrend. AS Business Week
has pointed out time and again,
some letdown was to be expected
toward fall, at the start of the auto
mobile changeover period and the
curtailment of 1942-model output.