Evening star., 1942-02-15
Business Takes
Grim View Of
War Situation
Optimism Diminishes;
Transition to Arms
Busis to Be Rushed
Special Dispatch TO The Star.

NEW YORK, Feb. 14-Military
news this week overshadowed do
nestic business developments. says
Business Week in its analysis Of the
outlook today.
For, it is stated, when the Japa-
nese actually won the crucial bridge
head on Singapore Island, after
working all the way down the
Malayan Peninsula in surprisingly
fast time, the American publics
conception of the war outlook un-
derwent serious modification.
So far, businessmen, workers, and
farmers alike have had an unex-
pressed, but none the less definite,
notion that time and American
industry would lead the way to
difficult, but inevitable" victory.
The pattern, in the minds eye, was
something like this:
The japanese would have their
innings in the first six months of
1912 but they would not be strong
enough to capture major Far East
ern bases, such as Singapore and
Soerabaja.
Then, toward midyear, after the
American industrial machine really
got to turning out planes, tanks,
and guns in record-breaking guam
titles, the initial arms superiority of
the enemy would be overcome. and
the United Nations would 90 to
town Similarly, it was reasoned
that the Germans would make an
other spring drive against Russia,
that even If Moscow were captured.
the German Army would be spent.
and that beginning in 1943 the war
would be under United Nations
control
War Picture Changes.
However, Japan's complete mas
terry Of the sea and air in the Far
East-at least temporarily-and the
recent German success in Libya
open up new and disturbing pros
pect
Suppose Japan does get control Of
Singapore and the Netherlands East
Indies; suppose Germany, instead
Of driving toward Moscow, captures
Suez and the Caucasian oil fields.
That would effect a sea juncture
with the Japanese via the Red Sea
and the Indian Ocean, and the two
major Axis powers would have oil
and a line OF communication for
concerted military and naval opera
tions.
Such an analysis, of course, gives
the Axis all the breaks. But any
hardheaded analysis of war must
assume the worst while hoping for
the best. Indeed, the stock market
early this week declined rather
brusquely, suggesting that Wall
Street was taking the pessimistic
view.
Two longer-term possibilities were
cited: % That the war would be
of much greater duration than ex-
kpected; that huge quantities of ma
terials and manpower would have to
| be poured into the Far East and
Europe to wrest military and naval
| power from the Axis. and that the
standard Of living would be forced
down by the mounting take" Of
war: ca that the United Nations
might not win after all. and that the
United States would face a totali-
tartan controlled postwar world
which would force changes in our
! entire economic and social ways of
| life.
Faster Pace, Due.
This new. incompetent war
analysis is bound to lead to a quick
ening of the transition from peace
time production to arms. Though
/ plants are steadily converting to
war work. the War Production Board
| is still permitting a modicum of
durable consumer goods to be pro.
duced; and actually. in some cases.
| provisions are made to supply nom
| defense plants with small amounts
of critical materials in order to pre-
vent unemployment.
In the next few months, the W.
P. B. may order wholesale closing
of non-defense durable goods plants
ON the theory that closed plant
leads to a scramble for war work.
Moreover, ultimately manpower (and
woman power may be drafted, and
transportation priorities instituted
as the war pace accelerates.
Labor leaders are demanding new
wage boosts as payment for the
workers part in the war effort.
The steel and auto cases are symp-
tomato. Yet, increased wages will
have the effect of making imitation
doubly sure. Not only do they
increase purchasing power, of which
there is too much already, but they
also hoist production costs, thus
tending to raise prices and the cost
of living. Price Administrator Hen
derSon has asked the War Labor
Board not to grant substantial wage
increases which will raise prices, or
if it does, to steriliZe the wage
boosts by directing payment in de-
fense bonds. For this purpose, pre-
sumably the Treasury would have
to issue a special noncashable Sc
curity.
In the meantime, business activ-
ity has been expanding rapidly.
Since early in January, the Business
Week index has advanced from 1853
to around ITO A resurgence in
construction volume was an i'm.
portant influence in the advance.
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