Madison County Democrat. (London, Ohio) 19??-1958, 1950-06-09
Better Visibility
Or Mirage? Cited
In Business Trend

Inc INDUSTRIAL recovery that
started last July or August has
now retraced virtually all of the
ground lost in the preceding re-
cession, and is threatening to sur
pass the former postwar peak,
established late i'm 1948.
The improvement in business
sentiment, since the murky days
of last summer, has been even
more emphatic. The fog of doubt
that hung over much of 1949 ap-
pears to have been largely dis
persed ,and the area of economic
visibility seems to have been
greatly widened by the favorable
trade winds of recent months.
Part OF the present state of per-
Vasive confidence can be traced to
the fact that many of the early
premonitions regarding 1949 prov
ed to be groundless. Because the
downward spiral failed to make
much headway last summer, it is
assumed that the risk of encoun-
tering another and more potent
one in the near future is greatly
diminished.
A further and perhaps more
direct explanation of the conspi-
cious buoyancy that has come to
prevail is provided by the extra
ordinary records being achieved
in three leading industries, and
the highly favorable interpretat-
ions that are induced therefrom.
The steel industry, for example,
has broken all former records dur
ing the past sixty days, and there
is no let-up in sight for June. That
the demand for steel, at least out
wardly, appears to be strong and
lnsistent as at any time during
the entire postwar period, is read
lily accepted as eloquent testimony
of the inherent vitality of the pre-
sent prosperity.
The probably short-lived but
quite unanticipated return of
premium prices on popular makes
of motor cars is taken to mean
that, to paraphrase a well-known
rhetorical admonition, 1T is not
as late as we thought" in the
catching-up phase of the automo-
bile industry. The satisfaction of
war-deferred demand has already
taken longer than was originally
expected, but now that buyers of
the earliest postwar models are
coming back in increasing num-
bers for requirements, in the form
of newer and improved cars the
automobile business seems to have
taken on a new and indefinite
lease on life.
A third potent argument that
there will be no departure from
the established postwar pattern
for months TO come is the extra
ordinary rate of activity in the
construction industry. The enact
ment of the Housing Act of 1850
a few weeks ago seems to have
dispelled whatever misgivings once
We're harbored regarding the dur
alton of the building boom. That
public law, which his intended to
assure an adequate supply of
credit to builders and buyers, and
at a record low rate of interest
cost, is interpreted as a clear
signal that nothing will be done
officially to restrain building act
ivity.
The behavior of the security and
commodity markets also lends
substance to the theory that high
order of economic visibility pre-
walls. The future earning power of
many industrial enterprises is
being evaluated more optimisti-
cally than at any time in the past
twenty years. Even commodity
prices, which had been in a slow
decline for well over a year, have
shown increasing strength in re-
cent weeks, with some raw mate
rials such as copper, rubber, and
wool at or close to new highs for
the entire postwar period.
Perhaps the most pungent in
gredient that is currently spicing
business sentiment is the prospect
i've Federal fiscal situation. For
better or for worse, the prevail
ing belief is that lying ahead are
a series of Federal deficits that
will be large enough to overcome
any deflationary forces that might
other wise assert themselves.
This combination of circum-
stances, ranging from steel thro-
ugh automobiles, housing, security
and commodity markets, and
Treasury operations, explain why
there is less apprehension today
regarding near-term business than
at any time since the end of the
war. Whether the popular conclus-
ions are wholly valid, however,
is another question. This sense of
exceptional visibility may prove
to have been only a mirage.
For example, it must be con-
ceded that the current rate of steel
production has about it an air
of unreality. 1t is largely de-
layed reflection of the steel strike
last fall, whose consequences were
somewhat understimated at that