War & Business

The price of rhubarb root (a cathartic) last week rose to 65-c- a lb., up almost 200% in the past three weeks. Ephedrine (a nasal astringent), which hay fever sufferers this month are using everywhere, similarly shot up 200% to $3 an ounce. Mandrake root, which Elizabethans considered a cure for sterility and druggists now use in physics, soared to $4.25 a lb. These convulsions in the minor Oriental drug trade last week were solely the effects of the war in China. Nor were they the only commercial effects in the U. S. To the confusion of economic isolationists, U. S. businessmen in many a more important occupation had occasion to notice how commerce reacts to a first-class war. a war 5,500 miles away and still undeclared.

Markets 6 Exchanges-War was apparently only one of many reasons for the slump in the New York Stock Exchange (see p. 57), but other Exchange excitement could be laid entirely at war's door. Wheat jumped 3-c- a bushel one day on the Chicago and Winnipeg markets on a general war scare. Japanese bonds, in spite of a rally, stood 15 points below their price three weeks ago--a pain to U. S. banks which hold them as collateral for loans to Japan.

Unfounded rumors of silver shipments totaling $100,000,000 from Canton and other cities in the interior of China to Hong Kong broke the price of bar silver in London to a new 1937 low of 19 1/4d (43-c-) an oz., 1 1/2-c- below the U. S. price. Result-- the U. S. Treasury therefore became a heavy buyer until the price differential was erased. Arbitragers promptly took advantage of the same situation, and 3,175,000 ounces of their silver last week arrived in Manhattan. On a war scare virtually all principal foreign currencies developed weaknesses against the dollar, and the tide of gold movements to the U. S., previously ebbing, rose again: in one day $11,900,000, $5,800,000 of it from Japan, was engaged for shipment.

U, S, in China. The U. S. personnel of China National Aviation Corp. was last week on its way home--the air line (owned 55-45 by China and Pan American Airways respectively) abandoned by Pan American which operated it. its planes commandeered for war service. Standards of New Jersey and California,

Socony, Texas and Shell oil companies, which have investments in China proper estimated at $42,000,000 in 1931, were faced by the hard fact that they may be ousted if Japan wins, as U. S. oil interests were ousted four years ago from Manchuria. U. S. investments in China total $200,000,000. In shattered Shanghai U. S. investments totaling a major chunk of this were in danger of going down the drain. Sample: the $57,000,000 Shanghai Power Co., subsidiary of American & Foreign Power Co.

Shipping, Meanwhile the trade routes of the world were being altered. Canadian Pacific, Dollar and Nippon Yusen Kaisha Lines dropped Shanghai from their schedules. Passenger traffic to China had ceased almost entirely, although traffic to Japan suffered little. Marine underwriters discontinued (or raised to prohibitive heights) war risk insurance on all cargoes to be unloaded at Chinese ports. This promptly affected exports, for banks generally refused to advance credit on uninsured shipments. New York seamen contributed to the trouble by agitating for war risk pay when serving on ships in "endangered waters." The Dollar Line had one consolation: fat fees due from the Government for rescuing five shiploads of refugees from Shanghai and carrying 1,200 troops there from Manila.

Exports 8 Imports. In the first six months of 1937 total U. S. exports rose 20% over the same period last year, but exports to Japan rose 77% to $165,000,000 and exports to China rose 50% to $31,000,000, indicating that both warring factions anticipated trouble. Last week trade to Japan had suffered little, as was shown by the New York silk market, where prices declined on the belief that imports from Japan would continue to arrive on schedule. But exports to China were way off, since Shanghai normally handles more than 50% of China's foreign trade. Fruits and groceries consigned there were unloaded from ships in San Francisco, other cargoes at Hong Kong and Singapore, until docks groaned. A typhoon, described as the worst in ten years, caused further losses to shippers by wrecking the Hong Kong water front last week, sinking some 20 ships in the harbor and ruining great piles of exposed goods (see p. 18). No lumber, a prime Pacific Coast export, was moving from the U. S. to either combatant, and Japan, conserving her resources, stopped her huge purchases of U. S. scrap iron, probably anticipating that the war would end before it could be made into munitions. The U. S. cotton farmer who last season sold 1,550,000 bales to Japan, his best customer (China bought only 14,000 bales), had already been warned by the Department of Agriculture of the imminent disruption of this market, but for the time being Walgreen Drug Co. was happy over an emergency shipment of cod liver oil, expressed to the war zone by Clipper.

Meanwhile tea. anise, antimony, Perilla oil and galangal root, all imported from the Orient, rose in price. So did tungsten. Some 60% of this rare, whitish-grey metal comes from China. Technically known as wolfram, tungsten has a higher melting point than any other known metal (6,000DEG F.), is used in electric lamp filaments, radio tubes and high-speed tool steel. In

1933 the price of tungsten was $2.50 a ton. Last year it rose to $7. Fortnight ago it rocketed to $25. Last week the metal market was alarmed over a possible shortage, for China declared that she would withhold her tungsten from world markets as long as the war continues. Prices of high-speed tools at once rose 67-c- to 80-c- a Ib.

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