Boomology

"All government ought to be helping industry to its feet ... it even almost ought to err in that direction." So said red-haired Attorney General Frank Murphy last week. Since he tends strictly to his legal knitting and engages in none of the New Deal's economic fancywork, his sentiments were merely sentiments. But the same day two other members of the Administration went to the help of Business with good advice about the war boom.

Lunching with Manhattan's Bond Club, Under Secretary of the Treasury John Hanes stood up and predicted an era of business expansion soundly based on the investment of new capital in utility and industrial plants with or without war. Said he: "We were on the road to economic recovery prior to Poland." This naturally warmed the hearts of his hearers and encouraged them in expansion.

Meantime from the mimeographs of the Department of Commerce issued a statement signed by Secretary Harry, and written under the auspices of his new Bureau of Industrial Economics. Its No. 1 sparkplug: 37-year-old Harvardman Dick Gilbert. It said (Mr. Hanes notwithstanding) :

"To sustain current levels of business activity there is need for greater consumption by the public, as well as increased capital expenditures by business or enlarged exports. . . . Before the war started the business outlook was good, but the speculative price and inventory activity of the past month has endangered this prospect."

The divergence between these two descriptions of business was more than half political. Under Secretary Hanes spoke for the Pollyanna wing of the Administration, which is not at all anxious to throw any stumbling blocks in the way of recovery that the Government does not have to pay for. Secretary Hopkins and ghostwriters spoke for the New Deal wing, which has no real faith that Business ever will produce prosperity and wants to be on record against the day when the boom collapses and more appropriations will be asked from Congress.

Whether the war boom is a stimulant that will give Business a lift toward permanent recovery or will only give it a hangover, is a prime question for economists to argue. Last week in an address to industrial leaders summoned by General Motors' Alfred P. Sloan Jr., in Manhattan, Dr. Harold G. Moulton, pudgy president of Brookings Institute explained his view:

So far in the war boom production has been greater than consumption and inventories have piled high. Unless belligerents begin to buy on a big scale, or home consumption picks up, an inventory recession is inevitable. In this delicate situation, the outcome, he estimated, would be determined by whether businessmen encourage buying by holding prices down or discourage buying by boosting prices. He pointed out that although the U. S. is short of neither materials, labor, nor capital, the prices of raw materials have ominously risen 10% since August.

Dr. Moulton also figured that European war purchases would be smaller this time than in War I. Last week the first substantial war orders actually placed in the U. S. were reported. Samples:

France, inquiring for 20,000 trucks, placed a $3,500,000 order for 2,000 with Yellow Truck & Coach. Studebaker landed another French truck order, White Motor Co. another. Goodrich had orders for 645,000 feet of A. R. P. fire hose from Britain, Hewitt Rubber for 1,300,000 feet.

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