Almost Joy

"We have now passed the crest of the third minor recovery since the low point of the Depression," said the Annalist last week. "According to certain private advices from Washington, the outlook now is for a continuation of the present moderate recession in business activity until late summer, when the effects of new Government expenditures are expected to inject another dose of stimulant into industrial activity."

Despite the prospect of a decline in industrial production over the next few months--a prediction in which most observers concurred with the Annalist--business sentiment last week was positively joyful in comparison with the heavy gloom of late winter (TIME, March 25). Fact is, businessmen for once are willing to admit that trade can be good without getting better. Even G. O. Pundit Mark Sullivan, noting the impressive volume of corporate refundings, declared last week: "The result is that the aorta between capital and industry has begun to function. Because the reservoirs of capital are teeming, this flow, with the headway it has now acquired, may readily swell into a great business revival."

Chief reason for expecting a recession before the "great revival" was that automobile production had passed its spring peak. To an enormous extent the automobile industry has been carrying the burden of recovery. Of 26 U. S. corporations reporting March-quarter earnings at the best figure in five years, the Wall Street Journal discovered, no less than 17 were either motormakers or companies dependent in large measure on the motor industry. In the first four months automobile production was about 1,570,000 units, a 37% gain over the same period of last year. Sales to consumers, however, were only about a million, leaving more than 500,000 cars piled up in the hands of dealers and manufacturers. With the best selling season still ahead, that inventory is nothing alarming but it most certainly means that factory schedules will be pared sharply.

Meanwhile the stockmarket, pursuing an independent course, has been climbing since the middle of March. Last week it flowered in five successive days of million-share trading or better. Brokers got so excited that they began to call up long-lost customers to spread the cheer. Silver stocks led the market (see p. 17), and the Dow-Jones industrial stock averages hit the highest level of the year. But that was the same level as the other New Deal highs of February 1934 and July 1933 and there, balancing better feeling against poorer figures, the stockmarket hung churning.

Most businessmen have their own idea of how to promote a bull market, and last week at the American Chemical Society meeting in Manhattan the chemical industry took its turn at sounding off, incidentally setting new records for grandiose promises of what business could do if the Government would let it alone. Flaying the Administration for mixing Recovery with Reform, President William B. Bell of American Cyanamid Co. cried: "Recovery lies within easy reach. Already accumulated demands in the durable goods industries approximate $85,000,000,000. That is sufficient, when added to the ordinary consumer demands of the country, to re-employ the 9,000,000 men now out of employment in industry from six to eight years."

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