Measurements

In Washington last week the Federal Reserve Board estimated October production at 120 (1923-25 equals 100), up 18 points from August, nine points from September, 24 points from last October. In Manhattan the National City Bank compiled its quarterly summary of the earnings of 320 leading corporations: for July-August-September 1939, $201,000,000, against $104,000,000 a year earlier.

Having measured the war boom in this fashion each spoke a word about its soundness. Said the Federal Reserve with reserve: "Unless there is considerable increase in the absorption of goods, the accumulation of inventories now under way might reach significant proportions." The significance of "significant" was left to businessmen's imagination. Said the National City Bank: "Continued building up of inventories, through further forward buying, would prolong the boom but only defer the reckoning."

This crack appeared in the bank's Letter, whose monthly summaries of business trends bring statistical kudos to a young Economist-Vice President, 45-year-old George Bassett Roberts, tall, owlish professorial son of the bank's economist-emeritus, 82-yeaR-old George Evan Roberts. In the same Letter last week Economist Roberts also published the nine-month earnings figures of his selected 320 corporations--a far better gauge than last quarter reports of how much real prosperity, ex-war-boom, U. S. business has achieved. By industrial groups these nine month earnings showed:

Worse Off than in 1938 were seven baking companies whose profits were down 2.8%; seven beverage makers down 4.3%; six miscellaneous mining and quarrying companies are down 10%; 13 oil companies down 30.8%, reflecting August's overproduction crisis, the most serious in U. S. oil history and the failure of War II to provide export relief for continued inventory trouble.

Still in the Hole were nine coal-mining companies whose September bonanza served only to reduce their nine deficits from $5,669,000 to $2,766,000.

Out of the Nowhere into the here came Big Steel (which Economist Roberts rates as an industrial group by itself) converting a $12,000,000 deficit to a $12,000,000 profit. Steel's third quarter report last week showed its Cinderella common stock back in the black to the tune of $10,420,445--47-c- a common share, and showed $5.16 operating profit per ton shipped; it is operating at close to 90%. Even more spectacular was the record of Bethlehem Steel, which makes money at a lower rate of operations than its big brother, which is now operating at full capacity, whose common earnings shot up from nothing in the 1938 quarter to $1.10 in the 1939 period, 132% better per share than Big Steel. Bethlehem's nine month earnings: $11,609,456 against last year's $1,592,079.

Interested Parties to War II who had profit rises: 24 iron and steel companies (excluding U. S. Steel) whose net went from $17,835,000 in the hole to $25,811,000 profit; five building equipment makers, up from a $930,000 loss to $3,522,000 profit; 25 machinery builders up from $4,479,000 to $10,329,000; eight railway equipment suppliers--from minus $2,566,000 to plus $4,075,000; General Motors, up from $38,388,000 to $109,620,000.

Innocent Bystanders who profited in spite of war or as war boom profits trickled down to them: 14 textile & apparel companies which went from minus $1,368,000 to plus $5,960,000, nine household equipment vendors up from $1,939,000 to $3,998,000; 14 suppliers of services up from $226,000 to $2,227,000; nine trade companies whose net went from minus $768,000 to plus $1,280,000.

Last month the U. S. Treasury reported that of 477,836 active corporations that filed tax returns in the boom year of 1937, only 40% reported any earnings. As 1939 is going, maybe 40% of U. S. business will again have to admit profits to the tax collector.

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