STATE OF BUSINESS: Soggy Spring

For 17 Decembers, Colonel Leonard Porter Ayres's Christmas present to U. S. business has been a speech to the Cleveland Chamber of Commerce, forecasting the coming year's prospects. Last December the country's No. 1 bachelor economist prepared business leaders for substantially better business in 1939, especially in the first half year. He said: "The monthly average of industrial production was 110* in 1937, and it will probably be 85 or 86 in 1938. It now seems likely that its average in 1939 will be about 104."

About the same date ex-Plunger Joseph Patrick Kennedy, on vacation from the U. S. Embassy in London, reached home. Whatever he thought privately about economic conditions, he said in his public capacity that only a war would put the market (and therefore business) down to where it was in the grim spring of 1938.

Last week these predictions did not look so hot. When they were made, industrial production stood at 104. In January it slid to 101, in February and March to 98. In April, while it continued on its way down, Colonel Ayres's latest analysis stubbornly laid down conditions for recovery "to continue." A month before Joe Kennedy spoke, the Dow Jones stock averages had reached a 1938 high of 158.41, but last week they were about halfway back to their 1938 low of 98.95. Ambassador Kennedy was saying nothing (for publication) about stock prices.

Threats of war in Europe have been one factor retarding U. S. business, but last week a significant incident spoke in an-other tone of voice. After waiting anxiously for days, businessmen heard Adolf Hitler speak (see p. 18). Promptly the London market spurted up and the New York market headed down—a pointed suggestion that the worries of U. S. business are made in the U. S. Two of those worries:

> Not since mid-November have steel operations been at 62% of capacity. The steel rate, after a brief stand somewhere between 50 and 55, ended last week at 48.6%, began this week at 47.8%. Optimists looked for a scapegoat, found it in the coal tie-up. Typical headline: "Coal Situation Retards Steel Operation Rate."