December Forecast

Last December Secretary Henry Morgenthau Jr., who eight years ago was an agriculturist but now talks economics with some assurance, hooked his pince-nez on his nose and looked a twelvemonth ahead. Prosperity, he told his economic experts in the Treasury, would be back in 1939. By prosperity he meant something much closer to 1937's $69 billion national income than to 1938's recession income of less than $65 billions. Last week, while Henry Morgenthau was waving out the old fiscal year, the Commerce Department issued its figures on national income for the first five months of calendar 1939: it showed national income running at the rate of $65.4 billions, only 3% above the rate of 1938. Nor did the Department of Labor uphold the Secretary of the Treasury's inner circle reputation as a prophet when it announced that factory employment for May was off 1.1 points more than seasonally (to 90.1 on its index). Many a U. S. businessman saw a patch of blue sky early in May, when there was a flurry in steel (TIME, May 22), but last week it seemed only to have been a hole in the overcast.

>Before the July 4 holiday or the Danzig crisis could be blamed, Bethlehem Steel shut down two furnaces at its mammoth Buffalo (N. Y.) works.

>Steel prices wobbled as all companies cut sheet prices $8 per ton to the low reached in the brief price war two months ago. Steel estimated that the price cuts would cost the industry somewhere between $13,200,000 and $50,000,000, reported that one typical producer (on 50% operation) was losing $12.50 on every ton of sheets he turned out to sell at $50.

>Until last week Wall Street wags were describing 1939's spring bull market as the one that walked away from the steel stocks and left them right where (some below) the last bear market had flung them. Last week the market ended its sorriest month in 18 years (11,967,390 shares traded), was slipping back toward depressed steels: after the rail stocks failed to Dow-confirm June 10's industrial high of 140.14 (TIME, June 26), the industrials had fallen more than 10 points.

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