Weekly Market Report and Farm Outlook - page 3* 



deficit, it would be quite possible to check an inflationary rise in 

 prices. The Treasury announced Wednesday that the sale of defense 

 savings bonds had exceeded $1,735,000,000. Tax rates will doubtless 

 be increased from time to time. However, if defense needs require 

 such a large fraction of total output that production for consumption 

 is reduced, prices are likely to rise because of the restricted supply 

 which is available with no restrictions in incomes. 



There is a group in Congress which hopes to include in the 

 price control bill ceilings on wages, prices, profits, and rent, very 

 much as Canada is doing. At present the balance seems to be in favor 

 of the group that would leave wage ceilings out of the bill and permit 

 ceilings on prices of agricultural products at not less than 110 per 

 cent of parity. 



Business activity - Steel production declined in the past 

 week about 2 per cent, but other forms of business activity, with the 

 exception of automobile production, are holding up well. We seem to 

 have reached the point, however, where further increases in total 

 output of industrial products will be difficult to accomplish. From 

 now on, we shall probably have to shift out of the production of 

 consumer goods more and more into the production of armaments. Al- 

 though the decline of steel output probably was caused, to a certain 

 extent, by the strike in the coal mines owned by steel companies, 

 there doesn't seen to be any opportunity for any rapid expansion in 

 the volume of production of Industrial products. We have now reached 

 the stage comparable to that reached in 1916 v/here production was 

 stabilized at a relatively high level. Under such circumstances, the 

 tendency is to bid up the price of skilled labor and raw materials 

 in an effort to take them away from competitors. This was made 



