^^ipi IU,U.I|IM' 



^ with the British and American navies, her defeat is practically 

 inevitable^ The present conference would therefore seem to be a 

 method of stalling for time in order that the unpleasant day of reckon- 

 ing might be postponed. The chances of war in the Pacific are increas- 

 ing. 



Should an outbreak of war take place in the Pacific, we shall, 

 for a time at least, be confronted with increased transportation dif- 

 ficulties in that area. Many raw materials would be affected, includ- 

 ing tropical vegetable oils, rubber, silk, tin, sugar and maniia 

 hemp. 



Although at this time the House has not voted on the Senate 

 amendments to the House version of the neutrality act, yet, the present 

 indications point to a war lasting into 19^3 with the involvement of 

 additional nations. The United States is and will undoubtedly be 

 involved, and will be inclined to sanction more drastic controls of 

 all sorts of activities including those affecting prices. 



Domestic developments . Not a great deal has been heard during 

 the past week concerning price control legislation. President Roosevelt, 

 however, has publicly expressed himself as being in favor of heavier 

 taxes in the near future. As far as prices are concerned the implica- 

 tions are bearish. Business continues at a high level, however, with 

 every effort being made to increase the production of armaments and 

 related materials. 



Most disturbing occurrences during the past week have been 

 the strikes and threats of strikes. Several hundred thousand workers 

 are Involved, If the railway strike goes into effect, the entire 

 transportation system of the United States will be tied up and the 

 usual incomes of these striking workers v/ill not be available to 

 purchase farm products and other consumer goods. The long time result 



