Throughout the first three months of 1940 the Federal Reserve Board Production Index headed steeply downward, but last week corporation earnings reports failed to show the same trend. Associated Press's tabulation of the first 90 to report showed earnings 43% above the same quarter of 1939 (68% not counting overweighty American Tel. & Tel.). The reasons for this paradox were that: 1) although production continuously declined, the quarterly average was still good because of big backlogs of orders piled up last fall; 2) first-quarter earnings looked good because they were compared...
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