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One was the threat of a runaway commodity price inflation. An emergency had been proclaimed and there was small doubt that Franklin Roosevelt was prepared, if necessary, to fix prices and limit profits. What form this "might take was not yet settled. In the view of many a New Dealer most industry has been making passable profits on a mediocre volume of business (Federal Reserve Production Index was between 95 and 100); a larger volume should rather reduce than raise prices, for unit costs will fall. Anticipating Administration pressure if not a Presidential outburst against profiteering, copper and lead producers confined themselves to moderate price rises, announced that there would be ample supplies available.
The other threat was peace. If peace comes unexpectedly, before enormous export orders bail out those who last week speculated on that huge business, U. S. industry might face a 1921-type collapse. The Securities and Exchange Commission kept a weather eye out for a peace scare that might shake the public out of the market, precipitate a crash severe enough to compel it to close markets; or the New York Stock Exchange to fix maximum daily price changes.
Meanwhile, speculation and the illusion of prosperity may itself encourage an increase of consumption, giving business a genuine stimulus. And although Congress last summer rejected the idea of Capital Goods spending, the crisis had put into Franklin Roosevelt's hands the means of carrying it out in the name of preparedness. Gone was the Administration's peacetime notion of self-liquidating projects. Peace itself had been liquidated. Last week even Henry Morgenthau, who opposed public works spending, rehired Chicago's learned Jacob Viner, Princeton's Winfield William Riefler, No. 1 & 2 Treasury anti-spending brain trusters, and Princeton's Walter W. Stewart, to advise him how to spend for preparedness in the U. S.'s greatest crisis.