Rally (Cont'd)

"It would be rash," said the austere London Economist last week, "to predict that America is within sight of general economic recovery, for . . . the forces bearing her down are almost as ineluctable as those which . . . forced her to the peak of prosperity. Nevertheless, there is reason to think the Giant of the West has passed the crisis in his sickness."

The "Giant of the West" seemed to agree that he was indeed feeling better last week. He continued to frolic with increasing enthusiasm on his New York Stock Exchange (TIME, Aug. 8). After taking a one-day breathing spell, the market boiled for the rest of the week, stocks & bonds soared. From their Depression lows rail shares (Dow-Jones averages) were up a thumping 116%, industrials 73%, utilities 73%-Bonds rose 17%. Brokerage houses with staffs geared to drowsy 700,000-share days joyously recalled old employes to help handle the fat business of 5,500,000 shares daily. Wall Street's lights for the first time in many a month burned far into the night. Reflecting the swollen volume, a boomlet developed in Exchange seats. A Big Board seat sold for $120.000 against a low last May of $62,000. Curb memberships jumped from $16,500 to $28.500. "How late is the tape?" rang familiarly around board rooms. On the two biggest days the U. S. Treasury gained nearly $235,000 in transfer taxes. Total value.of all stock listed on the New York Stock Exchange was boosted $10,000,000,000.00. Entering this week, the rising market began to look like an oldtime balloon ascension, the public rushing in to cause a 5,500,000-share Monday.

Cornered bears, fat with three years' profits, fought madly to cover their short positions. Badly squeezed, they howled loud & long. Once the rally was well under way their frantic buying helped pool managers to push stocks up & up. Outstanding leader of the advance was American Telephone & Telegraph, which soared from $70 1/4 a share to $114 1/4. U. S. Steel more than doubled its Depression low of $214-; many stocks tripled in value. Large orders from European money centres swelled the volume of U. S. buying, the dollar rose smartly.

Though the Press played a rattattoo to the general fanfare with volleys of small bullish items, there was but one major development in the business situation last week. From Washington to Manhattan journeyed Governor Eugene Meyer of the Federal Reserve Board to confer with Owen D. Young's committee of twelve bankers and industrialists seeking ways & means of pumping credit into supine industry. His mere appearance in Wall Street touched off a minor rally in a temporarily flagging market. With the Young Committee he discussed a plan for setting up a Commodities Credit Corp. with $100,000.000 capital, largely backed by the R. F. C., to finance inventory purchases of raw commodities, principally agricultural. Though no details were announced, it was promptly dubbed "the commodity pool," and stocks dependent on farm purchasing power were quickly whipped up to new highs. Bankers were generally cool to the idea. They want less tampering with commodity prices, not more.

Governor Meyer and the Young Committee were said to be pondering also vast Administration plans for both private and public works. But of sharper immediate effect on the market was the issuance of a government estimate of a 1932 cotton crop smaller by 6,000.000 bales than last year's. Cotton forged ahead five dollars a bale, carried other commodity prices with it. Further strength was lent the movement by a report that a $90.000,000 cotton pool was being formed by large textile mills and their bankers to take over Farm Board and co-operative holdings.

Strong commodity prices continued to form some basis for the skyrocketing share prices. But gains were small last week compared with the brisk July upswing that was led by hogs. The Annalist index rose but .3 to 92.5, a figure still below the 93.2 of July 12. December wheat climbed 7 1/2-c- a bushel to 59 1/2. Talk of the "commodity pool" and reports from Russia indicating a poor harvest there played into the hands of operators for the rise. It was learned that the Farm Board had liquidated four-fifths of its original 250,000,000-bu. commitment. Though reports were current that Chicago's famed Arthur W. Cutten was again plunging on the long side, he would only comment : "One should be careful about buying wheat on a bulge." Later he was reported to be forming, with the Administration's approval, a $30,000,-ooo pool. "I'm not in any pool and I don't intend to be ... not so long as the Government sits in the game," snapped Plunger Cutten.

Still shuffling off were steel production, automobile production, construction. The New York Times weekly business index declined to a new low. And Wall Street, because Governor Meyer called on other bankers besides the Young Committee while he was in Manhattan, was inclined to see a little closer connection between the stock market rally and the Administration's politically-inspired efforts to break the backbone of the Depression. If there was such a connection, Wall Street wondered whether the almost perpendicular market rise of last month might not prove a boomerang, hoped that the Giant of the West would not trip as he pulled himself up by the bootstraps.

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