Gloom

The stock market, sagging since the first of the year, bumped to a seven-year bottom last week. The venerable Dow-Jones industrial stock average hit 98.3, 14% under 1942's best, lowest since 1935.

For this sorry show, brokers had two pat reasons: 1) lower profits and dividends because of still higher taxes; 2) the long string of United Nations defeats. Brokers' explanations are usually in the nature of rationalizations, but the effect of war economy on business was unmistakable. Many famous companies have already cut their dividends. Biggest market declines came in companies like Du Pont, Eastman Kodak, Dow Chemical, International Business Machines, whose conservative fiscal methods, progressiveness and aggressiveness had made them blue chips. Under the Treasury-proposed tax program, these sound peacetime policies will hardly pay; "excess profits" will be taxed 89%. Net will depend very little on good management now, very largely on how much money was earned five years ago or how much money was sunk in the company a generation back.

In this general lowering atmosphere,* Congressional moves to suspend SEC's death sentence for the duration did not even help hard-pressed utility shares-they sank to the lowest levels ever. North American, Public Service of New Jersey, Southern California Edison and similar stocks fell so far that they yield 10 to 15% at current dividend rates, sell at one-fifth to one-half their highs in depressed 1933.

Final note of trading gloom: on the New York Stock Exchange, business so far this year has averaged only 428,000 shares daily, poorest since 1918.

* Not everything went down. Encouraged by walloping good railroad income accounts, many speculators and investors switched from stocks to second-grade rail bonds, pushed prices near the 1939 highs. Junior liens of Baltimore & Ohio, Missouri-Kansas-Texas, Missouri Pacific now sell at two to four times last year's low prices.

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