Retreat

The prancing bull market in stocks was stopped dead in its tracks last week.

In two hectic days the Dow-Jones averages of industrials tumbled to 156.34--down 5.18 points. Rail averages were down 2.23 points. On Friday, when traders unloaded 2,000,000 shares, the drop in values was the sharpest for any day in 16 months.

The sudden break sent market analysts rushing for paper & pencil to explain what had happened. A few pundits saw great significance in the fact that one wave of selling swamped the market minutes after the ticker had flashed the news that the U.S. First Army was across the Rhine. Their inference: good war news was bad news for speculators in war industries.

But the majority of dopesters stood on firmer ground. Their theory: the slump was mainly an investor's psychological reaction to the ominous Washington mutterings that something drastic be done to curb the rising prices of securities.

Day before prices cracked, Federal Reserve Board Chairman Marriner S. Eccles had lashed out again at investors, and urged a punitive capital-gains tax of 90% on profits earned from securities and 100% marginal requirement. Eccles was alarmed because by his reckoning prices on the New York Stock Exchange had advanced 80% from their 1942 lows.

By comparing prices during the darkest days of the war with February prices, Eccles had made the bull market appear falsely sensational. Actually, after three years of prodding, investors had accomplished no more than to hike stock prices from their low after Singapore's fall to only a few points above their values at the time war began in 1939. To most investors this modest recovery did not seem like a runaway market. But the red flag waved by Eccles was a signal for a tactical retreat,

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