On the Rise?

To the listless U.S. economy the Federal Reserve slipped another pep pill. For the second time in a month FRB last week announced a 1/2% reduction in the required reserves of member banks (down to 19% for central city banks, 17% for reserve city banks, 11% for country banks), thus freeing a potential $3 billion in bank credit for additional loans. Said a top FRBman: "Our purpose is simple: to create conditions still more favorable to recovery."

In a few industries there were signs that recovery might have begun. After the gloom of January and early February, Detroit's automen reported a sharp, continuing sales rise in March, with sales of some cars up as much as 25%. Oilmen, too, thought they might be bottoming out of recession, had cut production drastically to reduce inventories, while many independents clamored for further import cuts (see Oil). Texas cut its April allowable another 120,203 bbl. and scheduled only eight days' production (2,444,571 bbl. daily) for the entire month, the lowest level in history. Although gasoline stocks topped those of 1957, heavy crude oil and heating-oil stocks were coming down to size. Last week Gulf Oil Corp., Phillips Petroleum Co., Texas Co., Tidewater Oil Co. and Shell Oil Co. all reported record sales--and often record profitssfor 1957. Almost without exception they expected a good year in 1958. Said Cities Service President Burl S. Watson: "We have our problems, but every company is forecasting still another increase in demand this year."

Up on the Farm. Oil's hopeful outlook was shared to an even greater degree by the farm-machinery industry, which started earlier on its recession and now seems to be coming out of it. With an end to the Midwest drought, and higher farm prices (see Agriculture), farmers were buying so much farm machinery that some companies are hard-pressed to keep up with demand. Massey-Ferguson. Ltd. sold more new combines and tractors between Nov. 1 and March 1 than at any other time in the past five years. Allis-Chalmers Mfg. Co. is well ahead of 1957, while J. I. Case Co. has the biggest backlog in its history, recorded sales of $21.4 million for the quarter ended Jan. 31 v. $16.1 million last year. Said one J. I. Case executive: "Our biggest trouble right now is getting equipment to the dealers fast enough.''

Profit at 50%. In paper, the signs of a bottoming out were also starting to appear. St. Regis Paper's Chairman Roy K. Ferguson, while noting that net sales were down 8% to 10% so far this year, reported that customers were beginning to ask for immediate delivery, a sure sign that "inventory reductions are nearing the point where we should feel the impact of an upturn by not later than midyear." As for steel, which so far has borne much of the brunt of the recession. President Avery C. Adams, of Jones & Laughlin Steel Corp., No. 4 in the industry, announced that J. & L.'s orders climbed slightly during the first twelve days of March, though nothing to get excited about yet. Nevertheless, Adams expected to make good his boast of turning a profit at 50% of capacity. Said he: "We were in the black in January and February, and we expect to be in the black this month."

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