Wall Street's Answer to Lenin

War, said Lenin, "periodically restores the disturbed equilibrium" of a capitalist system. That comment, which is often echoed in the Communist world today, will not help his followers explain Wall Street's reaction to the Viet Nam Moratorium. A sea of demonstrators poured into Wall and adjoining streets, crowding them so tightly that people could hardly move. Hundreds of custom-tailored bankers and brokerage-house partners joined their clerks and college students in a peace march, braving the jeers of hard-hatted steamfitters who tried to stage a counterdemonstration. The peace marchers jammed into a memorial service at Trinity Church, where Investment Banker Andre Meyer, Ogden Corp. Chairman Ralph Ablon and other high executives read the names of war dead from the pulpit.

In a more material way, investors expressed a yearning for peace, and a belief that peace would be bullish. They bought stock in close to record amounts and sent the market to its sharpest gains in months. Prices spurted early in the week on hopes that the Moratorium demonstrations would compel the Nixon Administration to take some action that might further scale down the war. Stocks paused at midweek as investors took profits, but climbed again on news of the Communist offer of direct talks between the U.S. and the Viet Cong. Prices tapered after the U.S. rejected the offer.

At the height of the emotional week, the Dow-Jones industrial average surged briefly past the 840 mark at which earlier rallies this year had stopped. Trading on the New York Stock Exchange twice boiled over 19 million shares for the sixth and eighth most active days in history. In all, the Dow-Jones rose 29 points for the week, closing at 836.

Wishful Thinking. Investors see the deep U.S. involvement in Viet Nam not as the restorer but as the destroyer of economic equilibrium. Stock prices have often risen markedly on nebulous peace hopes and dropped back when those expectations were frustrated. True, some industries profit from the war. But investors are well aware that, contrary to the cruel myth that capitalism generally thrives on war, the Viet Nam engagement aggravates social tensions that are bad for business. They also consider that war spending causes much of the inflation that the Federal Reserve's credit re--straints are designed to a combat.

So great is the desire for easier credit that some Wall Streeters had convinced themselves that the Government will have to ease monetary policy, and their wishful thinking helped to spur last week's rallies. Some brokers pontificate that the proliferating signs of economic slowdown or even coming recession will soon force the Federal Reserve to relax the squeeze.

Despite all the official declarations that the Administration's present anti-inflation policies will not be changed in the immediate future, brokers have adopted a more bullish mood. Those who only a short time ago were discussing the prospect of the Dow-Jones average going below 800--as it did for a few hours two weeks ago--are now warning their clients of the dangers of missing "the turn" on the up side. In their view, any easing of monetary policy, whenever it comes, would start a strong rally. And any real move toward peace could send stocks soaring.

The talk seems to have affected mutual-fund managers. For months, they have been holding almost 10% of their assets in cash--to the displeasure of some of their shareholders, who would have put their money into banks if they wanted it held in that form. The fund managers think they cannot afford to miss any market turn, and some bought heavily last week just in case. Their buying may or may not have been misguided but, if it continues, it could push stock prices up considerably.

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