Slalom

With winter coming on, stores in many a northern community were last week stocking up on skiing equipment. Meanwhile impatient skiers who wanted to study an example of extraordinary skill in downhill running had only to look at U. S. stock markets. At the start of last week stock prices had already been whistling for eight weeks in a steep slalom around such) formidable obstacles as reports of record farm income for 1937, miscellaneous bullish statistics, encouragement from the Federal Reserve Board and optimistic comments by Governmental bigwigs. Last week, having dropped a breathless 55 points from the summer peak of 190 set by the Dow-Jones industrial averages on Aug. 14, the market did a graceful telemark around still another formidable obstacle--prosperous third-quarter earning statements.

To account for the market's slide, businessmen have talked more & more of "a major business recession." Judged by steel production, which was off almost 40 points since the spring to 55% of capacity, and by the New York Times business index, which fell below 1936 for the first time this year, this view last week appeared well founded, but third-quarter earnings have been generally awaited as the ultimate index of current business.

Reports from the first 21 firms to announce third-quarter earnings last week showed a 7.5% average increase over the same period last year, promptly gave the lie to bearish indices. Among these earnings were Union Oil of California up from $2,400,000 to $3,650,000; Continental Baking from $1,020,236 to $1,201,992 (a 13 weeks' report); American Light & Traction from $5,368,893 to $5,919,580; Westinghouse Air Brake from $1,153,091 to $1,846,833; Electric Bond & Share from $2,431,460 to $2.571,601; American Chicle from $831.281 to $1,022,665; Libbey-Owens-Ford up from $2,266,988 to $3,216,690. For the first nine months Libbey-Owens was nearly $1,500,000 above last year's $7,369,960. An old market standby, American Telephone & Telegraph reported that in the fiscal year ending Aug. 31 earnings were up from $165,400,000 to $195,500,000. Operating revenue for 92 Class i railroads in September was $296,700,000 compared to $295,000,000 last year. But New York Central's August net was off from $957,000 to $262,600.

Earnings statements last week were still too scattered to be conclusive and the market slide was not to be stopped so easily. It broke to the lowest lows since 1935, then continued dizzily downward driving Dow-Jones industrial averages some ten points lower to 125. U. .S. Steel led the way, going to a new bottom of $61.50--less than half of the year's high ($126.50). New York Central fell to $17.50, lower even than in 1932 when Delaware & Hudson's shrewd President, Leonor F. Loree, thought it a great bargain and bought his road 495,000 shares in the open market at $22.36. Watching the market ski swiftly on, speculators, whether skiers or not, last week wondered frankly what wax it was using.

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