Up the Hill

For two weeks, like a hill-climbing car with water in the fuel lines, the New York stock market had sputtered upward in short uncertain bursts. One day last week the lines cleared and it began a steady climb. In the busiest session since mid-July, 1,800,000 shares were traded, with such blue chips as U.S. Steel, General Motors, and Standard Oil (N.J.) leading the parade. The Dow-Jones industrial average rose 3.32 points, biggest gain since the bullish days of last July. At week's end, the Dow-Jones average was 190.19, up 9.78 points in twelve days and not far from the year's high.

Wall Streeters, who had had a dozen reasons for the market's slump during the summer, now had another dozen reasons for the rise. There was "a better tenor to foreign cables," it was only "the preelection rally," etc., etc. But there was also reason to believe that investors, who had mistrusted the solidity of the boom, were having their minds changed by fresh evidence.

More for Stockholders. The boom was going as strong as ever; the Federal Reserve Board reported that September production had been the same as in August, just short of the postwar peak. In the reports that began pouring in last week, many third-quarter earnings proved to be much fatter than expected (example: General Electric's $29.2 million was up 49% from the similar 1947 quarter). And joyful shareholders cashed in. Earnings were so good for some 21 corporations that they declared extra dividends. Republic Steel, with its earnings ($12.8 million) more than doubled, declared extra dividends in both cash (25-c-) and common stock (1 share for every 25).

The shape of things to come looked even nicer. Last week alone, no less than five new plants worth $15 million or more apiece were opened for production or research. U.S. Steel, which opened one of them near San Francisco (see below), planned to have another one near Los Angeles by 1950. Greenwood Mills announced a new $21 million expansion program; Sun Oil Co., a $70 million program; members of the American Gas Association will spend $3.3 billion. Westinghouse Electric Corp., which reported an alltime record in appliance production for September, saw no letup. Said Vice President J. H. Ashbaugh: "We are planning on increasing production on all products" in 1949.

Less for Clothes. Prospects were not that bullish all around. In clothing, food and shoes, the price trend was still down. Following the lead of Crawford Clothes, Inc. (TIME, Oct. 25), two suitmakers, a shirtmaker, and a big men's wear retailer last week announced price cuts ranging from 6% to 20%. And the Department of Labor reported that food prices dropped 0.6% from mid-August to mid-September, with the result that the cost of living remained the same in mid-September as a month before, ending a steady advance of five months. (The index has still to show the effects of the newer food and clothing cuts.)

The soft spots were also changing the wage pattern. In Haverhill, Mass., shoe companies asked 5,000 workers to take a "drastic wage reduction." The same day some 2,000 workers in the Western Electric Co. plant at Haverhill got raises of 8^ to 13(# an hour.

So far, the boom has been little affected by the Government's credit restrictions. In its October Bulletin, the Federal Reserve Board reported that business loans by Federal Reserve System banks had increased steadily since mid-June, implied that they might go up still more. It said that "inflationary pressures have continued dominant," and hinted that banks may soon be asked to put still more of their money in reserves.

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