No Cause for Alarm?

THE ECONOMY No Cause For Alarm?

To a mournful harmonica rendition of Hearts and Flowers, a group of traders marched across the paper-strewn floor of the New York Stock Exchange one afternoon last week. At Post No. 9 they stopped, laid down a wreath to the memory of an old friend.

With such mock solemnity Wall Street marked the passing of Commonwealth & Southern Corp., the giant utility holding company now finally dissolved under the Holding Company Act. For years. C. & S.'s low price (generally about $5 ) and large amount of common shares outstanding (more than 33 million) had made it a volume leader on the big board and a rich source of commissions for brokers. C. & S. preferred and common stockholders will get shares in four utility companies, with a listed total of only 20 million common shares.

But the death of Commonwealth & Southern was about all that Wall Streeters seemed sad about last week. The Dow-Jones industrial average rose 3.38 points to a new 1949 high of 185.36, well above what most traders had hoped for in what they had regarded as only the usual "summer rise."

Investors seemed to think that the upsurge would last. They brushed off the steel and coal strikes, quoting the old Wall Street saw: "Never sell on strike news." They pushed up U.S. Steel if to 1 3/8 TO 24 3/8, the high since the stock was split in May, and General Motors up 2 3/4 to 65 3/8, new high for the year.

Except for a slump in railroad carloadings there were few signs as yet that the strikes were having much effect on business. It would be several weeks before most auto manufacturers felt any real pinch in their steel supplies. Some businessmen were cutting down on forward buying, and steel warehouses were planning to allocate their dwindling supplies. But Mill & Factory magazine, in its latest survey of 1,000 manufacturers, found that 63% of them thought that the business outlook was brighter now than six months ago.

Most of the predictions were made with a big "if" predicated on the strikes. Midway through his nationwide tour to check up on the economy, Secretary of Commerce Charles Sawyer cheerily reported: "Sales in the retail clothing lines and shoes have fallen off in the last two weeks . . . [But] unless the steel and coal strikes are prolonged . . . there is no reason why the recent upward trends in business should not continue."

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