Turnabout in Metals

Asked a Wall Street wag: "Did you hear about the lucky Texas oilman? He was drilling on his property and struck coffee." Last week General Foods Corp. (Maxwell House) and Standard Brands Inc. (Chase & Sanborn) each boosted the wholesale price of coffee again (to $1.11 a lb.), and new retail rises of 3-c- to 10-c- were on the way. People were getting used to gyrations of the jumping coffee bean.

From another group of commodities came surprisingly similar news: the nonferrous metals, long in a downward spiral, were suddenly perking up. In an unexpected spurt of buying, lead prices rose for the first time in eight months (to 13-c- a lb.), picking up 1/4-c- a lb. for two days running. Zinc jumped 1/2-c- to 9 3/4-c- a lb., its first rise in more than a year. Tin, tacking on a nickel, shot up to 93-c- a lb. as purchases were stepped up. Judging from the metal futures markets, which last week scored the biggest gains in years, metal speculators figure the rises will stick.

The bubbling metal markets reflected a strong undertone in most raw materials that in the last month has sent the Dow-Jones commodity index up 10 points to 185. Part of the reason has been the big volume of construction contract awards, now running 13% ahead of last year (which in turn promises better business for appliances and other industries later in 1954). Furthermore, business is well along in its inventory cutback and is ordering again. The chemical industry, for one, reported better sales last week. And the trade magazine Purchasing, which polled more than 500 purchasing agents all over the U.S., found that 65% of them thought the inventory adjustment was about over. Said the President's Economic Adviser Arthur F. Burns: business sales are now outrunning production, and "a foundation is being laid for a new economic advance."

Nevertheless, many a White House adviser regrets that the President picked March as the key month to watch. Unemployment is still rising, reached 3,671,000 by mid-February, an increase of 584,000 in a month. It may be May before the trend is reversed in some industries, and longer than that before some businessmen feel the change. In any case, many people seemed sure last week that the change is coming. Reflecting their confidence, the stock market kept on rising, and for the first time since 1929 the Dow-Jones industrials closed above 300 one day last week.

This week the Securities and Exchange Commission served up another reason for optimism. Based on its latest survey, said SEC, industry plans to spend $27.3 billion on new plants and equipment this year, only 4% less than in record-breaking 1953. In the first quarter, such outlays are running at the record annual rate of $28 billion, v. a $27.8 billion rate in the first quarter of 1953.

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