Proof of the Prophet

Last January General Motors President Harlow H. Curtice boldly announced a new $1 billion expansion program, and predicted that G.M. would build more than 3,000,000 cars and trucks this year. Said Curtice: "No depression is in my vision." Last week, when G.M. issued its report for the second quarter, the figures proved Curtice a good prophet. Sales of $2.6 billion were 7% below record 1953, but net earnings, helped by the death of the excess-profits tax, reached $236 million, up 47% from a year ago and second highest in company history. Sales of cars and trucks from G.M.'s U.S. plants in the first half of the year totaled 1,754,978, well on the road toward Curtice's 3,000,000 forecast for the year.

Costs & Taxes. On the average, industry's second-quarter profits were running about 2% ahead of last year's high levels. Among the first 400 corporations to report, about half showed better earnings than in 1953. At the two extremes, the booming electric utility industry scored a 51% gain, but railroad profits were down 44%. Among the few railroads to show better results was the Minneapolis & St. Louis (six-month operating income up about $100,000), which was taken over by a new management in a proxy fight last spring (TIME, April 26).

In the steel industry, which has been operating at scarcely better than two-thirds of capacity, combined earnings of 30 companies were just 14% under a year ago. U.S. Steel's second-quarter net was down 11.9% to $49 million. But Chairman Benjamin F. Fairless predicted that demand for steel would pick up late this month or in September. Chicago's Inland Steel, which concentrates on basic steels rather than high-cost alloys, announced alltime highs in second-quarter production (102.6% of capacity) and first-half earnings ($19.4 million). Bethlehem Steel's Chairman Eugene G. Grace also reported profits 7.8% ahead of a year ago ($31 million). Grace went on to confirm reports that Bethlehem, the country's second largest steelmaker, was talking merger with the sixth largest, Youngstown Sheet & Tube (TIME, Aug. 2). The announcement sent the stocks of both companies sharply higher, Youngstown rising 5 1/8 to 58 in a single day and Bethlehem gaining 2 5/8 to 80 1/4.

Sales & Profits. Despite oil production cutbacks, major petroleum companies were still able to report higher profits. For the first six months, the Texas Co. showed a record net of $97 million, Jersey Standard reported earnings up to $4.84 a share from $4.42 a year ago, and Phillips Petroleum's sales and earnings were ahead of 1953. In the fast-stepping electrical and electronics industries, Westinghouse Electric's second-quarter net was up 2% to a record $19 million, and Radio Corp. of America reported new record earnings of $19,268,000.

Spurred on by such reports, the stock market forged ahead last week to another 25-year-high, with the Dow-Jones industrial average tacking on 4.44 points to close the week at 347.92. July trading on the New York Stock Exchange totaled 51.8 million shares, highest for the month in 21 years.

In a program designed to give a "nudge" to slow sections of the economy, Commerce Secretary Sinclair Weeks last week announced a speedup in Government spending for military procurement, highway and airport construction and shipbuilding. A two-year, $385 million program of shipbuilding, said Weeks, will be the biggest peacetime project of its kind in history. In addition, the Maritime Board announced a $65.8 million deal with American President Lines,* to include construction of two new passenger-freighter vessels, purchase of four Mariner ships from the Maritime Administration and of two luxury liners (the President Cleveland and President Wilson) now operated by American President Lines under Government charter. The deal is the biggest single merchant ship deal since the passage of the Merchant Marine Act in 1936.

* Whose Chairman Ralph K. Davies confirmed rumors last week that the company will buy control of the $26 million American Mail Line, making it the West Coast's biggest shipping line.

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