Wait Till Next Year

On Wall Street, which lives by statistics, there are some numbers that have a mystical significance more important than their actuality. Last week the Dow-Jones industrial average rose above the 600 mark (up to 611.98 in fact) for the first time since early June. That was still 100-odd points short of the record set in December--but anything above 600 looked good. Twice before in the past month, the Dow-Jones stocks had struggled close to 600 only to fall back.

Some bears thought that the market might tumble after President Kennedy's TV talk, in which he said he will not recommend tax cuts until next year (see THE NATION). Instead, stocks went up--possibly because there was less recession talk in the air. Besides, businessmen had pretty well discounted the President's tax decision in advance. Said Robert Henry Stewart III, president of Dallas' First National Bank: "I don't know of anyone who was waiting for the speech before he went ahead with a business decision. We don't work quite that way.'' Signs of Rise. Though businessmen carry a tax burden more oppressive in the U.S. than in any European nation (except Great Britain), there was surprisingly little disappointment at getting no cut.

Kenneth Childs, president of Los Angeles' Home Savings and Loan Association, figured that "sound business judgment would indicate that tax cuts in the face of deficit spending would be difficult to justify." Boston Banker Richard Chapman thought that "it's wrong to raise doubts about the fiscal sanity of the country and the soundness of the dollar." Besides, the cheering fact is that the economy looks a bit brighter than a few weeks ago. Said Inland Steel's Chairman Joseph Block: "We are not in any economic crisis which might favor the Government's busting right in with a quick across-the-board tax cut." Some key barometers of business released last week--industrial production, housing starts, retail sales, new orders--showed small rises for July. This news cheered the stock market, but the President's speech also helped by clearing the air. Said Walston & Co. Market Analyst Edmund Tabell: "If there's one thing the market hates, it's uncertainty." Wall Streeters took heart at the promise (not quite a certainty) of a long-term tax cut next year.

"Man, Do We Need That!" Not everybody applauded Kennedy's stand. "If a reduction is justified next year, why not this year?" demanded Jones & Laughlin Steel Chairman Avery C. Adams. With a lemony frown, Chicago Banker Tilford Gaines asked: "When you want a martini, why torture yourself until the day after tomorrow?" But businessmen did not seem to want a quickie tax cut at the cost of losing the "long-needed tax reform" that the President promised for next year in both corporate and personal income taxes. Said Hotelman Conrad Hilton: "For many years, our tax structure has been based on social objectives rather than on economic objectives, to the detriment of business activity and employment." Most businessmen recognized that to ram through reform, Kennedy would have to have benefits to confer to make up for the reductions in tax write-offs and tightening of tax loopholes. Drawled R. P. Baxter, president of the Rio Grande National Life Insurance Co.: "I think President Kennedy wants to hold Out so he'll be in a better position to bargain when the full tax revision bill comes around next year. And, man, do we need that!" If there is now some heightened recognition of the urgent need of a real tax reform, that is a gain.

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