Evening star. [volume] (Washington, D.C.) 1854-1972, 1955-03-20
Stock Market Probe:
If Reckless Motorist Is Distracted,
Who's to Blame for the Accident?

- - q Q
gress that started last week to in
vestigate Wall Streets spectacular
bull market may find before it is
through that it has a bull by the
tail"
This prediction was in the process
Of coming true last week. Democrats
privately were expressing doubts
about the benefit their party could
get out Of such an inquiry, and Re-
publicans already were charging
that Mr.. Fulbright was rocking the
boat.
There was always the possibility
that the market would have broken
on March 4 even If j. William Full
bright had never been born. But
the fact remained that he was born,
that he was elected to the Senate,
and that he chose to investigate
this particular subject at this par
ticular time, Politically, If things
go wrong enough, he may well regret
all three occurrences.
Focts TO Foce
These were facts that hac to he
faced:
. The market was more bullish, for
longer, than it ever had been since
the crash Of 1929.
o A Government Investigation was
going on.
Q The stock market is an extremely
sensitive mechanism; like the HUI
man brain, its function is UNDER
stood, but its way of functioning is
not.
. And mass psychology among
stock traders is much like the slim
illus that sends a flock of starlings
into the air with no apparent signal
and no apparent purpose.
II people were getting nervous
anyway because Of the age of the
bull; II the Senate inquiry tended to
make them a little more nervous;
II some unknown factor started OPP
Grating in the market; and IT mass
psychology started stampede,
somebody-possibly great many
people-would be likely to get hurt.
But how badly hurt?
Few, If any, experts believe that
the worst conceivable crash-if it
came now-could possibly be as bad
as 1929. Conditions are too diff
ferent; few analysts really know
whether comparison with 1929 is
valid, because they are not sure
that the two markets-1929 and
1955-are even vaguely comparable.
And conditions elsewhere in the
economy do not appear to be par
allel.
Differences From -
These evidences of differences
between now and 1929 were offered
to the Fulbright committee by Fed
eral Reserve Board Chairman Mar
tin last week:
Stock price indexes are up II per
cent over 1929, while wholesale and
consumer prices are up n and Sc
per cent. respectively.
Earnings of industrial corpora
tions are up a per cent, utilities 81
per cent and rails 70 per cent. COM
pared with the II per cent average
stock price rise.
Corporate debt is up 100 per cent,
but the United States gross national
product is up 246 per cent and cor
porate sales are up 274 per cent.
The number of shares listed on
the New York Stock Exchange is
UP 220 per cent, while the amount
Of trading on the average day is
down 80 per cent.
The amount of margin required
for stock purchases In 1929 was not
regulated, and ran between 10 and
Is per cent. with plenty Of 10 per
cent margin accepted. Margin today
is Federally regulated at go per cent
minimum.
Out of the welter Of testimony be-
fore the Fulbright committee last
week there came numerous hopes
for the best and fears for the worst.
But no one seemed to see in what
was happening on the Hill and in
the Street the clear and present
danger Of another 1929.
As one Federal Reserve Board
economist put it last week:
IT everyone had been on o cash
or 60-per-cent-margin basis -
there couldn't have been that kind
of a crash. even In 1929"