Current Situation

In recent weeks the stock market has been cavorting like a grain-fed horse. Last week it grew weary.-- That is, many stocks which were at their record highs last February and which toppled in March, recovered, then broke slightly. (The March break brought the whole Manhattan Stock Exchange listings down an average of 30 points.) This table shows the extent of some recoveries: SPRING RECENT

Low HIGH

General Motors 113 225 3/4

U. S. Cast Iron Pipe 150 249

U. S. Steel 117 156 3/8

Hudson Motors 50 74 1/2

Du Pont 193 314 1/2

This midsummer rally, now history, came unexpectedly. It was a speculators' market led, according to astute Financial Journalist Bertie Charles Forbes, by William Crapo Durant and Jesse L. Livermore. Because the market was under this speculative influence, there has been doubt as to the extent to which it has reflected the business condition of the country. In general, the U. S. is in excellent condition. Many industries are at the most prosperous tide of their histories. A few are at the turn of their ebb.

P:. Bank clearing for 23 key cities last week stood 10.6% over those of the same week last year--were $8,640,233,000. Best gains were in Kansas City, Boston, Detroit, Cleveland, Pittsburgh, Cincinnati and St. Louis.

P: Money in circulation the first of the month was $4,858,473,503, or $42.01 for every human in the U. S., which is more than circulated a year ago.

P: Steel production is at an abnormal summer rate. U. S. Steel blast furnaces are operating at 71% of capacity, those of independents at 65%. U. S. Steel unfilled orders are 3,620,352. On the Stock Exchange U. S. Steel quotations danced to 156% last week, their record high. Some stock buying speculated on a dividend distribution, some on U. S. Steel's excellent business. At Duluth, iron ore shipments this season are calculated to reach fully 55,000,000 tons, 1,000,000 more than last year.

P: Most motor car makers last week displayed with great confidence their 1927 models for the past week. Others will follow in quick succession, until the winter automobile shows bring them together for comparison. Retail sales have already picked up. In the first six months of the year, automotive sales--cars, trucks--aggregated the amazing total of $2,389,428,000.

P: General Motors directors last week saw fit to make a 50% stock dividend. This reached almost 3,000,000 shares, makes the present capitalization about 9,000,000 (at current Stock Exchange prices, worth $1,800,000,000,* upon which 1 3/4% dividends will be paid beginning Sept. 11. The E. I. du Pont de Nemours Co. and its stockholders will gain most. They hold somewhat more than 25% of General Motors stock.

P: Railroads of the northwest have "turned the corner," Chairman Howard Elliott of the Northern Pacific, said last week. They carry crops, ores and lumber. For the nation there have been ten weeks this year when more than a million cars were loaded. In only one week, that of Jan. 2 were there less than 900,000. This reflects lively interchange of commodities. Gross railroad earnings, January through June, were $3,028,560,000.

P: Crops, although total harvest will be somewhat less than last year (TIME, Aug. 9), are abundant; will be profitable to the growers. A result of this expectation is the increased demand for farm equipment--not only of the direct utilities, as harvesters, tractors and the like, but also of the indirect, as house water-supply systems and individual electric lighting plants. In Nebraska the demand for farm land, deadened since 1920, has become very active.

P: Of the mail order houses, Montgomery & Ward are opening five vicinal stores to display their cataloged goods. Some shelf ware will be sold on the premises. (They have long had such a store at Kansas City.) Sears, Roebuck sales for the year ending with July were $270,000,000; Montgomery Ward's $198,000,000. In both cases the totals are greater than for the previous year.

P: Chain store sales indicate the purchasing power of the proletariat. July sales of ten such chains were $45,989,174 (18.9% more than July, 1925). Sales in the first seven months were $300,523,171 (14.2% more than the same period of 1925).

P:Cotton textile manufacture is reviving after years in a slough. Although consumption of cotton dress goods has decreased on account of rayon and silk, yet there has been greater industrial use for cotton--automobile tops and upholstery, tire fabrics and cords, bags. The trouble was that the manufacturers kept their mills going, demand or no demand, and consequently piled up huge stocks which had to be sold, often at losses. This summer most mills have laid off help and run only part time. Therefore, sales are far above production. In two weeks of July, a certain grouping of mills manufactured 54,901,000 yds. of cotton, sold 72,860,000 yds. Another grouping made 101,291,000 yds., had unfilled orders for 121,853,000 yds. In other words, the industry is stabilizing itself, a process in which the recently formed Cotton-Textile Institute (TIME, Aug. 2) will help greatly.

P: Building, a notable exception, has declined every month from March to June. In June, for the first time in a year and a half, figures were lower than in the corresponding month of the previous year.

* There have been no recent 3,000,000 share trading days as happened repeatedly in the spring. --Or $1,242,000,000 at Manhattan Curb quotations of 138 for the new stock, when and if issued.