Old Tennis Ball

Last winter when business and stockmarket were soaring the balance of expert opinion held that stocks would suffer a spring slump, then recover to soar through the fall. Sure enough, the slump started in March, and, assisted by cold water from President Roosevelt, the crack-up of the British commodity boom and the unhappy state of the nation's labor relations, reached bottom in June. For two months thereafter all was well enough, save for the extreme thinness of stock and bond trading. On Aug. 14 Dow-Jones industrial averages reached a high of 190 for the summer. Then, to the confusion of prophets, the whole market began slipping. By last week the market was back almost to the year's lows--Dow-Jones industrials to 170, utilities to 26.40 and rails actually penetrating their previous level of 50.17 to 46.89.

The week before Labor Day traditionally marks an ebb of financial activity. Last week's was not only ebb but neap tide. Trading in bonds on the New York Stock Exchange one day was only $3,730,000, smallest since 1918. Volume of August stock trading had totaled only 17,220,000 shares, smallest for that month since 1934. Gloom hung so heavy in Wall Street that a seat on the Exchange sold for $75,000, lowest price since April 1935. On the sole million-share day last week 143 issues found new lows. On a recession not so great as that of last June, Wall Street morale touched a new low for recovery, and brokers began holding a premature wake over fall business prospects.

For this there was some justification. Steel mill operation held at 84% of capacity, a high figure but disappointing because a rise would be normal. The Iron Age warned its industry of ''revised estimates of the volume of autumn steel business." Lumber output dropped more than seasonally, with orders last week running 20% less than for the same week last year. And commodity prices were down--winter wheat from a 1937 high of $1.29 to $1.02 a bu.; corn from $1.16 to 97-c- a bu.; cotton from nearly 14-c- to just above 9-c- a Ib.--the peg set by the Government's new cotton loan policy.

Bearish as these statistics were, there were ample other indications that fall business would be good, that the trend is still upward, the trend of prices still toward inflation. Commodities might indeed be falling, but that was a logical outcome of bumper crops which would still leave farmers with the biggest income in years. Industrial and agricultural bank loans attained the highest figure in five years ($620,000,000), while airconditioning equipment production, cigaret sales and electric power output were at all-time peaks. Moreover, retail sales were zooming happily. Payrolls were still fattening. In view of such indices the prospect for fall business looked much like an oft-batted tennis ball which when dropped still has plenty of bounce, but not quite so much as human hearts have hoped for.

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