Up, Down

Having knocked off more than a year's gain in last fortnight's triple tumble, the stockmarket last week had a rebound. Since business news was neither good nor bad, the advance was ascribed to "technical reasons"--Wall Street's way of saying that everything which goes down must come up. But the market did not go up far, did not stay up long. Trading on the New York Stock Exchange, after soaring above 2,000,000 shares thrice in a month, fell back into its recent rut. By the peak of the rally, the Dow-Jones industrial averages had climbed only from 157.9 to 164.7.

Then President Roosevelt delivered his Constitution Day (see p. 9) speech demonstrating that Court Reform, with him at least, was by no means a dead issue. Down went the market again, obliterating its rally, plowing into new low ground for the year. Despite its market effect the President's speech did not alter the obvious political fact that the Administration has no more intention of letting a runaway bear market develop now than it had to see a bull market get out of hand last spring. At that time the Federal Reserve Board was bearing down on credit. Fortnight ago it started to loosen up, persuading the Treasury to release $300,000,000 worth of "sterilized gold" (TIME, Sept. 20). As a stockmarket hypodermic, the gold news was notably weak, for it reminded Wall Street that almost anything can happen, but it again showed that the Administration not only possesses vast power over U. S. economy but is ready to use it.

Wall Street felt last week the Government's power should be used to ease restrictions on trading in order to provide market liquidity as requested last month by President Charles Richard Gay of the Stock Exchange. Screwing up his face as though his remarks were very distasteful to him, Securities & Exchange Commission Chairman James McCauley Landis, as he retired to become Dean of Harvard Law School,* last week finally replied to President Gay.

Said Private Citizen Landis: "If you have a great number of accounts in which people are waiting to move at a moment's notice and are fearful, you create instability but you may have volume. Against that type of market we have taken our stand. It is interesting to observe where the real cushions come from and our figures of last week indicate where they came from. During last week the small man was buying in large volume. . . . Panicky feelings arise in the congested financial centres. ...

"I am not arguing for the elimination of the speculator, but he should not dominate the market. ... If you are interested in volume alone, you will cry out against anything that cuts that volume. If you look back at the number of people who, because of conditions which prevailed even before 1924, made a living by inducing other people to gamble, you see why that outcry, why the demand for higher commissions and why the demand for lower margins." Condemning the "panicky speculators'' who "know that Wall Street is bounded on the east by Long Island but forget that it is bounded on the west by the U. S.," the retiring SEChairman ended by asserting that market "cushion" is provided by odd-lot trading. To these waspish remarks President Gay made answer in words that settled nothing: "With all deference to Mr. Landis, for whom I have the highest respect, I see no reason to change my views."

*For Mr. Landis' successor, Washington betting favors Commissioner William Orville ("Bill") Douglas.

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