Wolf, Wolf!

At 12 noon on Saturday, August 19, the Dow-Jones average of 30 industrial stocks closed at 135.11, down 7 points for that week, 9.60 points from the pre-Danzig peak of July. At 12 noon on Saturday, August 26, the same average closed at 136.39. Such was the net reaction of business opinion in the U. S. to the worst week of war scare since 1914 (see p. 14).

During that week: 1) war jitters drove that stock average down to 132.81; 2) peace hopes (prompted by the only calamity comparable to war that could have befallen democratic capitalism: a Hitler-Stalin get-together) drove it up to 135.07; 3) Britain's first refusal to buy peace at the price of another appeasement drove it down again to 131.82; 4) amid rumors of wars, buyers absorbed frightened selling and raised prices to the final high of the week.

Some investors regarded a war scare as an opportunity to pick up bargains. Some sophisticated speculators bought, reasoning that if war starts the New Deal will keep the market open, that in a few months the U. S. will be in and a war boom will be under way. But by and large U. S. business was discounting fears and betting on peace.

In sharp contrast to the hourly he's-up, he's-down zest of Wall Street was the listlessness on the exchanges of Zurich, Amsterdam, Paris, London. There, trading came almost to such a standstill as was reached months ago on the Berlin Bourse. Doubtful that war will come and certain that even if it does, taxes and regulations will prevent any spectacular boom, Europe's financiers were largely lethargic.

The British met this crisis by letting the pound sterling fall precipitately from $4.68-c- to $4.28-c-. This should have prompted money to run from cheapening currency into stocks. But British moneymen were more impressed with the Government's simultaneous upping of interest rates from 2% to 4% to discourage buying, and its further strictures on capital flight.

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