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In spring, there is usually an upsurge in business. But last week, after two months of softening prices and sliding retail sales, businessmen were still waiting for the upturn. The whole economy seemed poised on such hairspring scales that businessmen took courage, or fright, from every vagrant sign. The stock market was a perfect example.

The bull market's pacesetter has been a famed old speculator's favorite, Northern Pacific, which shot up because of its vast land holdings in the Northwest's Williston oil basin. Last week Texaco's Chairman W.S.S. Rodgers told his stockholders at their annual meeting that the basin is going to be a major producing area, but that the cost of development will be high because wells must be drilled deep. It will be "several years" before oil is flowing in quantity. Result: Northern Pacific tumbled nearly ten points to 74 1/8, scaring the whole market into a fall.

Optimistic View. Two days later, Socony-Vacuum's Vice President J. C. Case took a different view of the basin at Socony's annual meeting. Said he: Socony is finding good oil at depths as shallow as 3,000 ft. and will drill eight to ten wells there this year. Result: Northern Pacific shot up nearly five points, and the whole market rose. Other oilmen explained the seeming contradiction in Williston estimates: Texaco's holdings are near the center of the basin, where the oil is more than 9,000 ft. down, whereas others on the rim (like Socony) can strike it as shallow as 3,000 ft.

The market's uneasiness, however, came from more than talk. Earnings were still feeling the heavy blow of taxes and rising costs. Bethlehem's net after taxes, the first reported by a big steel producer, was $18.9 million in 1951's first quarter, v. $39.4 million in 1951's last. Refrigerator sales were so soggy that General Electric laid off 2,500 workers at its Erie, Pa. plant and planned to cut production 50%. There were other layoffs, and for the second time since World War II's end, industrial employment failed to show its usual spring rise.

Gloomy View. Purchasing agents, the nation's keenest judges of buying trends, reported that for the fifth consecutive month business has trimmed its inventories; they counted twice as many production declines as increases. Department store sales were still below last year's, and commodity prices kept on falling (e.g., meat, cotton, wheat, pulp and paper).

Was the slip about to turn into a full-fledged recession? Some businessmen, such as Montgomery Ward's gloomy Sewell Avery, thought that it would. But the majority did not think so, especially since the Government is expected to relax credit restrictions, which are one of the big curbs on sales. Actually, after the frenzied boom last year, business was getting back to a merely normal boom. Many businessmen who had been allocating their production had a hard time realizing that they had to work to sell goods again.

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