The Brave Bulls

In Wall Street, the new feeling of confidence boosted the Dow-Jones industrial average to a 22-year high of 289.65, and by year's end traders cheerfully predicted the average might break 300 (1929's high: 381.17). If this bore surface traces of 1929--8 bubbly nonsense, the underlying facts did not. To many, the stock market still seemed the only uninflated segment of economy. Chicago's Colonel Henry Crown, who had bought Manhattan's Empire State Building, said: "You can buy stocks more cheaply than you can buy the buildings they represent." Many companies listed on the New York Stock Exchange, if liquidated, would pay two and three times as much cash as the listed price of their stock. At year's end the Dow-Jones industrial average sold at only twelve times earnings v. a peak of 20 times earnings in 1929.

Furthermore, stocks in the average were yielding 5% interest v. a low of 1.9% when the 1929 bull market ended. And the market was buoyed by the realization that after two decades of Government suspicion, hostility and harassment, U.S.

business itself was being called to share Eisenhower's leadership in the new political era.

New Measurements In the preceding decade, the whole nation's living standard had risen, partly through Government measures such as social security, price supports, legalizing collective bargaining, etc. But the most solid reason for the rise was the incredible expansion of U.S. private industry in war & peace. A decade ago U.S. industrialists feared overexpansion. Now they seem to fear under-expansion. In the seven postwar years, private industry has invested the staggering total of $151 billion on new plants--greater than all the capital equipment of England, France and Western Germany combined.

Business and labor alike evolved a new philosophy: each could gain a bigger slice of a bigger pie by more intelligent cooperation. Labor, which once fought technological change, came to see that improved machinery raised real wages by raising man-hour output and lowering costs and prices. Industry, which once fought unionization, came to see that unions themselves could help boost productivity, and that good morale among work.

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