The Effects of Change

It was the wildest performance in years on the floor of the New York Stock Exchange. Caught at their favorite luncheon spots when the news of President Kennedy's assassination reached them at 1:40 p.m., many Wall Streeters left their meals and rushed back through the streets to find the market already besieged with sell orders. Ignoring the firm rule that prohibits running on the exchange floor, traders ran about frantically, bowling each other over in their haste. By the time the board of governors announced the closing of the exchange at 2:07 p.m. (exchanges across the nation quickly followed suit), the Dow-Jones industrial average had plummeted 21.16 points, running up losses of $11 billion. At week's end the major stock exchanges decided to stay closed on the day of the funeral.

Panic. Such was Wall Street's reaction to the death of the President, and such is the panic that usually grips the financial community when an unforeseen disaster hits the Street. But the market also has a history of quickly recovering such losses--and businessmen of recovering their composure. Shortly after the shock began to ease, both began to appraise how the death of John F. Kennedy, and the succession of Lyndon Johnson to the presidency, would affect the nation's economy. Most businessmen seemed convinced that the U.S. economy is currently too strong to be upset for long by the President's death, and that Lyndon Johnson is not a man who is apt to do anything willful to upset it.

Businessmen view Johnson almost--but not quite--as one of their own, and generally feel that he will be somewhat more conservative than President Kennedy. They know that his family has extensive private holdings in ranching and broadcasting, that he is on friendly terms with Texas oilmen and other big businessmen, and that he has boosted Texas by using his influence to seek business and to stave off attacks on the 27 1/2% oil-depletion allowance. And it does him no harm in businessmen's eyes that as a U.S. Senator he voted "right" on labor issues less than half of the time by the estimate of the A.F.L.-C.I.O. "I expect," said Socony Mobil Oil Chairman Albert Nickerson, "that he will follow a middle-of-the-road course and be friendly to business."

Strong Base. At the same time, no one really expects Johnson to depart far from the economic policies of the Kennedy Administration. Charles Wellman, president of Los Angeles' First Charter Financial Corp., spoke for many businessmen: "President Kennedy and Lyndon Johnson thought alike on most issues. In a short while there will be a return to the status quo in the economy." Most businessmen expect Johnson to continue his longtime emphasis on expansive defense spending. They also expect him to push a tax cut, and feel that his legislative abilities may improve its chances of passing.

Johnson takes office at a time when the U.S. economy is in ringing shape. U.S. business has been steadily expanding since February 1961--the first full month of Kennedy's Administration. Even without a tax cut, the Treasury expects the gross national product to grow from $589 billion in 1963's third quarter to $603 billion by 1964's first quarter. Capital spending, stimulated by new Government tax breaks, has risen 5% this year, to $39 billion, and is still rising rapidly. Retail sales, housing starts, auto production--all are rising. Last week the Commerce Department announced that personal income made its sharpest gain in 18 months, rising $3 billion to a record annual rate of $470 billion. That is a good measure of the prosperity the U.S. enjoyed at the time of John Kennedy's death--and no one is anxious to change it.

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