STATE OF BUSINESS: On the Spot

Major Lawrence Lee Bazley ("Boom'') Angas is a pink & white Britisher with a reputation for making daring predictions which have sometimes come true. He is supposed to have foretold the collapse of rubber in 1926, the rise of gold shares in 1931. He won his nickname with a much-publicized booklet, The Coming American Boom, which heralded his arrival in the U. S. in 1934. Since then he has conducted his business as an investment counselor in Manhattan, writing a market letter for 300 clients and charging as much as $2,500 a year for market advice. One afternoon last week, just as stock prices began cascading, boardrooms began buzzing with the report that the Major, anticipating "pandemonium," had wired his clients that the selling would start at 1:30.

A more logical explanation of the market break was just coming over the ticker —the hasty, fear-begotten British and French military alliance with Poland. Next morning, however, newspapers gave the Angas rumor part credit for dropping prices to within a hair of the January lows. New York Attorney General Bennett subpoenaed Boom Angas for a hearing. The florid Major blandly denied having sent any general wires since March 25. He said he had only a "diminutive influence" on the market.

By this time it was clear that something not diminutive was scaring speculators. Day after the Angas rumor, panicky selling avalanched from all over the U. S. U. S. Steel broke through $50. Volume hit 2,890,000 shares and both Dow-Jones industrial and rail averages broke through their previous lows, reaching 131.84 and 26.38 respectively.

This put another famed market counselor, Robert Rhea, on a far hotter spot than Major Angas. Robert Rhea is the oracle of the Dow Theory, which has more adherents than any other market-forecasting system. In his March 25 letter to clients, Robert Rhea declared that joint penetration of their previous lows by the industrial and railroad averages would mean that the primary market trend had changed from bull to bear, even though the bull market which began last spring has not enjoyed either normal length or the usual hectic "third phase." Robert Rhea unhappily admitted his dilemma and critics of the Dow Theory settled down to a watchful waiting.