Second Wave

BUSINESS & FINANCE

The flood of selling which had washed the props out from under the high price of grain swept on last week. Day after day the weary traders crowded the grain pits to sell, and sell again. At week's end the Chicago Board of Trade had witnessed the worst ten days in its existing records. May wheat had now fallen a total of 52¼¢ to $2.34¾ a bushel, and May corn 54½¢ to $1.96½.

The wave washed over into the stockmarket. The Dow-Jones industrial average fell 4.17 points Tuesday, the worst one-day break since last April. The rail stocks had their sharpest drop since the big break of September 1946. Utility stocks also slumped badly. At week's end, the Dow-Jones industrial average was down to 166.18, a drop of 8.87 points in the fortnight, and rails were down to 48.36, a fall of 3.3 points.

Seek the Devil. The drop in grains pulled down livestock prices; they had their worst drop in the history of the Chicago stockyards. By week's end, the average price for hogs was down to $21.35 a hundred pounds, a 22% slump from the January high. The week's average price for cattle was down to $26.75, a fall of 10.6%. The ripples from the wave spread out into almost all commodities. Spot cotton, which had sold at 34½¢ a pound only two weeks ago, was down to 31¢.

By week's end, all the markets had steadied and a few commodities were even up a little. But this week a good many bears decided not to push their luck too far. They "covered" by buying grain to make good on the bushels they had sold short. The market rallied. Corn, which had started the break, rose the limit: 8¢. Wheat & cotton rose too. The optimism spread into the livestock market where hog and cattle prices edged up. A few traders went so far as to murmur cautiously that the worst might be past. But no one knew for sure whether the wave had spent itself.

The break, if good news for consumers, was bad news for U.S. farmers (see NATIONAL AFFAIRS). As might be expected, some Farm Bloc Congressmen bayed off to try to find a personal devil with "inside information" who had loosed the floodgates. With a tallyho from Secretary of Agriculture Clinton P. Anderson, the hunt led to the 38th floor of the Chicago Board of Trade Building and the small office of Edwin Taylor Maynard, 62, a trader ensconced behind four telephones and a ticker.

Maynard, said Secretary Anderson, had been a big short seller on the first day of the big price break. (Traders thought he had been the biggest individual seller.) Maynard cheerfully admitted that he had made a killing: in one day he had sold short 1,000,000 bushels of wheat and covered it later in the week. In the process he had cleaned up nearly $200,000.

Maynard pooh-poohed the idea of "inside information." Said he: "Anyone who kept his eyes open and watched what was going on could get the same inside information. . . . The market looked like a groggy boxer. It needed just a little push to knock it down." No trader thought that Maynard alone had caused the break. Thanks to stricter regulations, the days were past when bull & bear raids alone could control the markets.*