Sport: BUSINESS IN 1954

IN the economic year of 1954 the world had a clear and easily understandable measure of the soaring strength of the U.S. That measure was the great bull market in stocks. Stock prices rose higher than in 1929, and on the last day of the year the Dow-Jones industrial average hit an alltime high of 404.39. But what gave the bull market historic significance was that it symbolized the strongest possible confidence in the capitalistic system, a confidence that had often seemed lacking, even among U.S. capitalists themselves, in previous years of the boom. The remarkable fact about this surging confidence was that it began to grow at a time when business was slipping. Such doomsayers as British Economist Colin Clark predicted that the U.S. was in for a major depression, and right up until the November election Democrats cried economic havoc. But few really believed them. As industrial production edged down, the market went up—and as it turned out, the market was right.

For in 1954's "recession" the U.S. racked up its second-best business year in history, and the best peacetime year ever.

The bull stood for something more than Americans' faith in their economy. As the U.S. entered a new era of competitive coexistence with the Communist world, the bull was a symbol that Americans were sure they could compete—and win.

The fact was that the 1954 bull was a different breed from any other that had gone before. From almost every angle he seemed made of muscle. He stood against the background of an entirely new economy made up of many industries that did not even exist in 1929, and with a gross national product more than three times as big. Corporate profits, helped by the death of the excess-profits tax, totaled $17 billion in 1954, down 6% from 1953, but 100% above the 1929 level. On top of that, Americans in 1954 proved they knew how their giant economy worked and how it could be kept at work efficiently.

That knowledge and confidence sent stock prices soaring all through the year. Spectacular gains were scored throughout the list, e.g., General Motors went from 60 to 98;* Jersey Standard from 72 to 111; RCA from 23 to 38; Du Pont from 107 to 167; Anaconda from 30 to 52. As a group, the biggest rise (an average of 165%) came in the order-laden aircraft stocks. Taking into account splits, Douglas started at 83, rose 177 points (it gained 34 points in the last two weeks alone); Boeing started at 49 and rose 99 points; Northrop started at 18, gained 57 points. But it was not merely a war market.

Office-equipment stocks, buoyed up by the promise of a new thinking-machine age, jumped 78%; the busy airlines gained 95%; the oils rose 45%. In their scramble to buy, investors were not merely purchasing present profits; they were betting on the future. Example: though the steel industry limped through the year at less than 75% of capacity, investors in steel stocks pushed U.S. Steel up 34 points, to 74, and more than doubled the price of Bethlehem, to 109.

New Routes. As prices scooted higher, the public started coming into the market. In other days this would have been a sure sign for Wall Street's professionals to get out. But this was a new kind of public with new ways of getting in. It was also part of a new trend away from the philosophy of security at any price; having seen what the American economy could do—and how it