WALL STREET: Lecture for a Senator

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Before Senator J. William Fulbright's stock-market investigation committee last week appeared Bernard Mannes Baruch, a speculator who has made millions. Before he was 30, Bernie Baruch owned a seat on the Exchange, had made (and lost) more than $1,000,000. Forty years ago, when he was netting upwards of $2,000,000 yearly on Wall Street, Baruch used to say: "I am a speculator and make no apologies for it."

His imposing (6 ft. 3½ in.) frame still erect at 84, Speculator Baruch sat down to testify as the last committee witness. It was plain, as he delivered a clear and witty explanation of how the market functions, that he should have been the first witness. "At the outset." said he, "let me emphasize that no one knows whether stocks are too high today." because the market's rise or fall depends on such unpredictables as economic conditions, politics, international affairs, emotions—even the weather. "Largely because of the crash of 1929, the impression has built up that the stock market is the cause of booms and busts. Actually, it is the thermometer—not the fever." The Sound-Money Man. Gently, Baruch exposed the shallow depth of the Fulbright investigation by detailing aspects of the market that deserved (but did not get) serious study, e.g., the growth of investment trusts, the entry of life insurance companies into the market, the capital-gains tax that Baruch said discourages investors from selling. The market's rise, said he. merely reflects an economy buoyed by the dramatic postwar growth of industry and the cumulative effects of 15 years of inflation. Looking ahead, he added, "the only real protection the small saver—or any group—can have is through the preservation of the credit and security of this country." A balanced budget is more important than cutting taxes, said he, and a powerful, well-armed nation is more important than both.

As he finished his lecture the Senators opened up with a barrage of questions. Should Congress pass new laws in an attempt to give investors more protection? Replied Baruch: "You cannot control a man's opinion. Every day in the press. Senator, you see some talk about who is going to win the pennant, or win the fight, and what horse is going to win a race ..." What about Walter Winchell, who frequently hands out tips on his radio-TV broadcasts? "I think he has got as much right as anybody else . . .

The only thing is, if he were a friend of mine I would say: 'Just don't do it, because it is a pretty hard thing to predict what is going to happen to the stock market.' "