Y, MAY 29,1962 .
THE MICHIGAN DAILY
V MAY 29, 1962 THE MICHIGAN DAILY
Ktsur, lillLC.l'i
yellrng Avalanche Causes
sharp Stock Market Loss
Soviets Increase
Aid to Indonesia
ANN ARBOR DRAMA SEASON '62 SO
TONIGHT 8:30
'of essors
arm Drop
djustment'
By PHILIP SUTIN
Two University business admin-
istration school professors termed
Stock Market a needed readjust-
yesterday's sharp drop in the
ment and did not read a reces-
sion into it.
Prof. Paul McCracken declared
that the decline of stock prices to
a two year low amid heavy trad-
ing was the result of a re-evalu-
ation of the value of owning
stocks. "Factored into the market
for the last five years was the as-
sumption that the general price
level will rise two to three per
cent a year and that stocks are
a good means of beating it. Now
there is a weakening of this as-
sumption," he said.
He called the recent controversy
between the steel companies and
the Kennedy administration a vis-
ualization of the administration's
intention to maintain an anti-in-
flationary price level.
Not Following Earnings
Prof. Douglas Hayes speculated
that the stock market drop was
due to a readjustment of too high
stock prices. In recent years, he
said, prices have not been follow-
ing company earnings and divi-
dends which have not risen great-
ly in the last five years.
Historically, he continued, prices.
are still above the rate of earnings
and dividends despite the sharp
drop' in the market.
Neither professor felt that the
stock market decline signalled the
start of a new recession. "The"
stock market is overemphasized.'
It is neither an important nor re-
liable Index of what is happening
to business," Prof. Hayes declared.
Views Coincide
(The views of Professors Mc-,
Cracken and Hayes coincided with
those of Walter Heller, chairman
of President John F. Kennedy's
Council of Economic Advisors.
(The market slump, he said, re-
flects a realization that inflation1
"is no longer a way of life in this,
economy. The conviction that in-
flation is not a way of life is be-
ginning to permeate the economy."
(Heller added his belief - of-
fering statistics in support - that
the stock market price movements1
are unreliable indicators of coming
economic trends.)
i
-AP wirephoto
SPECTATORS-Crowds gathered and expressions soured as the
stockmarket fell to new depths yesterday. Investors watched the
board at Merrill, Lynch, Pierce, Fenner and Smith, Inc. in New
York.
World News Roundup
By The Associated Press
WASHINGTON-A new series of high-altitude nuclear tests will
be started in about four days over Johnston Island in the Pacific, the
Atomic Energy Commission informed Sen. Oren E. Long (D-Hawaii)
yesterday. The first test, Long said, will be in the sub-megaton range,
less than a million tons TNT equivalent, and exploded at an altitude
of 10 kilometers, or about 6 miles.
* * * *
WASHINGTON-House Republican Leader Charles A. Halleck
(R-Ind) predicted yesterday that the House Ways and Means Com-
mittee will continue to bottle up President John F. Kennedy's health
care plan for the elderly. Halleck described as a flop what he called
"monster meetings" held May 20 to build public sentiment for the
program.
* * * *
JERUSALEM-Israeli guards with submachine guns brought
Adolf Eichmann back to Jerusalem yesterday for the Supreme Court
verdict on his appeal against the death sentence. The former Gestapo
officer, condemned last December to be hanged for his role in the
Nazi extermination of Jews, goes before the five judges today.
* * * ,*
TOKYO-Communist Viet Cong forces in South Viet Nam claim
they have killed 1,863 government troops, wounded 981 and taken 635
others prisoner during a four-month period since January, the New
China News Agency said Sunday.
* * * *
MOSCOW-Premier Nikita Khrushchev conceded yesterday that
the United States won a share in space with the Soviet Union through
the orbital flight of Lt. Cmdr. Malcolm Scott Carpenter. "Now we are
not alone in the cosmos," he said. "Now the Americans (like the Rus-
sians) have put two men in space."~
Blue Chips
Take Beating
In Unloading
Dow Jones Losses
Steepest Since 1929
By The Associated Press
The Stock Market yesterday
suffered its sharpest loss since
Oct. 28, 1929.
Blue chips and "growth" stocks
were battered unmercifully as in-
vestors unloaded stocks from
coast to coast.
An estimated $19.5 billion dol-
lars was shorn from the quoted
value of stocks listed on the New
York Stock Exchange, based on
the fall in the Associated Press
Average.
Dow Jones Averages
The Dow Jones Industrial Aver-
age smashed through a hoped-for
support level at around 600, falling
34.95 to 576.93 - the steepest loss
in the Dow since the Oct. 28, 1929
date when the Average lost 38.3
on volume of 9,212,800 shares.
Yesterday's volume was even
heavier - 9.35 million shares, the
largest since July 21, 1933 when
9,572,000 shares were traded.
The ticker tape was one hour
and nine minutes late at the close,
the longest lag in the 32-year his-
tory of the high-speed ticker. Dur-
ing the '29 crash the ticker ran
at a slower pace and were late for
hours.
Highest Rated Issues
The havoc was terific among the
blue chips - the highest rated is-
sues.
American Telephone fell $11 to
$100.62, Du Pont $12.50 to $202.50,
International Business Machines
$37.50 to $361.
Selling snowballed amid calls for
margin - even though a 70 per
cent down payment is the legal
requirement now. Back in '29 it
was much lower.
Industrials, Rails
The Associated Press Average of
60 stocks toppled 13.40 to 211.20
with industrials down 17.50 rails
down 5.80, and utilities down 9.50,
all to new lows for the year. For
the AP Average, too, it was the
worst loss since Oct. 28, 1929.
Margin calls hit AT&T harder
than others because of a special
technicality allowing those with
"rights" to purchase the stock to
carry their actual stock purchases
on margin of only 25 per cent.
AT&T was the most heavily-trad-
ed issue, rolling up 282,800 shares.
Standard Oil (New Jersey) was
second most active, down $5 a
share at $46 on 148,200 shares.
Third was General Telephone &
Electronics, off $1.75 a share at
$19.25 on 108,800 shares.
The worst stock market break
since the 1929 crash sent prices
tumbling again on the Pacific
Coast exchange yesterday also.
Trading was active from the very
start of the session and at the
close was increasingly heavy.
The Dow Jones Industrial Aver-
age closed down 34.95-the great-
est decline in a single session since
October 28, 1929, when the in-
dustrial averages fell 38.33.
By KATHRYN VOGT
A new agreement for increased
supplies of Soviet arms and mili-
tary equipment for Indonesia, an-
nounced earlier this month, is the
most recent development in the
Russian foreign aid program.
The USSR has been supplying
Indonesia with jet bombers, tor-
pedo boats, and submarines re-
portedly, in a move to put pres-
sure on the Netherlands in the
dispute over Netherlands New
Guinea.
Western estimates have placed
Soviet military aid promises to In-
donesia thus far at more than $100
million in equipment.
Over $1 Billion
For each of the past two years,
Communist foreign aid to the free
world has exceeded $1 billion. The
Russian, Communist Chinese, and
Eastern European governments
have sent some 9,000 technicians
to more than twenty underdevel-
oped countries to administer these
economic and military aid funds.
Major projects supported by,
Russian aid in Asia include the
Aswan High Dam in Egypt and a
steel mill at Bhilai in central In-
dia. The Soviets have provided
$226 million in credits as well as
300 technicians and engineers for
the Aswan project. The Bhilai
steel mill, now producing one mil-
lion tons a year, was built at a
cost of $132 million to the Rus-
sians.
Since the inception of the for-
eign aid program in 1954, the
Communists have expended in
economic grants and credits $357
million in Cuba, $108 million in
Ghana, $654 million in Indonesia,
$624 million in Egypt, and $217
million in Afghanistan, as well as
an additional $2.3 billion in other
underdeveloped nations.
Although United States foreign
aid - over $4 billion in 1961 -
Senate A pproves
Public Works Bill
WASHINGTON (AP) - The Sen-
ate overrode determined Republi-
can opposition yesterday to pass
President John F. Kennedy's com-
promise $1.5-billion Public Works
Bill. The vote was 44*to 32. The
compromise version of the mea-
sure that was passed authorizes
$750 million of immediate spend-
ing on job-creating public works
projects.
( is several times greater than the
Communist outlay, the Soviets
have taken advantage of a very
effective credit system and oppor-
tunities for increased propaganda
for a remarkable political weapon.
This credit system provides. loans
to underdeveloped countries re-
payable in local currency at a low
interest rate, usually two or two
and one-half per cent.
The effectiveness of.the Soviet
foreign aid program partly lies in
the Russian "anti-imperialist"
reputation and claim of non-inter-
vention into the politics of recip-
ient nations. Communist aid is
also more attractive because it of-
fers loans, repayable in goods or
local currency, which upholds the
self-respect of the recipient more
than do charitable grants.
With the development of an ex-
tensive foreign aid program, how-
ever, a number of problems and
misgivings have arisen. Moscow
and the East European satellite
countries are short of capital to
supply their own needs.
Criticize Policy
Communist China has criticized
the aid policy - giving to free-
world nations rather than concen-
trating funds in Communist na-
tions or countries which are lean-
ing toward Communism.
Any substantial increase in aid
will demand reallocation of funds
now set aside for Soviet industrial
growth.
Officials See
Laotian Threat
VIENTIANE (Ao) - Diplomats
expressed fear yesterday that a
pro-Communist drive a g a i n
threatening Houei Sai in north-
west Laos may prompt Thailand to
demand direct intervention in the
Laotian civil war.
On the political front, the ab-
sence of Premier Prince Boun Oum
and Gen. Phoumi Nosavan, his De-
fense Minister, on an aid-seeking
mission to the Philippines, an-
noyed the United States at this
critical moment in the little king-
dom's military and political af-
fairs.
They left at a time when neu-
tralist Prince Souvanna Phouma
had returned to Laos to make a
new attempt at persuading them
to join in a coalition regime he
would head to take Laos out of
the cold war.
WEEK BEGINNING JUNE
MARIAN
MERCER
IN
LITTLE MARY SUNSHINE
NEW YORK S BRILLIANT MUSICAL SATIRE
LYDIA MENDELSSOHN EV'G AT 8:30/ 4.00 3.75 3.30 '2.80
THEATER MATS. (THURS. & SAT.) 2:30/ 2.60 1.65
I
ANN ARBOR DRAMA SEASON '62
WEEK BEGINNING JUNE 11
GLORIA
SWA NSON
IN
THE INKWELL
THE SMASH NEW COMEDY IS HERE
LYDIA MENDELSSOHN EV'G AT 8:30/ 4.00 3.75 3.30 2.80
THEATER MATS. (THURS. & SAT.) 2:30/ 2.60 1.65
ANN ABROR DRAMA SEASON '62 SEATS
NOW
GLORIA
GRAHAME
IN
THE COUNTRY GIRL
LYDIA MENDELSSOHN EV'G AT 8:30/ 4.00 3.75 3.30 2.80
THEATER MATS. (THURS. & SAT.) 2:30/ 2.60 1.65
DISC SHOP HIMF ENE
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12 noon, and 5:10 p.m.
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