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. 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