MONEY: Bankers in the Woodshed

All last week, U.S. financial markets staggered through a period of startling turbulence. On Wall Street, stock prices nosedived. The Dow Jones industrial average fell 40 points to 923, down 12% from the record high of 1052 in mid-January. Stock traders clearly shared the national anxiety about resurging inflation (see THE NATION). But investors had another major worry: rising interest rates, pointed up by an unusually sharp jump in the bank prime rate that even the redoubtable Arthur Burns, chairman of the Federal Reserve Board, could not immediately reverse.

Early in the week, seven big banks raised the prime by half...

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