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After the Smashup. In pursuing two admirable ends that businessmen might easily approve—price stability and increased investment—the Administration has thus managed to bring hostility and suspicion upon itself and to impair the confidence of the business community. That impairment was symbolized when the stock market plunge more than wiped out the Dow-Jones average's entire gain from the late "Kennedy bull market."
"If I were in Washington," says the University of Chicago's Lorie, "I would ponder the fact that the really steep decline of the stock market started at the time of the Kennedy-Blough battle. I would ponder that, because to a great extent our growth, our prosperity and our hopes of moving the country forward depend on the confidence of businessmen, large and small, and their expectations for the future. If those expectations are damaged, that could be much more serious than the stock market decline."
President Kennedy may come to see that confidence is the most valuable boon a President can confer upon the economy—far more valuable than the best-intentioned tinkerings. Failure to provide it could sabotage his economic programs, torpedo his campaign promise to "get this country moving again." And as a man who likes to read history books, Kennedy can hardly help recalling 1929 and its aftermath. The smashup of 1929, leading to the Great Depression, crushingly ended the rarely interrupted Republican dominance that began with Abraham Lincoln. For a proud Democratic President, it would be hard to imagine a fate more hideous than to become the Democratic version of Herbert Hoover.
*Old Joe, of course, would have said nothing of the sort, since he has a rather affectionate attitude toward bear markets. In 1929 he got out in time and sold short heavily, thereby making a killing. As for the great postwar bull market, Old Joe missed it: wanting to protect his millions from the danger of another 1929, he invested in real estate instead, made even more money than he ever made in the market. *Kennedy got valuable help from Inland Steel Co.'s Chairman Joseph Block, who at a critical moment bowed to Administration urgings and announced that Inland would not go along with the price increase announced by U.S. Steel. That broke the industry's ranks, forced steel companies that had raised prices to surrender. During a recent Block visit to the White House, the President asked him whether he thought U.S. Steel was "too big." After all, said Kennedy, U.S. Steel "set prices for the entire industry." Said Block: "I would remind you, sir, that quite recently a company 10% of the size of U.S. Steel set prices for the entire industry."