Business: Business in 1958

IN 1958 the U.S. just missed the moon. But Wall Street’s Bull made it—and over—with ease.

Starting in January, stocks on the big board took off with a whoosh that by December sent the market up 37% and carried every average out into space. Coming in a time of recession, the market’s amazing moon shot baffled most of the experts. But it was no mystery to the investors whose buying sent it up. In 1958 they could plainly see for the first time that the U.S. was blessed with a new kind of economy, different from any ever seen on the face of the earth.

The new economy is not the fruit of revolution but of the rapid change of U.S. capitalism to meet the vast, growing needs of the population it serves so well. In the new economy many of the old classical rules of economics no longer apply; over the years the U.S. has made and learned new rules all its own. The test—and the proof that the U.S. had learned its lessons well—was the recession. It not only highlighted the changes in the economy, but proved beyond doubt that the U.S. could take a hard knock and come bouncing quickly back. In the new economy:

¶Consumers no longer tie their spending to fluctuations in the growth cycle. The U.S. is so wealthy that even in recession one-third of its income proved to be extra, “discretionary income,” above and beyond necessities, money that could be and was used to power continuing booms in industries that were once termed luxury.

¶Businessmen no longer run for the storm cellar at the inevitable williwaws of economic life, but continue to plan and expand for the long term.

¶Labor no longer faces drastic cuts in wage rates—and buying power—in times of recession. Equally important, the accelerating shift to the service industries from manufacturing has made overall employment more stable.

¶Government no longer feels bound to buy its way out of recession with tax cuts and many-billioned programs of every type. In the new economy, built-in stabilizers automatically operate to take up the slack, keep income, and thus consumption, at high levels.

For these reasons, the recession of 1958 was the least worrisome of the 25 economic downturns in U.S. history.

Investors’ Market. Better than anything else, Wall Street’s high-flying Bull symbolized the new economic power and stability of the U.S. Within twelve months the Dow-Jones industrials went up 137.48 points from 435.69 to a historic high of 573.17 in the closing weeks of 1958; utilities jumped 20.42 points; rails soared 58.72 points. There were still skeptics who had seen such high-flying stocks and heard such talk of the new prosperity before—in 1929. But in 1929 the market was founded on fantasy, frenzy —and credit. In 1958 the Bull’s flight to the moon was fueled almost entirely with cash, clear evidence of the investors’ confidence in the U.S.’s economic health.

Wall Street still has its speculators. But Merrill Lynch, Pierce, Fenner & Smith, in a survey of 300,000 big, little and medium-sized investors, discovered that the vast majority bought for long-term investment and had no intention of selling, despite the recession. Even American Telephone & Telegraph Co., that staid old lady of the utilities, is getting to be a growth stock.

Long-term investors pushed A.T.&T. up 20% in 1958 to hit 200 for the first time since 1931. The buying pressure got so great that last week A.T.&T. made more shares available. President Frederick R. Kappel announced a three-for-one split, first in the company’s history, thus in one swoop will add better than 140 million shares to the market. To top it off, the dividend was boosted 10%.

The rush to buy was so great that trading had to be suspended for 1½ hours. When it was resumed, A.T. & T. sold at $225 a share, up $23. Earlier in the year A.T. & T. had another profound effect on the market. In September, it decided to put $260 million of its pension fund into common stocks. It was a signal that to one of the most conservative investors in the nation, stocks were not only respectable but prudent investments.

The workman who once put aside a few dollars a week towards his retirement, now buys into the market through a mutual fund or the Stock Exchange’s Monthly Investment Plan. So does the middle-income white-collar worker who hopes to send his son through college, the matron who saves to give her daughter a bang-up wedding. In Atlanta Mrs. Sara Pfeiffer, a trim, energetic grandmother and freelance writer, has organized three investment clubs, is busy with a fourth. Says a Cleveland commercial artist: “This year I became a capitalist. I went into the market for the first time.”

In 1958 the U.S. had so many new capitalists that the number of stockholders passed the 10 million mark. Merrill Lynch alone is adding new accounts at the rate of 950 a week. Mutual funds are growing almost as fast. In 1940 there were only 68 mutual funds with $448 million in assets; today 149 funds hold $12.75 billion in assets, the great bulk of it stocks. Another $12 billion in stocks is held by other institutional buyers such as insurance companies and pension funds. Even such stiff-collared investment bankers as Lehman Bros. and Lazard Frères went into the fund business, unable to resist the clamor for shares. Lehman originally offered shares worth $37.5 million; demand was so great the issue was boosted to $198 million. Lazard also first thought of $37.5 million, sold $127.5 million.

The Great Shortage. Inevitably, the rush to buy—and the reluctance to sell—created a shortage of stocks in 1958. Though the number of shares on the exchange has increased 400% (to 5 billion) since 1929, the number of long-term investors has probably grown 20 times. The year saw the fourth highest turnover in history; yet turnover as a percentage of shares outstanding was lower than in 49 out of the past 58 years. To make matters tighter, the number of new shares coming on the market had been small. The tax advantages of debt financing are so attractive that Only $23.6 billion of the $107.4 billion in new corporate security offerings since World War II were stocks; all the rest were bonds.

No wonder the Bull could flick his tail at recession. The 1958 market kept climbing, not a bit disturbed by threats of war in Lebanon and Quemoy, and bad corporate news that showed a 30.5% drop in six-month earnings. The new investors were looking at other values. As steel dropped to 47.1% of capacity in April, Bethlehem Steel, the No. 2 producer, failed by 8¢ to make its 60¢ first-quarter dividend. But Bethlehem confidently paid the dividend, and the stock climbed 5⅛ points to 41¾ by midyear. The important discovery for long-term investors was that steel could make money even at surprisingly low operating rates; it was no longer at the mercy of feast-or-famine cycles.

The market also proved that the new economy is so big and so diverse that many industries once considered the driving forces can slow down without bringing a traffic jam throughout business. The tobacco companies, the supermarket chains, drug and electronics companies all had record or near-record years despite recession. Investors reacted by driving P. Lorillard up 175% to 89 at the high; General Foods went from 50¼ to 79½ Federated Department Stores from 30⅛ to 54¾ Pfizer, Merck. Schering, and Carter Products posted 68% to 114% gains. One spectacular performer riding a recession boom: Zenith Radio hit a high of 208½ for a 209% gain since spring.

At year’s end some Wall Street professionals worried that the Bull had overreached himself, that the market had gone too high too fast. A few years ago, a stock that was selling for 15 times its earnings was considered expensive. At year’s end the price-earnings ratio for industrials on Moody’s index stood at 21, and for many stocks it was much higher, e.g., IBM is selling at 47 times earnings. Viewed at current earnings, the market may indeed be too high, reflecting a hedge against more inflation as well as a hope of sharing in the growth of the economy. But it is not too high in the light of the earnings investors think they can expect. Nevertheless, some experts expect a pause or short drop for the Bull to catch his breath. The pessimists fear a major shakeout. They could be right only if the nation’s reading on its new economy is wrong. And in 1958 the economy’s reaction to recession earned it a well-deserved vote of confidence.

Time to Digest. In the sense that the drop was the fastest and deepest, the recession was the worst since World War II. The gross national product lost $19.8 billion in six months. It was also the most carefully reported, closely analyzed and best understood of the three postwar recessions. Everyone knew the basic causes: businessmen, expanding at fantastic rates ever since World War II, had to slow down; the economy needed time to sit back and digest all the new capacity. Plant expansion, roaring along at the rate of $37.8 billion in 1957, dropped to $29.6 billion in 1958. Businessmen who had been accumulating inventories at the rate of $2.2 billion annually decided they had too much on their shelves; they cut back drastically, almost $5.5 billion for the year.

The immediate reaction of many politicians and businessmen was to call for the classic remedies. They cried for tax cuts, a mammoth government make-work program, many more billions for old-age pensions and unemployment aid. All year long the Eisenhower Administration staunchly resisted temptations to buy its way out of recession, although it speeded up and enlarged present housing and social security programs as antirecession measures. It gave the economy’s carefully built-in stabilizers a chance to work and relied on the nation’s own basic good health to recover from the slump.

As manager of the nation’s money supply, the Federal Reserve Board operated its credit tools with a delicate touch, lowering member-bank discount rates and reserve requirements. But there was no wholesale flood of credit. In the new economy so many other financial institutions —insurance companies, finance companies, savings and loan associations—have grown up that the nation’s credit pool is increasingly independent of the FRB. Nor was Chairman William McChesney Martin Jr. in any tearing hurry to force feed the economy. Said Martin: “During a boom, waste and inefficiency creep in naturally. It’s hard not to believe that recession does a lot of business a lot of good.”

Cushions & Nudges. The important thing was not to let the slump in manufacturing spread. And there the economy’s built-in cushions proved their value in helping keep personal income ($353.3 billion) at record levels. As labor incomes slipped $6.2 billion by April, chiefly from the declines in autos. and thus in steel, payments from unemployment insurance, pensions, social security, etc.. automatically climbed $5.5 billion (to $26.1 billion annually) and took up the worst of the slack. Increasing federal, state and local outlays for needed schools, hospitals, dams and roads helped keep construction growing to a record $48.8 billion. The 1957 housing slump was turned around (1,170,000 new housing starts in 1958) with the aid of beefed-up FHA, VA and Fannie May programs. Good weather and fine crops gave farmers a 20% boost in income. Finally, the defense planners who had helped accelerate recession with an ill-timed economy wave in the summer of 1957 got back on the missile beam by mid-1958 with a $5.3 billion increase in the contract awards.

It all helped, but the new economy is too big for the Government to do more than nudge it along the road to recovery. Says Treasury Secretary Robert Anderson: “People should stop worrying about all the little things Government can do. There was a minimum of stimulation from the Administration. The basic resiliency showed up in business.”

Even at the worst of the recession, there was no overall pattern of woe. New England, with its troubled textile industry and heavy manufacturing, was sorely tried. Many of the Midwest’s one-industry towns had some rough months. In Peoria, Ill., where Caterpillar Tractor is not just a barometer of business but the whole weather bureau, 9,000 men were out of work until Cat worked off its big inventory of bulldozers and earth movers. But at the same time, South Dakota’s farmers were so thick in clover that tax receipts ran 10% higher and the department stores of Cedar Rapids, Iowa were 4.5% ahead of last year. In the South, where new industry was moving in 50% faster than last year, most of what was known about the recession was what the people read in the news dispatches from the North. Says Southern Co.’s President Harllee Branch Jr.: “We had just enough of a recession to be made aware that one could happen.”

The New Consumer. The greatest single force in keeping the recession local—and then turning it around—was the monied U.S. consumer, the same man who, as investor, sent Wall Street’s Bull to the moon. By old-fashioned doctrine, recession is a time when consumers cut down their spending. In 1958 the confident U.S. consumer continued to buy, and then some. He became the economic hero of the year—and demonstrated several other facets of the new economy.

While most of the indexes showed steep drops, retail sales never fell more than 5%, by year’s end were climbing to new records. The sometimes worried but rarely daunted consumer denied himself virtually nothing in a shopping list that included 5,200,000 new TV sets, 8,900,000 new radios, 1,100,000 new home freezers, 2,744,000 new automatic washing machines, uncounted new stoves, mixers, and toasters.

Saving was once something practiced by the well-to-do minority of the population —because only they could afford it. In the new economy, so many Americans are so well off that savings and loan accounts have grown to $46 billion, v. $10.9 billion ten years ago. Time deposits at mutual savings banks and in commercial banks, postal savings and savings bonds add up to another $160 billion or so—all money that can be spent. Even old folks, many of whom once lived on their children, now have a comfortable income from corporate, federal, state and local retirement funds totaling almost $75 billion.

The Status Symbols. Savings are only one factor in keeping consumer spending high. One of the big new things economists talk about is “discretionary income” —what Americans have left over after they pay taxes, feed, clothe, house and transport themselves and buy whatever else they consider necessities. In the new economy, the necessities themselves are so numerous that the consumer price index now contains 300 items (v. 200 in the 1930s). Nevertheless, the U.S. in 1958 spent only two-thirds of its total $311 billion disposable income on necessities. All the rest, a staggering $104 billion, was discretionary income to be spent as people chose. With the migration to higher income brackets that has put close to 50% of the taxpayers in the bracket above $5,000 annually, discretionary income is a constantly rising figure, will jump to $116.6 billion next year.

This income has caused a great change in what sociologists like to call the status symbols, the material possessions by which a family can show its success. Once it was usually a car—the bigger the better. But now, says McCann-Erickson’s President Marion Harper Jr.. “the status symbols are beginning to pile up six deep,” include boats, summer homes and swimming pools (53,000 built in 1958). They are the symbols of the new “reward” spending. As part of his reward for hard work, today’s U.S. consumer feels justified in buying luxuries that yesterday’s wage earner dared not even contemplate.

Rambling Rambler. The changing symbols of status showed up in new car sales. Detroit’s output tumbled 26.7% to only 4,250,000 cars for the year. Both Ford and Chrysler lost money in the first nine months (though Fords were selling so fast at year’s end that the company will end up in the black). Motorists found plenty of reasons not to buy, and some complained that 1958’s creations were too long, too low, too chromy, too powerful, too high-priced. A truer reason was that Detroit was slowed by its own excellence. Practically everybody who wanted a car already had a good one, or two—and they took a long time to wear out. With no pressing reason to buy, cars were postponable items—except as they offered something new in the way of status symbols.

The industry’s success story of 1958 was the fast rise of the small car, which provided transportation, economy and snob appeal all in one package. The buglike European autos, such as Volkswagens, MGs, Renaults and Fiats, buzzed off with 8% of the domestic market, better than double their 1957 record. But the man of the year in autos was American Motors President George Romney, who had staked the fate of his company on the small Rambler and won. As sales soared, he turned American Motors’ $11.8 million loss in 1957 into a $26 million 1958 profit, and at year’s end sales and profits were still climbing fast.

Some other 1958 symbols of plenty: $1.6 billion for jewelry, $280 million for furs, $20.1 billion on travel and $2.1 billion for that growing U.S. hobby, boating. If his fancy was tickled, the U.S. consumer could even be tempted into buying 30 million hula hoops.

Innovate & Profit. For the businessman with something truly different, new buying patterns promise fabulous profits. The sales magic in planned obsolescence has worn thin; consumers are increasingly wary of “new” models whose only visible changes are reshuffled buttons and knobs, especially if the old models still work. Today’s consumer demands something really different, and in 1958, industry responded by spending $10 billion on research and development in the hope of creating a benign circle of economic activity: the exciting demand for new products creates employment, which in turn results in more money for more workers to buy still more goods. “The more we get,” says Curtis C. Rogers of the Market Research Corp. of America, “the more we are willing to work to get still more.”

The fact that 15,121 trademarks were registered in 1958 was one measure of industry’s drive to innovate. Westinghouse is testing an ultrasonic dishwasher that knocks off dirt with sound waves, an electronic hostess cart that can be wheeled to any part of the house, a refrigerating system to make the old box obsolete by providing separate drawers for meat, dairy products, vegetables, each with its own temperature adjustment.

Even arms spending is bringing great benefits to consumers. In 1958 the commercial jet age was born out of the Air Force bombers. In fiscal 1959 the U.S. will spend an increasing amount, as much as $5 billion, on electronic controls and gadgets of all kinds for the new family of missiles and space probes. Out of this vast spending already have come miniature electronic brains and controls for machines, and a whole new family of electric civilian devices. Transistors and other semiconductors are as useful in pocket radios and TV sets as in missiles.

How eagerly the U.S. consumer greets an exciting new product was witnessed by Chicago’s Motorola Inc., one of the first to jump into the market for stereophonic phonographs in 1958. The company put on sale a portable stereo set priced at $159.95, hoped to sell 8,000 units by Christmas. Actual total: 72,000 sets. Next year Motorola will spend $12 million on advertising its products, and thinks that stereo, which can run to $5,000 a set, may turn into as big a bonanza as TV.

Luxury & Convenience. No one learned the lessons of innovation better than the nation’s butchers, bakers and grocerymen. People tend to think of food as a standard, largely static item. But in 1958’s new economy, nearly 50% of the products sold were not available in their present form at the end of World War II. By offering the consumer a constant parade of new ways to spend money on food, the industry has managed to keep the same 26% of the consumer’s dollar over the years. So successful was the campaign that in 1958 U.S. housewives boosted the national food budget 9% to an alltime-record $79 billion. “The U.S. woman,” says Lansing Shield, president of the 438-store Grand Union chain, “has exchanged her place by the stove for the driver’s seat of a car.” She loaded her shopping bag with such convenience items as instant coffee ($375 million in 1958) and frozen, precooked foods ($155 million). The trend is to ever bigger markets with ever more products to sell. This year Shield opened six stores of the future that stock 35,000 items, all sold at discount prices. All are well ahead of their break-even sales point in their very first year. Says Shield: “The typical supermarket sells 800 nonfood items, but why draw the line at 800? Why not offer the customer everything she uses regularly in her home? We will add items until the consumer tells us to stop.”

Wages v. Productivity. The shifts in consumer spending were rough on many industries. Led by the drop in autos, durable goods slipped 17.8% at the worst point of the recession. Unemployment, concentrated largely in manufacturing industries, reached a peak of 5,537,000 in June, was 7.6% of the work force in August. Paradoxically, hourly wages in manufacturing went up (2.9% to $2.13 per hour) and proved still another point about the new U.S. economy. Though businessmen were in the best bargaining position in years, they did not use the recession as a club over labor. Instead, they took the long view and often avoided cutting payrolls as sharply as the facts might have justified. They even granted pay increases on the bright hope for the future rather than on the dark facts of the moment. This did not mean that management suddenly grew soft; acting together for the first time, the auto industry was willing to take a strike rather than give in to what it called the United Auto Workers’ excessive demands for a 35¢-to-45¢ package increase. But when the walkout was settled, both management and union agreed that the contract was a fair one.

What encouraged businessmen most of all during the slide was the surprising jump in productivity. In 1957 manufacturing productivity rose hardly at all. In 1958 productivity jumped around 5% to 7%, and thus outran wage increases for the first time since 1955. Not only had companies mechanized and automated to cut down rising labor costs, but many a laborer, mindful of the rising jobless, had proved more worthy of his hire.

Service, Please. The new machines meant that many workers laid off during recession might not get their old jobs back. In November 1957 automakers turned out 579,000 cars with 637,000 production workers. Last November the work force was down to 490,000, but Detroit produced 500,000 cars and figured to increase that total to 590,000 units in December with the same number of workers.

But automation did not consign the laid-off worker to the ranks of the unemployed permanently. In the new economy, he must just do something else. A major effect of the recession was to accelerate the long-term trend from manufacturing to the service industries, where consumer spending was growing at the rate of $6 billion a year. Since the U.S. has more autos, planes and boats, more restaurants and hotels, more roads, toll gates and public conveniences of all kinds, it takes more and more workers to tend them. At the turn of the century manufacturing employed nearly 50% of all nonfarm workers. Today, the proportion is only 30%, and employment in the service industries is far more stable than in manufacturing. Says Economist Gabriel Hauge, onetime adviser to President Eisenhower and now chairman of Manufacturers Trust Co.’s finance committee: “The shift from manufacturing to services is comparable to the shift in the American economy in the 19th century from agriculture to manufacturing.”

On to 1959. At the end of 1958 the U.S. was well on its way out of recession. Gross national product was clipping along at $453 billion annually, a new record, and industrial production was back up to 142 on FRB’s index, only four points below the alltime peak. Where to in 1959? As usual, the forecasters see clearly for six months: a gradual, continuing recovery without explosive boom. Says Louis J. Paradiso, chief statistician for the Commerce Department: “1959 will be moderate. The graph will go back to saucer form. The momentum of the recovery will show a very good rate of increase in the first half, with the second half showing no acceleration.”

Gross national product will probably rise $10 billion in each of the first two quarters, then flatten out to end the year around $480 billion for a 6% increase. Inventories have already reached bottom, will slowly be rebuilt. Businessmen are once again increasing their outlays for plants. Forecast: up $1 billion to $31 billion. Says A.T. & T. President Kappel, who will add $2 billion to the $2.2 billion he laid out last year: “When the recession came along, we had to decide whether to trim capital expenditures as in past recessions. We felt sure that renewed growth was coming, so instead of cutting down drastically—which would only mean having to race the motor later to catch up—we went ahead and proceeded to build quite a lot of useful margin into our plant.”

As industry after industry picks up speed, industrial production will climb up to its prerecession peak. Items:

¶ Steel will average 79% of capacity in 1959, says Jones & Laughlin’s President Avery C. Adams. He figures a steady rise to 91% of capacity in the second quarter, total production of 115 million tons, “and J. & L. will do better than these rates.”

¶ Aluminum, which dropped 8% in 1958. will increase shipments by about 20% to 2,100,000 tons next year, says Alcoa Market Researcher E. M. Strauss Jr., who foresees expanding markets in the auto industry, containers and construction. ¶ Appliances will have a banner year, with sales up 5% to more than 15 million units, says President Judson Sayre of Borg-Warner’s Norge Division. The industry will sell 16% more automatic washers, 8.3% more clothes dryers, 3.6% more refrigerators.

¶ Electronics will do better still, says Motorola Executive Vice President Edward R. Taylor, who forecasts a 13% gain in TV sets, another 9% gain in radios. Biggest jump: the new stereophonic sets, which will climb from 750,000 units in ’58 to better than 3,000,000 next year.

The industry that could turn the economy’s slow growth into a gallop is autos, where the potential market is bigger than at any time since record 1955. What gives automen heart is the low level of consumer debt and the prospect of a big increase next year. One of the axioms of the new economics—and the exact opposite of the copybook maxims—is that rising consumer debt is a sign of prosperity, expanding in times of optimism, contracting in times of doubt. With recession in 1958, consumers paid off $1 billion in auto debts, the highest repayment since World War II. Now, with recovery, they should be in the mood to borrow for cars again. While predictions are for a 5,500,000-car year, automen think they may do a lot better. One hopeful sign at year’s end: cars were selling at a far faster clip than a year ago, when Detroit was already beginning to trim production to match falling sales.

Employment Up, Prices Down. A problem for 1959 that may take longer to solve is unemployment, which will probably stay at around 4,125,000 during the winter months, then start decreasing toward 2,500,000, which is considered about minimum unemployment. “We’ll pick them up all right,” says Commissioner of the Bureau of Labor Statistics Ewan Clague, “but it will take us most of 1959 to do it.” Part of the reason is industry’s rising productivity, which is expected to continue to rise smartly next year, and which in turn will hold down prices. Inflation showed up in almost every speech by leading economists in 1958, but not in prices. There was little doubt that rising costs, high demands, and big Government spending had woven some inflation permanently into the economy. The big question is: Can it be held in check, particularly since the budget will show another big deficit?

In the current Government fiscal year, the red ink will be about $12 billion; though President Eisenhower plans to present a balanced budget to Congress for the year beginning July 1, the outlook still is for a deficit of upwards of $3 billion. This may well be trimmed as Government income rises with business. Few economists believe that inflation can be ended, barring a depression, since a rising price level has been with mankind since the dawn of time, and is almost inevitable in a dynamic economy. The problem is to keep it within bounds—under a 1½% price rise per year. In 1958 prices did not rise even that much. The forecast is that they will remain stable in 1959.

Another question mark for 1959 is the state of the nation’s foreign trade. To the delight of foreign countries, the new economy’s huge purchases kept imports at record rates, though exports plummeted from a peak annual rate of $20.5 billion in 1957 to $16.6 billion the first half of 1958. Gold flowed out of the U.S. at such a rate that there was talk of a flight from the dollar. While exaggerated, the talk underlined the fact that foreign companies are engaged in a vast modernization program, which, with lower labor costs, will give them a double advantage on world markets. Warns Alfred C. Neal, president of the Committee for Economic Development: “For the past 30 years, the U.S. has been blessed in that we never had to worry about our balance of payments. But if this keeps up, we may lose important foreign markets which we vitally need.”

Go West and Up. None of the problems are so difficult that businessmen, with work, can not solve them. Looking ahead, the U.S. can thank its lucky stars for a technology that as yet knows no bounds, and for an economy growing enough to absorb its enormous production. Every businessman knows the long-term statistics: an exploding population, already past 175 million, that will grow to 190 million by 1965, and will probably surpass 200 million by the year 1970. By 1965, say economists, gross national product will hit a fantastic $600 billion, and beyond that they dare not hazard a guess.

The U.S. can already see the future in capsule form on its own West Coast. In 1958 the migration of 500,000 people to California alone was an economic jack that meant money in the bank, houses on the hill. Along the mist-shrouded shoreline of San Francisco, Retailer Levi Strauss is finishing a $1,000,000 face lifting, and Strauss executives have moved into their penthouse suites alongside the employees’ new cafeteria and sun roof; half a block away, the $10 million Crown Zellerbach building is getting a concrete coat for its 20-story steel skeleton; across the bay in Oakland, a $45 million Kaiser Center building reaches for the sky. Off the new freeways, snorting earth movers rip away the brown hills to continue the march of suburbia. Business activity in the Bay Area for the year broke all records; construction was up 17% to $633 million in the first ten months alone; and for the whole of California, personal income at $36.25 billion topped 1957’s record by a fat $1.1 billion.

No wonder Pacific Gas & Electric Chairman James B. Black could look around and say, “It would be difficult indeed not to be encouraged. We will have a population of 39 million for our Western region by 1975, some 14 million more than at present. There are only ten countries in the world with a greater number of people. Only six countries have a greater area, and possibly fewer still have greater natural resources. We still have far to go. But our industrial horizons are broader than much of the nation yet realizes.”

What Chairman Black said about the West could also be said of the entire U.S. The nation is only just beginning to understand its new economic strength. Some time in 1959 the U.S. will undoubtedly send a rocket to the moon. But when it gets there, the Bull may well be on his way to Venus.