Most Honorable Bull

For years, Japan's Zaibatsu clique ruled the nation's economy so tightly that most Japanese never dreamed of buying stocks. They felt that the game was the sort that only the Zaibatsu could win--and ordinary people who did chance it were regarded as harebrained gamblers. Many banks flatly prohibited loans to "known stock buyers." But at World War II's end, when U.S. occupation forces confiscated Japanese securities once worth $15 billion, they tried to stir up public interest in buying stocks, hoping to prevent the rise of any new dominant clique. With the help of occupation officials, the Japanese government sponsored pamphlets, lectures and movies to convince the common people that stocks were as honorable as a bank deposit.

The campaign not only succeeded, it set the Japanese buying stocks with such a frenzy that by last week Tokyo was in the midst of a ripsnorting bull market that made Wall Street's look like Elsie the Cow. In fact, Japan's bull was about as wild & woolly as the 1929 market in the U.S., including such trimmings as insiders' "pools" to run stocks up & down like a thermometer. Last week, while Wall Streeters were glad to trade 1,000,000 shares a day, the Japanese were trading an average of 8,000,000 daily, and had seen volume mount as high as 15 million shares, close to the U.S. peak in 1929. Many a favorite Japanese stock has doubled and tripled in a few months.

Peace, It's Wonderful. No Japanese stock is quite as wonderful, or as strange to U.S. eyes, as one called Peace Real Estate Co. Peace owns the Tokyo Stock Exchange building, and bases its rentals on the amount of trading done. Consequently, when the bull market stepped up trading, Peace's profits rose, and the rise in Peace's stock helped to create more trading, in a kind of endless circle. As a result, Peace has become as much a bellwether for Tokyo traders as General Motors for the U.S. Since January, it has risen from 160 yen (about 44-c-) to as high as 530 ($1.47).

Along with its bull, Japan has acquired another U.S. phenomenon, the investment trust, in which investors may buy part ownership in scores of companies. Japan now has seven such booming trusts, which charge only 2 1/2% in commission, and pay 7% interest. So far, they have sold $70 million worth of securities to workers, housewives, farmers, even labor unionists. (One of the biggest trusts, operated by Nikko Securities Co., reports good sales among prostitutes, who have large savings after seven years of occupation.)

Although some of Japan's big rises looked "manipulated," the market's buoyancy had other causes. While commodity prices soared after the war and the yen sank from a value of three to $1 to 360 to $1, occupation officials kept the listed "book values" of stocks at their low prewar levels. In 1950, "book values" were readjusted to meet the yen's inflation, and prices automatically shot up.

By Fan & by Abacus. The Tokyo Exchange's day-to-day operation would bug many a Wall Streeter's eyes. Every day some 1,500 traders pack into a trading area only 75 feet square. On busy days, few can find room to move; they transmit their buying & selling signals by waving their bamboo fans. Their method of recording transactions is painfully cumbersome. One of the biggest brokerage houses has only one battered Remington Rand machine, does most of its arithmetic at machine speed on primitive abacuses. Frequently, its brokers and clerks have to work to 2 and 3 a.m. to catch up with the day's transactions.

Japan's bull is beginning to catch the eye of U.S. investors. Exchange officials now estimate that Americans own about $1.4 million worth of Japanese stocks.* And last week the New York Curb Exchange hoped that by year's end a few better-grade Japanese stocks will be traded on its board.

* Dividends may be collected in dollars through an involved method of appointing a Japanese proxy to deposit them.

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