It may be a little presumptous of me to speak at this point(please accept my apologies if so), but it kinda looks like a failure occurred somewhere near the second fuse module from the top, and caused the two ungrounded legs to contact each other.
I recognize this panel as an FPE "SF" style fusible panel which I believe was marketed sometime in the early to mid 1960's. It could be equipped with either main lugs only, or a bolt-in main breaker. There were several plug-in (stab-in) fuse modules offered for use with the panel; four edison-base plug fuses, a combination of two plug fuses and a 2-pole 30amp cartridge fuse fullout, a module with two 2-pole 30amp pullouts, or a module with a single 2-pole 60amp pullout. I have one of these panels in my collection of vintage electrical equipment - I pulled it out today and looked at the construction of the 30amp pullouts...not much clearance between legs.
In this particular case, I wonder if the main breaker failed to open, and the situation attempted to"resolve itself" by burning off one of the legs in the meter can...?
Hope to hear from you, Dave.
[This message has been edited by mamills (edited 06-22-2002).]