PANIC AND CRASH

Hokitika Guardian, 23 November 1929, Page 8

PANIC AND CRASH

WAIil, STREET COLLATSE. 1 SAN FRANCISCO, October HO. Tlic remarkable era of avid public speculation in stocks which lias swept over the United States during the past live years came to a striking climax in the most terrifying stampede of selling ever experienced on the New York Stock Exchange and other leading security markets of America, a climax which had no equal in the annals of frenzied finance in bizarre United States. t Not since the war panic, which resulted in the closing of the Exchange for seventeen weeks in 1914, had Wall Street seen anything to approach such a dark and trying day, and never in financial history had security markets

been thrown into such a tumult. It appeared for a time' that the stock markets would be unable to face the situation and that trading would have to be suspended, but the leading exchanges saw the ordeal through, although a few floor traders collapsed and had to be aided from the trading floors. By early afternoon the situation became so grave that a hurried meeting of leading bankers was called at the offices of J. P. Morgan and Company and a reassuring statement issued from the conference by Thomas W. Lamont, one of the Morgan Partners, which resulted in finally checking the sickening drop of stock prices and saved the market from a complete impasse. „ Scores of important stocks tumbled from 15 to 70 dollars a share, paper values vanishing at the rate of tens of millions a minute until mid-afternoon, when the hankers’ statement prompted large operators who were reaping milions in selling the market short to cover their commitments, and prices of many issues rebounded substantially. AMAZING FIGURES.

Total sales on the Stock Exchange reached the amazing figure of 12,894,(380 shares, surpassed by more than 50 per cent the previous record of 8,246,760, reached on March 26 last. The ticker quotation service fell hours behind transactions, and traders who were unable to get quotations from the iloor through their brokers proceeded blindly, save at intervals when a few stock quotations were sent through the bond market tickers.

Standard dividend-paying stocks were thrown overboard along with the more speculative issues. ■ Stocks were sold for what they would bring in blocks from 1000 to 150,000 shares.

Traders on the floor of the Stock Exchange shrieked and howled their offers for desperate minutes before they found takers in a perfect bedlam and a babel of veilings. Such a roar arose from the Stock Exchange floor that it could be heard for blocks up and down Broad and Wall Streets. Speculators and sightseers poured into Wall Street in such volume that extra police Avere required to handle them. EVERYBODY HAD SPECULATED. Many have since endeavoured to analyse the situation and seek the cause of the stock market’s sensational downfall, and it is generally agreed that the long-sustained orgy of speculation carried many stocks to unwarranted dizzy heights. Quick profits had an intoxicating effect. Millions found a neAV way to get rich quickly and easily. The recipe Avas simplicity itself. “Buy stocks!” Early this year everybody was doing it—except Avise old veterans like AndreAv Mellon, Secretary of the U.S. Treasury, avlio urged the people to buy bonds rather than stocks. This advice Avas folloAved by many of the more conservative, but the gamblers ridiculed it. Prices recently began to develop irregularity and sellers began to outnumber buyers in many stocks. Then it became very hard to borrow money, for all rates thought nothing of' touching ten per cent. Brokers’ losses, meanwhile, were sky-rocketed by the billion, until they now stand at above 8,549,000,009 dollars. This Avas disheartening enough, and it was also a Avarning enough to those whose experience pro-dated the Avar.

On top of that, industry and business after a wonderfully sustained boom, broke out in weak spots. Steel orders fell off and automobile buying slackened; dear money checked building; unemployment reports began to circulate; railway traffic fell below a year ago. Until a few weeks ago it was as easy to issue millions and even billions of new securities as it was to boom any stock desired. But just as Germany overworked her printing presses and flooded the country and the world with paper currency, so American underwriters and promoters of all kinds overworked printing presses to feed new securities to the •public.- Investment trusts alone have floated about two billions this year in the United States. Indigestion set in, and offerings that were launched with a hurrah quickly began to sink. Investment houses became clogged with : unsaleable stuff. It was inevitable that the deflation and boom would come to ail end. but nobody dreamed it would come with such startling suddenness, bringing wreck and ruiii in its train.

SCENES OF DESOLATION. The crash resulted in thousands of American speculators—-gamblers, if vou like doing caught in a terrific jam in which they suffered, being wiped out through their insufficiently margined accounts with brokerage houses, who proceeded to sell them out when the customers were unable to increase me margin on stocks bold. The scenes in and around the brokerage houses were pathetic in the extreme when these speculum's realised they had been sold out. Suicides and failures were rumoured galore. Many of these investors had bought stocks and sold

them on small profits only to go deeper into the speculation on margin and their hanking accounts were depleted. Noav that they are wiped out they are compelled to resume their old-ti mo employment before they became stock gamblers. It has taken thousands out of the brokers premises and compelled them to return to employment, but it is expected that as soon as they save a hundred dollars they Avill re-entei the stock market Avith a similar result in store.

“Thqy always come back for more,” brokers will tell the inquirer. The collapse in stocks has afforded the country a real reminder that the much-advertised boom of America has been severely checked and it will he many a day before complete recovery is chronicled.