The Guardian And Evening Star, with which is incorporated the West Coast Times. FRIDAY, FEBRUARY 21, 1930. THE AMERICAN CRASH.

Hokitika Guardian, 21 February 1930, Page 4

The Guardian And Evening Star, with which is incorporated the West Coast Times. FRIDAY, FE BRUARY 21, 1930. THE AMERICAN CRASH.

American publications referring to the late collapse of the stock market, said 1 it was a very spectacular and impresI sive affair. It was the all important event of the, hour, and all realised that widespread losses had resulted. It was a natural reflection that many business phyis might be altered and enterprise halted. Employment was expected to be affected, and trading lessened. A leading banking authority in New York thought there* was every reason to believe such apprehensions were much exaggerated. It was pointed out that whether prices were high or low, the stocks were owned for tne greater part in the country, and ' after all the real value consisted in w'hat the properties could earn from year to year. Market values were often forced values. Jn the course of the crash they became panic values, which was not a true value. The situation was an artificial one, and share values under the circumstances did not affect the country’s resources, while productive capacities could hardly be affected. Nevertheless, a shock was received which confused and disturbed the orderly course of business. It unsettled men’s intentions and plans, causing ' them to hesitate and wonder if conditions had changed and whether busi- ( ness was going ahead as before. The { important thing at such a time is to f reassure the public mind, and this 1 President Hoover undertook to do by 1 the conferences held in Washington ! and the organisation which has result- ' ed The idea was to bring together < r the leaders of the important indus- 1 tries and have them satisfy each other ' that conditions are sound and that o they can safely go ahead with their e plans and expenditures. Undoubtedly t the exchange of information and as- T surances, and the effect of the publicity i-‘ given to these conferences, were very o helpful. There is no need that expen- ii ditures lie undertaken for the mere h purpose of making work, but it is do II sirable that business shall go forward li as usual and that some organised effort v be made to overcome the uncertainty a which exists. It is a. well-known fact p that the volume of production and ti trade is subject to normal fluctuations, m due to incalculable influences which are pi beyond control. Industry is always is undergoing changes and sometimes the f'e industries are more nearly in balanced ai

relations than at other times. This is the principal factor in tiio. ready absorption of production which is the basis of general prosperity. Production and. distribution were at a very high rate in the last half of 1028 and firßt half of 1920, but in some important ines production evidently had been ivercrowded in r.valrv for the benefits of mass production 1 Goods cannot be piled up ahead of consumption demands without an enforced slowing down later, and evidences of this were to be seen before the collapse of the stock market Indeed ,there is reason .or thinking that they were more or a factor in the collapse than has been commonly reckoned, for they weakened the market’s support at a critical time The process of readjustment which became apparently four or live months ago was corrective and wholesome. The question is as to how much the trade reaction has been aggravated by what has happened in the stock market. President Hoover and the Secretary of the Treasury, Andrew Mellon, anounced that they did not regard the deflation of stock prices as an evidence of business weakness. There had been a reduction in the construction of dwellings and industrial buildings (but not in public works) during the past six months. This decline was due to til's '.high rates of interest brought about by the abnormal stock market speculation and the flow, of money into Wall Street. Now that the stock .speculation bubble bad burst, President Hoover announced that he favoured a great expansion of public works; and as the first great step in this programme he proposed ektelisive river improvements uitd clillalizatidti that will ultimately result in reduced costs of transporting grain, coal, etc. He also favoured enlarged programmes of municipal, county and state construction of pavements, rouds, water works, sewerage systems etc. Without doubt the president’s great prestige as an executive) engineer and political economist caused his recommendation to be adopted fi fSo there is assurance that 1930 will be the greatest year of public works construction in the history of America. The effect of the crash should thus pass rapidly and stock values return to a normal price, where they will remain no doubt till another get-rich quick wave sweeps over the country, for financial history of this nature will keep on repeating itself.