Trade Seriously Hit

Sun (Auckland), Volume III, Issue 815, 8 November 1929, Page 9

Trade Seriously Hit

SEQUEL TO STOCK COLLAPSE * American Business Suffers POSITION RECOGNISED AS SERIOUS (United P.A.—By Telegraph — Copyright) Received 10.44 a.m. • NEW YORK, Thursday. THE market staged a recovery that meant millions of dollars to hard-pressed traders throughout the United States, and which was of a more sweeping nature than yesterday’s deeline. Prices were up from one to six points above the previous close, which was the more remarkable because, during the first hour of trading, the market continued yesterday’s decline,'dropping from one to 15 points.

However, all along the list the early losses either were overcome and a gain recorded or were at least wiped out. Trading was at a tremendous rate, due to heavy selling in the first hour and tremendous buying in the last two hours of the short session. Despite the final advance, hundreds of accounts were destroyed in early trading, and many who a week ago thought they could weather the storm with adequate margins were sold out. Some brokers thereafter declared that the greater part of the necessitous selling had now been accomplished, and the market was in a better technical position to respond to good news. Many other authorities, however, refuse to express an opinion yet regarding the market’s future. While the panic and deflation of the markets throughout the pa.st fortnight unquestionably left the speculative factions prostrate, comfort was drawn from the fact that business generally was sound and apparently not seriously affected. There was insistence, moreover, that the eradication of the speculative “lunatic fringe” would probably be good for the country generally. It was admitted that the wiping out of so many billions of dollars in paper profits would undoubtedly limit luxury consumption, and that the nation’s luxury trades would show effects; but fundamental commodities would not be injured. LESS OPTIMISM NOW . However, it is now clearly discernable that there is distinctly less optimism. It is now frankly admitted that the nation’s business is suffering, and will possible suffer very seriously. It is no longer a question only of the fate of the speculative element. If it is remembered that the daily

declines since the “Black Thursday” have in many important stocks been greater than on that day, and that many consequential corporations have nearly lost a market for their shares, it can at once be seen that the situation really invites no optimism. A more specific idea of what is me: -t can be gained if one partieular instance is cited. One of the largest and most prosperous cigar-manufac-turing firms in America, whose stock sold at 130 dollars, dropped to four dollars, and yesterday a large block of the same stock sold at 21 dollars at auction. , To reiterate, the situation is now avowedly recognised as serious. The cause of the collapse is, of course, as little known today as it was a fortnight ago, aside from the recognised psychological factors -that always play a part in pricking a boom of any kind; but what is now more important is the attempt to understand the effect of the collapse. EXPERTS’ WARNING The best financial observers, notedly Mr. Roger Babson, who more than anyone else predicted accurately the stock crash, warns that it is yet too early to understand the full influence it will have on business. They take comfort from the fact that,- unlike the 1920 panic, business is now not suffering from inventory inflation; but it is also pointed out that good inventories that may today seem like hand-to-mouth buying may tomorrow, if consumption decreases, appear woefully over large . There is a definite element of uncertainty throughout the body economic of America. Something of that feeling is graphically illustrated in the cry in the financial district, “Why should the United States Steel Corporation, the very backbone of American industry, like continuing to decline, or be fluctuating so wildly?”