LESS OPTIMISM

Ashburton Guardian, Volume 50, Issue 24, 8 November 1929, Page 5

LESS OPTIMISM

WALL STREET FINANCE. THE DEFLATION OF VALUES. EFFECT ON GENERAL BUSINESS. (United Press Association—Copyright.) (Received This Day, 11.10 a.m.) NEW YORK, November 7. While the panic deflation of the American stock markets throughout the last fortnight unquestionably left speculative factions prostrate, comfort was drawn from the fact that business generally was sound and apparently not seriously affected. There is insistence, moreover, that the eradication of the speculative "lunatic fringe' will probably be good for the country generally. Jt is admitted that the wiping out of so many billions of paper profits will undoubtedly limit luxury consumption, and the nation's luxury trades will show the effects, but fundamental commodities will not be injured. However, it is now clearly discernible that there is distinctly less optimism on this head. It is now frankly admitted that the nation s business is suffering, and will possibly suffer, very seriously. '

A RECOVERY RECORDED. GENERAL REVIEW OF POSITION. (Received This Day, 12,15 p.m.) NEW YORK, November 7. The stock market staged a recovery that meant millions of dollars to hardpressed traders throughout the United States, and which was of a more sweetening nature than yesterday's- decline. Prices were up from one to six points above the previous closing rates, which was more remarkable because during the first hour of trading the market continued yesterday's decline, dropping one to fifteen points. However, all along the list the early losses either were"overcome and a gain recorded, or at least wiped out. Trading was at a tremendous rate owing to heavy selling in the first hour. There was tremendous buying in the last two hours of the short session. Despite the final advance, accounts were destroyed in early trading and many who, a week ago.' thought they could weather the storm with adequate margins, were sold out. „, iii Some brokers thereafter declared that the greater part of necessitous selling has now been accomplished, and that the market is at present in a better technical position to respond to .mod news. Many other authorities, however, refuse to express an opinion vet regarding the market s future. Jt is no longer a question of only the fate of the speculative element. If it Is remembered that the daily declines since "Black Thursday" have in many important stocks been greater than on that clay, and that many consequential corporations have nearer lost the market'for their shares, it will at once be seen that the situation really invites no optimism. A more specific idea of .what is meant can be gained if one particular instance s cited? One of the largest and most mpcrtant cigar manufacturing firms in AmcV'iea, whose stock sold at 130 dropped to lour, and yesteulay a large block of the same was bold at lU To o rc'iterate, the situation is now avoW edly recognised as serious. Jhe cause of the collapse is, oi coins., as little known to-day as it was a fortnight ago, apart from recognised Shological factor's that always ylw a part in pricking a boom or anj kind But what is now more important is the attempt to understand the effect of the collapse. The best financia observers, notary ltober Bebson who. more than any one else predicted accurately the crash, warn that it is yet too eaily S understand the lull influence on business. They take comfort that unlike the 1920 panic, business is now not suffering from inventory inflation, but it is also pointed out that good inventories that to-day may seem like hand-to-mouth buying may to-morrow, if consumption decreases, appear woefully over large. . There is a definite element of uncertainty throughout tne 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, be continuing to decline or fluctuating so wildly.