SERIOUS EFFECTS.
AMERICAN BUSINESS.
Definite Uncertainty In Body
Economic.
SHAREMARKET PANICS
(United P.A.—Electric Telegraph—Copyright
(Received 10.30 a.m.) NEW YORK, November 7. While the panic of the deflation of the American stock markets throughout the past fortnight has unquestionably left speculative factions prostrate, comfort was drawn from the fact that business generally was sound and apparently not seriously affected. There Avas an 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 paper profits would undoubtedly limit luxury consumption and that the nation's luxury trades would show the effects, but the fundamental eommodies would be uninjured. However, it is now clearly discernible that there is distinctly less optimism on this head. It is now frankly conceded that the nation's business is suffering and will possibly 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 "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 meant can be gained if one particular instance is cited. One of the largest and most prosperous cigar manufacturing firms of America whose stock sold at 130 dropped to four, and yesterday a large block of the same sold at 2i at auction.
To reiterate the situation is now avowedly recognised as serious. The cause of the collapse is of course as little known to : day 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 1 is now more important is the attempt to understand the effect of the collapse.
The best financial observers, notably Mr. Roger Babson, who more than any one else predicted accurately the stock crash, warn that it is yet too early to understand its full influence on business.
They take comfort that, unlike the 1920 panic, business is now not suffering fro?u inventory inflation, but it is also pointed out that good inventories that may to-day seem like hand to mouth buying, may to-morrow, if consumption decreases, appear woefully overlarge. There is a definite element of uncertainty throughout the body economic of America. Something of that feeling is graphically illustrated in the cry iif the district: "Why' should the United States Steel Corporation, the very backbone of American industry, be continuing to decline or be fluctuating so wildly."
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Bibliographic details
Auckland Star, Issue 265, 8 November 1929, Page 7
Word Count
446SERIOUS EFFECTS. Auckland Star, Issue 265, 8 November 1929, Page 7
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