FALSE RUMOUR.

Auckland Star, Volume LXIV, Issue 190, 14 August 1933, Page 7

FALSE RUMOUR.

Roosevelt's "Illness" Causes Wall Street Crash. ""LAMBS" SHORN AGAIN. (From Our Own Correspondent.) SAN FRANCISCO, July 25. One of the worst setbacks to America's national industrial recovery efforts was that which occurred in the smashing of Wall Street stocks' values when the jugglers of the nation's investment securities apparently engineered ono of the most cleverly planned crashes of recent years. V..-

Everything in the industrial firmament appeared to favour a continued increase in value of stocks, owing to reports of scores of industrial concerns showing that business had materially improved during the past three months. In fact, confidence had been restored throughout the country by reason of President Roosevelt's spectacular efforts. Someone —obviously a professional "bear" on Wall Street—started a false rumour in New York that President Roosevelt was seriously ill, suffering from double pneumonia, and a panic followed on Wall Street.

As might be expected, no one waited for confirmation of the wild rumour, and even when President Roosevelt declared he never felt better in his life, tho crash continued with even greater severity. . On the third day, in the abbreviated session on the Saturday, stocks were flung overboard for any price. Thousands of investors, working on a margin basis, were hopelessly submerged and they were sold out immediately by their brokers when unable to furnish further funds to back the depleted equities of their margin accounts. The values of their stocks had fallen, in many cases 50 to 75 per cent, in consequence of the raiding tactics of the professional "bears." It was a complete rout and another army of investors were ruined and forced out of the market. / James McMullin, a New York writer, watching the tricks of ' Wall Street, wrote: "The big speculators this week pulled some of the fanciest pool manoeuvres on the trade and trotted them out for a record. Every time-worn trick was brought out for the public's edification. Pool favourites were jiggled upward in a manner to make the amateur's mouth water, to the accompaniment of luscious rumours about miraculous earnings. And the amateurs bit in carload lots. Now the professionals in question sit back with their profits and enjoy being virtuous. What happens to the amateur's peace of mind and pocket book docs not worry them."

On the following Monday, after the third day of the crash, stocks staged a great recovery, thereby cnahling the "bulls" to add to their profits. It was the same story of the "lambs" being shorn and the "bulls" staging an after recovery for their own benefit.