U.S.A. PROSPERITY

Greymouth Evening Star, 8 November 1929, Page 9

U.S.A. PROSPERITY

BIG SLUMP COMING? (By Cable —Press Assn. —Copyright.) (Received November 8, 11.30 a.m.) NEW YORK, November 7. While the panic deflation of American stock markets throughout the past fortnight unquestionably left the 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 frenzy,” is probably good for the country generally. It is admitted that wiping out so many billions of paper profits will undoubtedly limit luxury consumption and the nation’s luxury trades would show the effects, but fundamental commodities would be uninjured. However, it is now clearly discern.able 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.

THE SITUATION REVIEWED (Reed. Nov. 8,2 p.m.), NEW YORK, November 7. The market staged a recovery that meant millions of dollars to hard-press-ed traders throughout the United States, and which was of more sweeping nature -than yesterday’s decline. Prices were up one to six points above the previous close, 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 early losses either were overcome and a gain recorded, or at least were wiped out. Trading was done 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, accounts were destroyed in the 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 necessitous selling had been accomplished and the market is at present in a better technical position to respond to the good news. Many other authorities, however, refuse to express an opinion yet regarding the market’s future. 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 conservative 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 important cigar manufacturing firms in. America, wliose stock sold at 130, dropped to four, and yesterday a large block of the same stock was sold 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 is now more important is. the attempt to understand the effect bf the collapse. The best financial observers notedly Mr. Robert 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 from inventory inflation, but it is also pointed out that good inventories that may to-day seem like hand-to-mouth buyers, may to-morrow, 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, be continuing to decline or fluctuating so mildly?”