WALL STREET BOOM
STOCK VALUES’ RAPID RISE SPECULATION—OR REVIVAL ? [BY CABLE —PBESS ASSN. —COPYBIGHT.] NEW YORK, February 13. A stock markets gaiu of no less than seven thousand million dollars in values, accompanied by a marked buoyance of the commodity markets of all kinds, and by reflections m London and Paris of an upward movement, has centred attention to-day upon the import of the credit expansion measure which is being expedited through Congress, passage virtually being assured next week. Shorn of all disguises, the movement on Thursday and to-day upon the stock market was purely speculative. It was not an investors' rush to buy securities. It was a spectacle of the “bears” being squeezed, and of their retracting precipitously. Nevertheless, the very air is full of a possible speedy return of prosperity. America, after her long and disastrous period of deflation, is caught by the elusive hope of a boom coming again. It is a remarkable phenomenon, which cannot be overlooked by the nations f abroad, who t may* whether America is not playing with fire.
Despite the Stock Exchange boom and the upward movement in other markets, the dollar has in the foreign exchange market turned exceptionally weak due to there being European fears that there is going to be currency inflation. The dollar on Exchange has been losing up to eleven points. The Belgian, French, Dutch and Swiss currencies have closed here at levels making it possible to make profitable withdrawals of gold from this market.
Strictly speaking, however, the American credit expansion scheme is not inflation. The forty per cent, gold ratio will continue against all the note issues. The Federal Reserve Bank, by being permitted to accept United States Government stocks and high grade industrial and commercial securities for rediscount, which has been impossible under the law hitherto, will be able to utilise at least one billion dollars of the “dead” gold which is now being held in its vaults. How far this new measure' is a scheme to help those banks which were caught with immense sums of badly depreciated stocks and bonds after the Wall Street crashes of 1929 and 1930, it is’ difficult to say. If there are any serious dangers that the new measure means inflation, then these lie in this latter possibility. , There is some feeling in banking circles that a. healthy expansion is impossible until the 1929 crash has been actually liquidated. The poor stocks bonds with which the banks were caught, as collateral holdings, are poor materials on which to launch a currency expansion.
The European x comments on the project are pessimistic, namely, that America is now heading for a departure from the gold standard. This is not considered seriously here, but the question asked is whether the States is trying to lift itself by its bootstraps. LONDON STOCK EXCHANGE. RUGBY, February 12. There was a decided change of sentiment on the Stock Exchange this morning, business being on a better scale and the general trend being in an upward direction. This is being attributed largely to encouraging advices from Wall Street and to a brighter prospect of an agreement on the reparations issue. Sterling opened at three dollars forty-four and a-half cents and at eighty-seven and a-half French francs.
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Greymouth Evening Star, 15 February 1932, Page 5
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542WALL STREET BOOM Greymouth Evening Star, 15 February 1932, Page 5
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