Greymouth Evening Star. AND BRUNNERTON ADVOCATE. FRIDAY, APRIL 30th., 1937. SLUMP ON ’CHANGE.

Greymouth Evening Star, 30 April 1937, Page 6

Greymouth Evening Star. AND BRUNNERTON ADVOCATE. FRIDAY, APRIL 30th., 1937. SLUMP ON ’CHANGE.

yiiE desire io sell on various Stock Exchanges in Europe and America demonstrates, once again, the inter-dependence of international finance, and the manner in which investors and speculators will rush in where they should hesitate to tread. For the most part, the losses reported of late will arouse little public sympathy, and the experience will help to bring quotations back to a more normal level. Stock Exchanges are mainly kept going by speculating activities, for the most part legitimate, booms being encouraged by “bulls” and slumps bv “bears.” The revival in. British

trade has been followed by huge capital issues, many of the offerings being over-subscribed within five minutes of the opening hour. As a eonsequenee, shares were quoted at a premium, the market estimate of the value of many concerns, being greater than the estimates of the vendors, who should have a better idea of what their

properties were worth. Trust investment company issues have also been numerous, and generally, the “bulls” have been on clover for some months.

A re-aetion was certain. Many who subscribed for shares had to borrow money to pay for these, their aim being to sell when quotations were sufficiently higher. This is familiar practice, and little happens until, the borrowed money has to be repaid, or the margins arranged with brokers have been exceeded. When “bears” get busy, and if their endeavours are not thwarted, quotations begin to fall, confidence and optimism dwindle, and‘there is a move to sell, which occasionally develops into a semipanic, as has been the case during the past week or two. Enormous sums are mentioned as “lost,” but to a great these values never existed except on paper. To pay 40/- for a 20/share does not necessarily increase the real value of the property concerned. Those avlio speculate on the Stock Exchange must be prepared for losses, as with all forms of gambling. Individual misfortune is not national disaster. There would be room for concern if the cause of the slump, on the Exchanges was an international crisis, such as the prospect of early war, or some disaster which involved seriously national finances or commodities. There is nothing like that in the present prospect. On the contrary, the outlook has not been so bright for some time. Newspapers eager to attack the Government are blaming Mr. Chamberlain, or Mr. Roosevelt, the one for his tax on profits and the other for his re- . minder that the gold-price may not remain at its present high , figure. Such criticism is undeserved, and will not have much support from those who count in the financial world. The market quotations will revive in due course, and speculation will be less rampant. Meanwhile, Britain’s t financial position is such that there is no cause for loss of coni fidence by the genuine investor, who should benefit by the clean-up that is taking place. There is plenty of money available where safety of capital is assured, and there is no reason to think that the repeated claims Britain has recovered from the economic depression, are not well-founded.