GAMBLING WITH STOCKS

Hokitika Guardian, 18 July 1931, Page 8

GAMBLING WITH STOCKS

AMERICANS’ BITTER LESSON

RECOVERY WILL BK SLOW

ADVERTISING MAN’S CONCLUSION

The influence of the stock market on the American people and its tendency jto produce a nation of gamblers was referred to recently by Mr David Cody, director of the Charles Haines Advertising Agency, Limited, Wellington, who returned to New Zealand by the Monowai from Vancouver after a four months’ business visit to the United 'States and Canada. Mr Cody visited every principal city in both countries. He visited 170 commercial houses and was thus afforded ample opportunity of studying present-day business conditions and methods, as well as various phases of American life. “Conditions in the United States and in Canada also were undoubtedly difficult, although the sister Dominion was not so badly off as the States,” said Mr Cody. “Business men had hopes that things would improve long Before this, but they have now realised that recovery will lie gradual and slow, and jit will be from two to three y-.ars before any substantial improvement is recorded. Despite the desires of President Hoover and prominent industrial leaders to maintain wages, presumably to sustain consumers’ .capacity to buy goods on the Customs scale, I found that wages ‘cuts’ of 10 per cent, and more' were quite general, and that by 'far the, majority of business concerns had had to reduce staffs. »

“Unemployment is a serious .problem ill the United States, the same as it is in New Zealand,” added Mr Cody. “The latest estimate of the country’s unemployed was in the vicinity of 6,000,000. No Governmental attempt has been made to cope with the situation despite agitation from a section of the Press and from various others quarters. “Unquestionably one oi Hie contributing causes to the depressed state of affairs in Aimrica was the crash of the stock market in 1929. By October, 1929, the United States—a mat : on which had previously applied itself with almost unparalleled concentration to the cultivation of business at home and abroadhad become a nation of gamblers. Money apparently was to be made more easily and more quickly on the stock market than through the recognised medium of work. Aided by the diabolical system of margin-buying, which we can be thankful does not prevail in Yew Zealand, people in every walk oi life were able to buy -stocks far in excess of their immediate capacity to pay. A stenographer could purchase a 1000 dollars’ worth of stock and deposit maybe only a hundred dollars, leaving n 90 per j cent, liability hanging over her head. ' The obvious result was that when the stock ‘crash’ came, not only were losses immediate and stupendous, but they will have to be spread over as many years as are necessary to make up the leeway. Th'is disaster alone must naturally have greatly minimised the consumer’s ability to purchase. Experts estimated that losses on the Stock Exchange in the United States following the 1929 crisis were not less than ,£8,000,000,000. If one were to spread 'that loss, over the 25,000,000 households in America, it would be equivalent to £320 per household. * » . “Of course, the stock market crisis was only one of a large number ol factors contributing to the depression (in the case of U,5.A.,” said Mr Cody, “but my observations will indicate the extent of the influence' of the stock market on the American people. Even to-day the fluctuations of prices on the New York Stock Exchange have far too great a psychological as well as actual effect on the public., People have come to associate high, stock prices with prosperity, apd advances of only a few points in leading stocks will produce a wave of optimism which will give' way a week, later to a wave of pessimism when those self-same' stocks slip back again.V The Amer can public still has its mind on the stock market. , "The recent Hoover proposal for a war debt moratorium produced a tide of opt'rirsm in U.S.A. that sent rnariv stocks prices, up as high as 25 per cent., concluded Mr Cody, “but such a u d - spread trading in stocks ensued that most prices have somewhat subsided, though.-they are still appreciably higher than they were before the moratorium proposal.”