COLLAPSE ON WALL STREET

New Zealand Herald, Volume LXVI, Issue 20402, 2 November 1929, Page 13

COLLAPSE ON WALL STREET

SEARCH FOE EXPLANATION. FEVER OF SPECULATION* PEOPLE LOSE 17HEIFI' HEADS. By Telegraph—Press Association—Copyright. NEW YORK, Oct. 31. Opinions regarding the initial incentive to the recent Wmll Street collapse differ, but it is agreed in practically all quarters that the basic causes were purely technical and psychological Thus it is asserted by some that the crash of the Hatry Brothers' interests in London was the first impulse toward the New York decline. They reason that the Hatry failure caused ilieavy selling of American securities) which paved the way for the general run, ;csot only because many stocks were thrown on the market, but also because loss of confidence became international in aspect. There are others, however, who assert that the " bear" elements: which had suffered severely for a long time past in the " bull " markets, took advantage of the first opportunity when what should have been only a, temporary reaction set in to send the list crashing. The fact remains, hoivevor, that neither the Hatry colEapse nor even the most strongly organised " bear" movement could have affected the mairket to such an extent had its technical position been strong. This wa.s net the case, however, for this brea,k emphasised the importance of th» fac't. that it :is not so much a question of ilhe libvel of the market that determines thei stability of the price structure, as it is a question of who owns the stocks on which probably lies the whole answer to the disastrous slump. Outsiders on the Meirftelt. It is admitted on all sides that for some time past an enormous number of people were dabbling in the market who had no right whatever to be there, and who had no substance with which to withstand any severe reverse.

During Wall Street's many prosperous days large numbers, even of simall traders, made considerable profits, after which the speculation fever grew and pii'ces in many individual instances rose to heights unjustified by current or expected earnings.

Thus the earlier stage of this decline, received the greatest iimpuka froni the liquidation of holders of securities whose margins had not been covered, or who were threatened by a possible mcrtr.se in the fall. After that the remainder of the story was the pure psychology of fear. The smallest traders were the first to become panic-stricken, tlheir uum'barii increasing in snowball fashion as (he word spread that the market was falling, in exactly the same manner as runs are caused occasionally on even Jioand banks. After the small ttradere had .. been cleared out the bigger and more (stable ones, who had watched thsiir departure with considerable satisfaction, began to taste the same medicine. They found that the feeling of anxiety had attacked even some of their own number, and the same process was repeated in exactly the same manner. Sales Ji.t Any Prtoi. First, several large holding were thrown on the market for anything they would bring, then enormous numbers of wealthy traders lost their heads, "throwing vast investmfints on the market, the selling being accompanied by as great excesses as were previously witnessed in the " bull " markets.

Moreover, many even of the " bear" element ultimately lost, tecauset they themselves never anticipated such a tremendous drop in values. It is now regarded in the best-infor t=.ed circles, however, that the bottom h?is been reached, that good. inve;;tmenlj? are obtainable at bargain prices, that <wnfid>snce is restored, and thai; the marked', is recovering after a necessary major operation.

STOCKS AGAIN USE. / EAGER RUSH TO BUY. LOSSES PARTLY REGAINED, (Received November 1, fi.S 8.m.) NEW YCffiK. Oct. 31. The stock market closed with another whirlwind finish, many issues furnishing spectacular rises. Ordei-s poured in from all sections of th* country for tin short three-hour session, Bind the. market opened at noon with a spectacular rush in buying. The' totai'l sales; were over 7,000,000 shares, with prices ill many instances up one to 40 points. Some had risen as I'ar as 75 points in the early trading, but mat inevitable profit-taking, then stairted upward again in a more orderly fasJiion. This leaders spurted near the close, which, helped the entire list upward. Scenes reminiscent cl the late "bear" drive was enacted on the floor of the Exchange. Brokers, fatigued after three days of heavy business, rushed afciomt to execute orders ranging fiom J:iO.OCO share!;, the confusion being heightened by the scurry of "shorts' 1 " to cover values, which increased by about £200,000,C0G, and eased off only a fractional amount >oI that sum. A message fronn Washington says that brokers' loaps in the New York Federal Reserve Bank district for the week emded Oet-ober 50 totalled £1.107,6f.i0,000, which is a decrease of £202i,200,0130 compared with the previous week.