WALL STREET COLLAPSE

Otago Daily Times, Issue 20870, 9 November 1929, Page 13

WALL STREET COLLAPSE

THE SITUATION SERIOUS. BUSINESS SUFFERING. A NOTE OF PESSIMISM. (United Pres* Association.) (By Electric Telegraph—Copyright) NEW YORK, November 7. While the panicky deflation of the American stock markets throughout the past fortnight has unquestionably left the speculative factions prostrate, comfort was drawn from the fact that business generally was sound and apparently not seriously affected. There was insistence, moreover, that the eradication of the speculative “lunatic fringe” was probably good for the country generally. It was admitted that the wiping out of so many billions of paper profits would undoubtedly, limit luxury consumption, and the nation’s luxury trades would show the effects, but it was believed that the fundamental commodities would be Uninjured. However, it is now clearly discernible that there is distinctly less optimism on this head. It is frankly admitted that the nation’s business is suffering, and will possibly suffer very seriously.

NECESSITOUS SELLING.

GREATER PART ACCOMPLISHED.

NEW YORK, November 7.

The market staged a recovery that meant millions of dollars to hard-pressed traders throughout the United States. It was of a more sweeping nature than yesterday’s decline. Prices were np from one to six points above the previous close, which was more remarkable because during the first hour the trading market continued yesterday’s decline, dropping from one to fifteen points. However, all along the list the early losses were either overcome or a gain recorded.

The trading was 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 the necessitous selling had been accomplished, and that the market at present is in a better technical position to respond to 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 clement. If it is remembered that the dally declines since “ Black Thursday ” have in many important stocks . been greater than on that day, and that many well-known corporations have nearly lost the market for their shares, it can be onca 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, whose 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, apart from the recognised psychological factors that always play a part in, pricking- a boom of any kind, Bnt what is now more important. is .the atteinpt to understand the effect of the collapse. : The best financial observers—notably, Mr Robert Babson, who more than-anyone else predicted accurately the stock crash—state that !t is yet too early to understand the full influence on business. They take comport in the fact 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 buying may to-morrow, if consumption decreases, appear woefully large. There is a definite - element of uncertainty throughout the economic world nf 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 be’ fluctuating so wildly?”