CANADA FACES PANIC

Sun (Auckland), Volume III, Issue 887, 3 February 1930, Page 1

CANADA FACES PANIC

Arrested Stockbrokers Released FINANCIAL CRASH AVERTED Business Dominates Government United P .A.—B g Telegraph — Copyright. Reed. 10 a.m. VANCOUVER., Sunday. CANADA this week has watched an amazing' financial drama, in which a threatened wreck loomed so widespread. that the highest law officers of the Dominion were obliged to come to the rescue of persons in high places whom they had just attacked. In one forenoon five of the leading' brokerage houses ■were raided and 11 of the principals arrested.

Colonel William Price, AttorneyGeneral of Ontario, directed a battle against alleged dishonest “bucketing” brokers, who have scores of branches throughout the country. He closed them up and asked the Stock Exchange to expel the mining operator's, who last year alone handled more than £40,000,000 of the public’s money. For one day the Stock Exchanges operated without these brokers. Overnight, however, the Ontario Government feared a financial crash that would rock the Dominion, and early on Saturday it was announced that the accused brokers would be readmitted to the Exchange. The Attorney-General was forced to capitulate to a definite threat that with the accused traders p"ohibire<l from trading there would be a panic, and the unprotected stocks of thousands of small holders would J>e wiped out, and in the case of the criminal court charges against the brokers being finally not proven, these specu lators, large and small, would have good cause for legal redress against the Government of Ontario. Curiously enough, the Government of Manitoba also found itself in a desperate position, and protested violently against the Ontario Government's action in seizing the offices and bank accounts of the accused brok ers. Manitoba’s prosperity is entirely dependent upon a stabilised wheat price. Two of the leading brokers were carry ing millions of bushels of wheat on a margin in the Winnipeg market. Their bank account seizures occurred un a day when wheat had reached its lowest point of the season. Noon on Friday saw a situation where 10,000,000 bushels of wheat would have been dumped on the market within an hour. The Premier of Manitoba announced 'hat the resources of the entire Government would step into the market to stabilise the situation, for he feared a panic: that would have carried the price away under three shillings a bushel.

On Saturday morning the Ontario police released enough brokers’ money to bolster the wheat market, and the crisis passed with Liverpool

cables announcing a two cents advance overnight. The week finished with the Government leaders realising that some businesses are sometimes too big to be disciplined without far-reachins and unexpected results. “BULLS” ON MARKET WHEAT DEMAND IGNORED ALARMING PRICE DROP Reed. 9.5 a.m. NEW YORK, Sunday. The Chicago correspondent of the New York “Times” says the eight months’ “bullish” effort by speculators and the grain trade in general in the United States and Canada, to ignore the supply and demand In the world's wheat markets, lias collapsed in the last fortnight. Declines In all grains to the lowest level of the present season, without improving the demand, has resulted, and at the same time a distrustful feeling has been created among foreign buyers of wheat, who have been told by trade leaders, as well as by members of the Government Agricultural Board, that they would have to come to America for their supplies. They have ignored the predictions so far, and have bought leisurely on a declining market. They are in a position to dictate values rather than be dictated to. Wheat prices in Chicago have declined by about 10 cents for seven days continuously and are 45 to 48 cents below the high point reached late last July and early in August. The decline is the culmination of the effort, to unload on to foreigners at higher prices the large surplus of the crops of 1928 and 1929, which were held in the United States and Canada. There has been a reduction of about. 160,000,000 bushels in the Argentine and Australian crops, compared with the previous season. Argentina is estimated to have only 64,000,000 bushels for export from the present crop, of which 13,800,000 bushels have been shipped already.