Causes of the Panic
panic ensued. The reason, it seems to me, that
these groups, such as notably the automobile group,
were weak was because as early as last June it was
apparent that automobile buying was falling off and
that the automobile companies as a whole were running
 into overproduction. Similar weaknesses in
the building situation were apparent in the early
summer and it is such fundamentals as these which,
in my opinion, were the real reasons for the decline
in prices.”

Decision on Edison Company Stock-Split
An important factor which contributed to bringing
 about the fall in prices, was the refusal of the
Public Service Commission of the State of Massachusetts
 to permit the Edison Company of Boston
to split its stock. The statements made in connec
tion with this pointed to the high prices at which
public utility securities were selling and the relationship
 which existed between earnings and market
prices. Of course, the payment of stock dividends
on these somewhat inflated stocks did tend to add
to unhealthy speculation. The Public Service Commission's
 refusal to permit it further, discouraged
the holders of public utility stocks in venturing to
bid prices higher and so contributed to the break.

Tax on Capital Gains

The Federal law imposing a tax on capital gains
helped bring on the panic. This resulted from overextension
 on the part of borrowers, largely induced