Causes of the Panic

41

13th to establish such losses, with the intent later
of buying back the same securities or securities of
the same class. So the capital gains tax operated
both to bring on the crash and then to prevent the
recovery of prices following the panic.

Excessive Credits

Craig B. Hazlewood, President of the American
Bankers’ Association, in his address before that
body, October 1, 1929, maintained that the market
values of securities on the New York Stock Exchange
had increased too heavily “after allowing for
increases in the number of units listed.” Total
values, he said, increased from sixty and one-half billion
 dollars January 1, 1925, to one hundred and
twenty-four billion dollars on July 1, 1929. Mr.
Hazlewood named as a blamable cause the increased
volume of credit allowances by the bankers of the
country which had been employed in carrying stocks
to those higher levels. These allowances, he said,
amounted to “too large a portion of the available
credit of the country.”
In considering increase in listed values, it is proper
to recall the $12,000,000,000 of sterling bonds listed
in the spring of 1928 which is included in this total.
Only a few millions of these bonds were actually
distributed in this country.
Doubtless it is true that the increase of credit
allowances was too great. This is because the
enlarged credit structure was altogether too susceptible
 to bear raids—not so much because it boosted