Causes of the Panic 
55 
through the bear raiding, it produced a vicious circle 
in which people were selling who wanted to buy. 
The “short selling” continued to hit the investor 
when he was down, until prices came to represent, 
not a lessened estimate of earnings at all, but an 
increased fear of individual insolvency. 
As this point was reached, the banks and brokers 
were protected by the action of the stock market 
on November 13th, in heading off possible bear raids 
by requiring all Stock Exchange members to report 
daily their “short” sales. Then the short selling 
stopped abruptly, prices rose and liquidation pro- 
ceeded in an orderly manner. 
This caused those buyers who had been awaiting 
their chance to recognize that the market had at 
last “touched bottom.” They jumped in and 
bought, thus causing prices once more to register, 
to some extent, the public’s estimate of future pros- 
bects of business. But this body of investors that 
took over the distress sales at the bottom consti- 
tutes a new public, not the old enthusiasts. These 
had in large measure been closed out. This new 
investing public lacks not only the old enthusiasm 
but also the old knowledge, although they are better 
controlled. They will be much more cautious than 
the holders who bid up the stock price level and 
will buy less on borrowed money. 
The resultant contraction of demand in the stock 
market may prevent prices for a long time from 
regaining their old height on the new plateau.