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 run- 
ning 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 bring- 
ing about the fall in prices, was the refusal of the 
Public Service Commission of the State of Massa- 
chusetts 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 relation- 
ship 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 Com- 
mission'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 over- 
extension on the part of borrowers, largely induced