224 The Stock Market Crash—And After 
New Problems Due to Discounting of Gains 
He draws the conclusion that there were sound 
business reasons for the rise in securities, but that 
the discounting of expected business gains gave rise 
to a new set of problems which resulted in the secu- 
rity markets going forward too fast. Mr. Kent sum- 
marizes as follows: 
“We find that sound business growth was at the 
bottom of the normal rise in the price of securities, 
that politics as exercised in the capital-gain tax pre- 
vented sales of securities which would have acted to 
hold the prices within bounds, that uncertainties 
caused by political blocs in Congress changed the 
forward-looking national psychology into one of 
uncertainty, that new securities were created and is- 
sued more rapidly than the public could absorb, and 
that their intrusion in brokers’ loans and other se- 
curity loans was not intelligently understood; that 
certain of these forces worked to create high prices 
for securities and others to undermine such prices 
after they had been attained.” 
Mr. Kent has taken an important view of the 
growth of brokers’ loans. But he fails to make clear 
that these loans do not necessarily represent real 
money or added drafts on the national income. To 
a large extent they are simply “indices of suspended 
titles.” To show this a friend who has given it 
special study supplies an example: 
Assume first that “A” owns one share of New 
York Central stock which cost him $65; that “B”