Speculation and Brokers’ Loans 231 
which were then far too low, not having yet been 
adjusted to the results of war-inflation. Through 
that inflation the dollar had lost a third of its pur- 
chasing power. But the public had not yet been con- 
vinced that the change was permanent and were loath 
to revalue stocks on the basis of permanently inflated 
dividends in terms of dollars. 
(3) These two contrasted rates, the abnormally 
low interest rates and the abnormally high stock 
yields, led to borrowings at 3 or 4 per cent to buy 
stocks yielding 7 or 8 per cent, thus initiating the bull 
movement. 
(4) The withdrawal of gold to Europe in 1927, 
consequent on the resumption there of the gold stand- 
ard and the later withdrawal of American bank funds 
from the stock market, failed to stop the movement 
because, by this time, corporations had acquired so 
prosperous a cash position as to supply the brokers’ 
loans themselves. 
(5) The net result was a rise in interest rates 
which reattracted gold from Europe and led to Euro- 
pean central banks raising their rates. 
(6) This may have helped precipitate the crash 
in London, and the drop on the Paris and Berlin 
Exchanges, which in turn, reénforced the grow- 
ing bearish pressure on the New York Stock 
Exchange. 
New York Banks Lend Aid 
During the market crisis the Reserve Bank at New 
York released credit to the member banks, which