Remedies and Preventives of Panic 243
months to come, and application of necessary
remedies as indicated, saying:
“The result undoubtedly will be the reorganization
of a great many banks which have become overburdened
 with doubtful paper. This happened after the
panic of 1920, and has also happened in the case of
practically all preceding panics.”
Without attempting to prejudge this proposal, it
should be remembered that the panic of 1929 was
unlike all preceding panics. Under its unique conditions,
 the member banks were well out of debt to the
Federal Reserve banks. The banking system met the
demand for additional loans without disturbing
money market rates. Had they not met it, these
rates would have soared, as is usual in panics, when
men and institutions must borrow at any rate to preserve
 their solvency.

Proposal of an Artificial “Floor” of Minimum
Prices

A very constructive proposal by James H. Rand,
Jr., but unfortunately not acted upon, was that the
New York Stock Exchange establish an artificial
“floor” at the minimum of prices as of a given day
of the panic.
This expedient had already been employed at the
reopening of the stock exchange on the outbreak of
the World War in 1914, after the five months’ suspension
 of its activities. The application of this
measure is described by H. G. S. Noble, President of
the Exchange at that time, in his book, The New