34 The Stock Market Crash—dAnd After

Linking of Commercial and Investment Banks
Mr. H. Parker Willis, editor of the New York
Journal of Commerce, ascribes to the big commercial
 banks, which had organized speculative pools
in the form of investment companies, a causal relation
 to the crash. I am informed by a country
banker in Connecticut that there was a tendency
among small banks to copy the big banks in the organization
 of these investment pools which helped
swell the wave of speculation through the country.
The big banks, of course, used the funds of
their stockholders in speculation under intelligent
guidance; the little banks could have no such expert
guidance. But in either case there was abuse. The
commercial banks are supposed to conduct their
operations under close public regulation, but by
means of affiliated investment companies, joined as
closely as Siamese twins, they have been enabled to
act irresponsibly, as is evidenced by the fact that
these companies publish no statements and are held
to accounting by no public body.

Overvaluation of Common Stocks
That the prime cause was serious overvaluation
of common stocks that had previously been undervalued
 is the opinion of Mr. Carl Snyder, of the
Federal Reserve Bank of New York. In correspondence
 with me Mr. Snyder says, referring to
the war inflation of commodity prices:
“The long-sustained rise in the level of commodity