Causes of the Panic

43

brokers’ 10ans, laid its finger on another actuating
cause of the break in these words:
“Industries had been financing working capital
more and more through the issuance of securities,
and this has resulted in a slower growth of commercial
 bank loans and a more rapid growth of loans
against securities, together with a holding of idle
funds periodically by many industries.”
These idle funds naturally sought employment at
the high rates which the stock market afforded as a
consequence of the restrictive policy of the banks.
The resolution of the American Bankers’ Association
speaks of the resultant total of so-called brokers’
loans as a “spectacular figure, whereas it should be
scientific figure.” As a spectacular figure, this
reflected stock market fluctuations that were'unsound
and detrimental to the public good. The resolution
adds that it leads to ‘‘threats of financial legislation,
 which if carried out, might be even more
harmful.”

Were Investors Sold Out Rather Than Selling?
The Commercial and Financial Chronicle (of
November 9, 1929) takes issue with myself and
others who have believed that the stock market had
attained a permanently high plateau-—not, be it
understood, a permanently high peak—above all
previous plateaus of stock prices. “In the last
analysis,” the Chronicle said, “the break in the
market was due to the fact that stocks had been
carried to absurdly high levels.” Moreover, the