Causes of the Panic

49

is substantially true of investment trust issues—
although the investment trusts withheld their purchases
 of stocks immediately before the panic, thus
contributing to the fall in prices.
But it is a fact, and an important one, that new
investment trust securities had been created and
issued more rapidly, at least, than these securities
could be fully substituted; many were not yet listed on
the Stock Exchange so as to become as readily negotiable
 as the securities they had displaced. By some
fatality the crash seemed to be exactly so timed that
many people with plenty of collateral could not use
it because it consisted temporarily of investment
trust certificates unlisted and non-liquid. That this
factor played a part was evidenced by the fact that
in the panic many investment trust securities which,
a few weeks before, were selling above their liquidation
 value, thus capitalizing the investment trust
management, came to sell below liquidation value;
that is, the constituent stocks held by these investment
 trusts were worth more than the titles to them
in the form of the trust’s certificates.

Gold Withdrawals
Yet another point is suggested by George E. Roberts,
 Vice President of the National City Bank, in
his address at the December, 1929, meeting of the
New York Academy of Political Science. Mr. Roberts
 notes that the export of half a billion of gold
during 1927 and 1928, while influencing the attitude
of the banks, “did not command the attention it