The Threat to Business 61

But the threat to business most feared, namely, the
twenty-six billion deflation in listed paper values,
so full of sound and fury, signifies little. It is now
more universally recognized that in the fall of paper
values there had been merely a transfer of wealth,
not a destruction of any physical wealth, even if there
were a lowered valuation.
This is because the crisis, unlike the 1920 crisis
was not a violent fall of an inflated commodity price
level. Business stoppage and unemployment could
hardly follow a stock panic, because such a case wipes
out profits and substitutes losses, and no concern can
afford long to run at a loss. But such a loss could
hardly follow a stock panic.
It is true that there was danger from the panic to
business in the huge transfer of security holdings
from one set of owners to another set from the
poorer to the richer, which might in some measure
deplete the purchasing power of consumers of the
middle class. But the slump in stock prices destroyed
no physical assets.
As stock prices gradually rose from the panic bottom
 it was found that, to a large extent, the crash
in prices had robbed thousands of Peters to pay a
very few Pauls. There were the same factories in
all the centers of industry producing the same line
of goods, with a difference, so far as could be observed,
 that there was now a new set of shareholders.
By the transfer there would be some dislocation in
demand for goods. The sanguine buyer of stocks
at the old high prices would no longer own the