APPENDIX 
543 
brokers in another. They gravitate together because that makes a market, 
and markets make values certain. 
(IId) Conant in his “Wall Street and the Country” (pp. 92-93) 
asked the then hypothetical question, “Suppose for a moment that 
the stock markets of the world were closed, that it was no longer 
possible to learn what railways were paying dividends, what their 
stocks were worth, how industrial enterprises were faring—whether 
they were loaded up with surplus goods or had orders on hand. Sup- 
pose that the information afforded by public quotations on the stock 
and produce exchanges were wiped from the slate of human knowledge. 
How would the average man, how even would a man with the intelli- 
gence and foresight of a Pierpont Morgan, determine how new capital 
should be invested? He would have no guides except the most isolated 
facts gathered here and there at great trouble and expense. A greater 
misdirection of capital and energy would result than has been possible 
since the organization of modern economic machinery.” It is interest- 
ing to reflect that in large measure, just this situation resulted when 
the world’s stock exchanges closed at the outbreak of the war in 1914, 
and just the predicted chaos occurred. But in 1914 there was the 
further problem that it was not so much a question of knowing how 
to invest more, as knowing whether, under the circumstances, one 
reallv had anything to invest! 
(Ile) “There is a difference in the effect of inflation in one kind 
of business from that which obtains in another . . . It is specula- 
tion in land and speculation in inventories that I fear more than specu- 
lation on the Stock Exchange. Speculation on the Stock Exchange 
may be an evil, but it is an evil which is quickly corrected. In the 
event of a sharp decline in securities on the Stock Exchange various 
individuals who have been speculating in the hope of a rise, may 
lose money, actual money or paper profits; but the loss in the main 
is confined to those individuals. When, however, the volume of bank 
credit is extended to an excessive extent to those who are engaged 
in industry, leading to inflated inventories, you have a collapse of a 
large number of industrial concerns and resulting unemployment. 
“The situation is even worse if it happens in the case of agricul- 
tural lands. If agricultural lands reach a price which is not justified 
by current income, actual or prospective in the immediate future, the 
damage is ten-fold greater than it would be from a decline on the 
Stock Exchange, and much greater than in industry, because the 
farmer’s home is attached to his occupation, and often he cannot liqui- 
date, without breaking up his home, as well as his occupation. Thus 
vou have in the case of inflated farm-land values a long and painful