When we turn to the New York Stock Exchange, we find that it has fully lived up to its mercurial reputation, "In contrast with the London Exchange, which managed an improvement of 100 per cent. in four and a half years, New York shares in the same period rose nearly 300 per cent, on their 1982 lows. The advance was at frst restrained and hesitating, influenced by the uncertainties of government policy, but from early 1935 47 to carly 1937 prices doubled themselves with no important reaction. At no time, however, was the market running ' ahead of reasonable expectations for, in fact, corporation profits were rising faster than security prices.
In a few months almost the entire gains of two years were wiped out; Drices fell 43 per cent. against 25 cent. in London. The severity of the decline, which preceded the setback in industry, is diMeult to account for without introducing the element of fear, and distrust of the government. Stock Exchange regul tion, high margin requirements, discouragement of short-selling, the Capital Gains Tax which bears spely hard or short-term operations have all helped to create "thin" markets, Incapable of resisting even a minor selling wave and in a nervous murker the effect is cumulative, each sharp drop preparing the ground ftw. for the next.
More Explanations Thinness alone, however, is no explanation of such a prolonged decline; the reasons must be more fundamental. American prosperity has been largely erected on the found: tion of lavish Federal spending, which was severely curtailed last year; and the pumping of cash into the hands fof the public in such forms as the *n Soldiers' Bonus, which could not be repeated. On this ephemeral base, which stimulated mainly the consuming side of industry, there could not be built up the essential demand for the permanent products of the heavy industries, so long as the security of capital enterprise was threatened by new and pending legislation.
What are the prospects for the current year? In the present slate of the world it is more than ever ditlcull to reach a confident view. but there are certain basle facts which should be. kept' in mind, Though locks have vison, and. will, rise further in the coming months as a rosull frst, of the expanded produetion evoked by the boom and second-1y, of the: subsequent falling-oft in industrial demand, they are not, in the aggregate umwiedly, nor at' all comparable with 1929." Moreover, isible" stocks do not completely reflect the true silwtion, Stocks in the hands of manufacturers are not, a yule, the subject of statistical Wwiry atid these, without question, ure falling: they ' always do on a dropping, market, contrast With 1929, Unless the situation deteriorates very greatly there scorns to be Nkelihood of a repetition of the vicious downward spiral which devel-pad in 1929/92, when the rigidity of fixed charges stich ax wages kept the cost of manufactured Koods high relatively to falling agricultural pro-duels and the disparity between the two dried up the effective demand ming countries for factory produels which led to the throwing, out of workers whose buying power farm products was, aired. "To-day the nan Of primary producing countries Is ernments everywhere have some degree of responsibility course of events, as The ering Copper, Tin, Rubber ete. are at last becoming, workable though the time-lag. Is technically insuperable and Auetuaions cannot be eradicated.
With 4 healthy stock situation, some measure of control over fulure reduction, continued industrial ae-
Uvity in Europe and a urge un satisfied demand in America itis liffult to believe that we are heading for a major depression. That country holds the answer to the im.
Text read from the printed page and cleaned; old type leaves the occasional error.