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 1932 lows. The advance was at first restrained and hesitating, influenced by the uncertainties of government policy, but from early 1935 to early 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; prices fell 43 per cent. against 25 per cent. in London. The severity of the decline, which preceded the setback in industry, is difficult to account for without introducing the element of fear, and distrust of the government. Stock Exchange regulation. high margin requirements, discouragement of short-selling, the Capital Gains Tax which bears specially hard on short-term operations have all helped to create "thin" markets, incapable of resisting even a minor selling wave and in a nervous With a healthy stock situation, some measure of control over future production, continued industrial activity in Europe and a large unsatisfied demand in America it is difficult to believe that we are heading for a major depression. That country holds the answer to the immediate future. If she will pull herself together and speedily adjust her self-created difficulties the demand from that quarter alone will resuscitate the markets and banish the fears that have paralysed consumers and speculators alike.
Text read from the printed page and cleaned; old type leaves the occasional error.