Evening star. [volume] (Washington, D.C.) 1854-1972, 1929-10-27
The Country's Business.

President Hoover's statement on the
business conditions of the country, Is
sued Friday night, was not explicitly
addressed to the question of the violent
downward movement Of the stock mar
ket, though it was Enthusiastically timed
to bear upon that situation. The
spasmodic fall in the prices OF securities,
marked on Thursday by the largest
tender of stocks for sale in the history
of the exchange, had brought about
a situation closely akin to panic. Yet,
save for those actually involved IN the
decline, those who had bought stocks
without paying for them, or who were
compelled to sacrifice them to obtain
cash for the satisfaction Of brokers or
the banks, in liquidation of their OBJ
LEGATIONS, there was little involvement
of the public. As far as the country
at large was concerned the panic might
have continued, If confined to Wall
street, indefinitely without causing any
real losses in intrinsic values.
But such q condition as that which
prevailed Thursday, clirnaxing the
trend Of several days, was unwholesome
and dangerous. 1t was possible that
the panic spirit which controlled the
Stock Exchange might spread into busi-
ness ranks, might AFFECT the confidence
of the buying public, might cause a
swift, spreading curtailment Of pur-
chases In all lines and thereby check
trade. It was therefore highly desir-
able that the President should by his
statement, which was in the briefest
terms an exact description Of the gen.
~Eal economic situation, reaSsure the
country on the score Of the soundness
q conditions.
IN his first sentence the President
stated the whole case: 1.-THE funda-
mental business of the country-that
is, the production and distribution Of
commodities on sound and pros
porous basis" That sentence bears ex-
animation, for the sake Of better con-
cept Of the relation between real busi-
ness and stock selling and buying. The
fundamental business Of the country
is the production and distribution of
commodities" If that business is good,
il 1t Is being conducted upon sound
lines, with consumption keeping up with
supply, and by the same token with
production keeping up with consump-
ton, then it matters little whether
the prices prevailing In the stock mar
ket are high or low. For the stocks
dealt in upon the exchanges are merely
tokens Of ownership. If and when
business is good, when production and
demand are normal, when distribution
is effective, those tokens are IN de-
nand. But they may be depressed in
price-though not in value-by artificial
means, by gambling methods or by the
effect Of mass apprehension. It is the
function of the Stock Exchange to fur
nish market wherein these intangibles
Of ownership in the country's business
may be bought and sold. 1t is the
misfortune Of the country that these
transactions are often marked by the
speculative spirit. When that spirit
dominates the Stock Exchange ceases
to be a true reflector Of the business
Of the country.
The Presidents calm reminder and
assurance that the country's funda-
mental business is sound served to make
clear the nature of the speculative fever
that had ragged to the point of panic.
It steadied the nerves of the people
It does not follow that the lesson
taught by this brief treatise on the
Nations economic condition win be
permanently learned. From time to
time it will be needed again, for the
public memory is short and its ability
to dif1erentiate between speculation and
sound trade is limited.