Evening star., 1932-05-10
SLUMP BLAME PUT
ON STOCK MARKET
NorbeCk, Speaking in Forum,
Says Manipulation Was
Major Cause.

0CA1dOO1 NOlOEIhs IlCPuDllIdIl. VI OOulL
Dakota, declared last night in an ad-
dress in the National Radio Forum, ar
ranged by The Star, and broadcast over
coast-to-coast network of the Ma
tional Broadcasting Co.
Speaking through WRC, Senator
Norbeck, head of the Senate Banking
Committee, which is investig ating Stock
Exchange activities, criticized opera
tionS in both securities and commodi-
ties markets, and declared for "dras-
tic revision" of practices. to prevent a
repetition Of existing conditions.
Congress does not want to interfere
with private business, but Congress may
have to do that very thing" he said.
Had Anticipated Trouble.
Asserting that more than 10000, 600
people, most of them heads of families
lost their savings when the boom burs:
in 1929" Senator Norbeck said that a
year and half prior to that time, the
Senate Banking Committee, anticipat-
ing trouble, recommended remedial
measures. but it was impossible to get
the approval of Congress"
There has been much division" in
the Banking Committee as to the ad-
visibility of proceeding with the pres
ent inquiry, which is directed into the
New York market. and on possible rem
edies also, the speaker said. but. he
added Il believe that a majority of the
committee are for a real investigation,
both of the bulls and the bears no
matter who gets hurt bv it, for they
believe in the end it will help restore
better condition throughout the
country"
The text of Senator Norbeck's ad-
dress is as follows:
Every man, woman and child in the
United States has been stung by the
bad practices of the Stock Exchange.
which have now taken the form of
short-selling and bear raiding The
Stock Exchange boom burst in the
fall of % couple of years ago. Prior
to that, there was steady rise and
wild speculation, such as was unknown
in all history of mankind. The specu-
lators were rigging the market by all
sorts of misleading reports and they
were making big profits. They were
bulls then; they are bears now. They
took large profits while the market was
rising; now they are taking large prof
its while the market is falling.
When they could think of nothing
else to sell, they would go out and sell
shares in themselves. Some of our
large bankers would sell shares in their
own banks and recommend them high
1y, at 10 times their actual value. Now
they are getting the shares back at
their own price. The great war cost us
20 billion dollars. The boys who saw
service will be old men before the war
debt is paid, but the loss to the Amer
ican public through the shrinkage Of
stocks and bonds is many times as large.
Why Did We Have the Stock Market
Boom?
Why did you buy stocks and bonds
on the market? You did it upon the
advice of those in whom you had con-
fidence. They kept going up. By that
time you began to feel certain the ad-
vice was good and more advice was
freely given. You got it from newspa-
psrs, you got it from magazines and
you got it from books. You got it from
promoters. and got it from professors
OF political economy. You got it from
everywhere. The country was full of
people who were willing to misrepresent
things to you in order that they might
line their own pockets. Some. of course,
were simply mistaken. But how easy
it is to give the wrong advice when
there is a gain connected with the ad-
vice.
Controlled Publicity.
ANY one who examines the tons of
literature dealing with investments
which appeared in books, magazines and
the daily press during the period be-
tween 1924 and 1929 cannot escape
the conclusion that there was a large
measure of direction given to the pub
licity Of speculative security markets
First, they played up common stocks
instead of bonds. Then, when the pub
lie had digested all the common stock
1t would take, they changed the tune
and started a systematic publicity cam
paign for investment trust shares. They
not only employed high-pressure pub
hcity writer's, but men Of learning. oc
cupying distinguished positions in East
ern universities, prepared articles which
curiouSly fitted well into the general
program of the stock promoters The
committee in investigating has already
found where one man, Mr.. Plummer
of New York, paid out over a quarter
of q million dollars for ballyhoo ar
ticles sent through the public press for
you to read and bet your money on.
The evidence was undisputed. Cancel
ed checks were brought before the
committee, and in some cases the &C
tual contracts for publicity work. This
sum he paid out mostly in one year
1924-before the boom had fairly
started Financial writers we're not
making any big profit in 1924. That is
before they bought Ford cars. Later
they had Bucks, Cadillacs. and Pack
ards. But the real display Of luxury
among them did not come until 1928
and '2e. The boom burst in the Fall
of '29.
Depression.
The present severe depression Is
largely the result of stock market oper-
ations. The cash flowed into New York
from every community. There had
never been such a Capitalization of
wealth as that which flowed so freely
into Wall Street in 1927, 1928 and 1929.
The results. however, are severe. Fam
lilies are destitute Suicides are COM
mon. Widows and orphans are the
harvest Should We stand idly by? 1t
Is admitted that more than 20 GOO 600
people. most Of them heads of families,
lost their savings when the boom
burst In 1929. Just think of it-2O,-
900, 900 families in the United States
were affected by these losses That IS
only one-third of the population OF this
country escaped the direct effect. and
they suffered indirectly. In the Spring
of 1929. a year and a half before the
boom burst in Wall Street, the Sen
ate Banking Committee recommended
remedial measures, but it was impos-
sible to get the approval Of Congress.
Even at that time stocks sold at fic-
titious values, but the public enjoyed
the situation Stocks were going up
from day to day, they said. Why dis
turo such prosperity as that? Tech
nicaI lawyers argued then, as now, that
Congress had no control over the stock
exchanges. We got no support All
we could do was to make report pre-
dieting disaster, and nobody wanted tc
read that Bad news was not wanted
Our committee implored members OF
the Federal Reserve Board to prevent
the use of that banking system for
speculation. Such a wild orgy might
have been prevented, but the board sal
with their hands folded and drew theiI
salaries.
The American people had forgotten
4baf ykaT ynfIct down