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Sweden, Switzerland and Holland, caused a steady stream of liquidation in London from the Continent, which grew in volume when, later in the year, a heavy fall occurred in wholesale com- modity prices. The fall in commodities forced traders to realize securities. The pressure to obtain money to finance production and distribution and pay taxes caused persistent liquidation in the gilt-edged market, and British Government securities fell to a level giving a return of well over 6 % per annum. In Dec. 1920 the leading stocks, in some cases, touched the lowest points on record. The 5 % War Loan fell to 81 &, Victory Bonds to 70^, Funding Loan to 65 A, and Consols to 43 f. The Bankers' Maga- zine calculations of the prices of 381 representative securities in Dec. 1920 showed a fall in values of no less than 315,000,000, the largest loss ever recorded in one year. British and Indian funds fell in value in 1920 by 11-9%, foreign Government stocks by 18-8%, home railway stocks by 17-3%, foreign Government stocks by 23-5 per cent. The decline in commercial and in- dustrial securities was much greater, the percentage being 40-9. The severity of this reaction was, of course, due to the sudden collapse of the six-year-old boom in trade. Iron and steel shares suffered a depreciation of 33-7%, shipping securities of 21-7%, and S. African mining shares of 39-2 per cent. The losses of the investor were so severe that he lost all interest in speculative stocks and turned his attention to gilt-edged stocks. This brought about a steady recovery in the latter in the first half of 1921. The issue of foreign Government loans in London, which was suspended on the outbreak of war, was renewed in 1921, when a loan to the Sao Paulo Government was issued, followed by an issue of Norwegian Government bonds.

American and Foreign Stock Exchanges. The shock of the World War caused stock markets all over the world to shiver and collapse more or less. By custom London was a market to which every bourse abroad turned for help when there was any pressure, and for a period of at least a fortnight after the middle of July 1914 the London market was called upon to absorb a flood of selling orders from every mart in Europe where securities were dealt in. While the European bourses had to all intents and purposes suspended business by the beginning of the week ended Aug. i, there was a fairly free market for securities in London in the great majority of international securities down to the middle of the week. The news of the coming war affected the European bourses early in July. On the I3th of that month the Vienna market was described as having become quite de- moralized by the fear of war. The Berlin bourse reflected this nervousness because Germany was Austro-Hungary's chief lender, Government and municipal loans of the Habsburg Empire being held in Germany to the extent, it was estimated, of over 200,000,000. On Monday July 27, the day before the declara- tion of war by Austria, the panic in Vienna was such that the bourse was ordered to be closed for three days. Subsequent events showed it was destined to be closed for an indefinite period. The Brussels market followed the lead of Vienna, ceasing business on July 27, and the Paris coulisse, or outside unofficial market, .also suspended operations on that day. On Tuesday July 28, before the declaration of war by Austria had become known, dealings became very difficult. On July 29 all account dealings in Berlin were suspended, transactions being confined to cash bargains. The Amsterdam and St. Petersburg bourses were entirely closed that day, while on Thursday all markets suspended business except London, Berlin, Paris and New York, but the settlement in Paris fixed for July 31 was postponed. Business on the Berlin bourse was ordered to be suspended on the following day (July 31), though the bourse was kept open. The Paris market remained open throughout that day, July 31, but only six quotations were available out of some sixty stocks and shares usually quoted in reports from that centre. The Paris bourse was the only stock-market to keep open its doors after Thursday July 30. But this bourse is under the direct control of the Government, and the authority of the Goverment was no doubt responsible for the bourse being kept open. Down to Sept. 2 a few quotations were forthcoming from Paris, but on that day the bourse was shut until further notice owing to the

approach of the Germans to the French capital. The New York Stock Exchange was open on Tuesday July 28, when the news of the declaration of war by Austria first became known, and it was called upon to withstand the first shock of that announce- ment. By the end of the day's session it was found that trans- actions for the first time that year (1914) had exceeded one million shares. On Tuesday July 28 the Toronto Stock Exchange was closed, after being open for 10 minutes, and business on the Montreal market ceased in the afternoon. On July 30 violent breaks in prices occurred on the New York Exchange, but there was at all times a market. The next day, however, the committee decided to follow the lead of London and to close the Exchange.

New York. In the latter part of 1912 there was a serious decline in American securities, owing to selling from Europe brought about by the Balkan War, but as soon as this unloading ceased the market was much unsettled by the decision of the Supreme Court of the United States ordering the dissolution of the Union Pacific-Southern Pacific merger. Down to the beginning of the World War New York had shown a tendency to develop more and more as a market for international securities, though very little was actually done to encourage foreign securi- ties to seek a market there. In the short and frantic period in the last few days of July 1914 bankers saw ordinary standards of value scattered to the winds and loans aggregating $2,000,000,- ooo imperilled almost in a night. When the House was closed special committees were set up to undertake the stupendous task of straightening out the apparently hopeless tangle of con- tracts outstanding when operations were suspended.

The New York Stock Exchange tentatively opened its doors again on Nov. 28 1914, for trading in bonds only. As the ex- perience was encouraging, the committee decided to reopen the House for regular trading on Dec. 13. Minimum prices had been fixed by the committee on Oct. 13, and trading in unlisted securities was resumed on the following day. The minimum prices were revised from time to time and abolished on March 31 1915, owing to a rise in quotations having rendered minima no longer necessary. Then began the most remarkable era in the history of the Exchange. In point of feverish activity and wild fluctuations in prices, the year 1915 was then without precedent. Million-share days, sensational advances, and equally sensational declines, were common occurrences. Price move- ments were very erratic. The most conspicuous feature of the enormous volume of trading was the participation by the outside public seldom if ever before witnessed on the New York Exchange. Under clique and pool manipulation, prices were whirled upward with startling rapidity. Stocks which led the advances were those of companies which, it was supposed, would benefit most largely from war orders. Throughout the year there was heavy buying of both stocks and bonds by investors and financial interests of the first rank. Many securities reacted from their highest levels before the close of the year, but others, on good business prospects, retained the greater part of their phenomenal rise. Even more remarkable was 1916. Activity was intense, and prices rose to exceptionally high figures. Every dollar security offered from Europe was eagerly snapped up.

The following year witnessed a reaction. The depreciation in the market value of American railway securities was estimated at $3,000,000,000 about one billion in bonds and two billions in shares. The principal causes of this great shrinkage in the market value of railway securities, in which about one-twelfth of the wealth of the United States was invested, were reported to be as follows:

(1) Enormous destruction of capital in the war, with un- precedented Government loans at rising rates of interest.

(2) The liquidation by Europe of about $1,700,000,000 of American railroad securities in payment for munitions of war.

(3) A rapid advance in the cost of railroad materials and labour, with no compensating advance in railroad rates, and fear on the part of investors that the Government would not promptly raise rates to maintain railroad property and credit.

When the U.S. Government declared war, the composure and strength of the Stock Exchange was an impressively favour-