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Rh able omen. This composure did not continue throughout the year. Prices of outstanding bonds declined steadily; and in Sept. and Oct. an extremely violent movement of liquidation swept over the Stock Exchange, carrying prices of the best investment stocks down to a level lower than that of the panic of 1907. This extreme demoralization of the Stock Exchange did not result from money tension lending rates were compara- tively low throughout the year nor was it primarily a conse- quence of decreased earnings or of a weakened economic position on the part of the investing public. It was due to war taxation , legislation, and the drawing up of estimates as to how much would have to be raised by taxes and by loans. In 1918 there was a recovery, with prices generally higher on the whole.

In 1919 there was a boom in stock markets which will rank in American finance as one of its greatest historical episodes. The pegging of sterling exchange at $4.76! was removed on March 20 1919, and the other Allied exchanges were released a few days later. But the depreciation of European currencies which followed did not stop European purchases. These increased in volume, and the demand acted as a powerful stimulant on the stock market. There began a speculation in stocks of an un- precedented description. Thousands of industrial corporations were endowed by the war with enormous reserves of cash which war taxation had barely skimmed. The atmosphere of Wall Street was charged with the wildest rumours of " melon splitting," increased dividends, and Liberty Bond distributions. Prices advanced by 10 and 12 points in a day, and on some days 20- and 3o-point rises were not uncommon. Amidst this furious activity the million-share day ceased to be exceptional. In May the Stock Exchange was obliged to close on Saturdays in order to give the staffs an opportunity of overtaking arrears of work. When, in the latter part of June 1919, the first reaction occurred, there had been 46 consecutive million-share days. The rise in the value of money was said to be the chief factor which brought the boom to an end. By the middle of Oct. the Federal Reserve Bank of New York found its proportion of reserve to liabilities reduced below the minimum prescribed by law. Call money rose to 30% in Nov., the highest figure since 1907. A coal strike, the heavy fall in the exchanges, and the failure of the Senate to ratify the Peace Treaty, were depressing factors.

Stocks reached the peak of the rise in Nov. 1919. On that occasion the figure was only fractionally below the high -water mark of the war period, viz. 101-51, which marked the culmina- tion of what was described in the picturesque language of Wall Street as the " war-brides " boom of 1916. Then followed the bursting of the distended balloon. In about three weeks the average price of 50 stocks dropped more than 15 points to 85. The collapse remained in the minds of members for a long time afterwards. Despite occasional rallies, prices dropped steadily, and it was manifest that the World War boom was definitely over. November 1920 was also a month of devastating declines, which produced conditions resembling a panic. The index figure of the 50 stocks fell to 68-85, against 94-07 in April.

In the first n months of 1920 transactions in stocks on the New York Stock Exchange snowed a considerable reduction in volume from those of the corresponding period in 1919 210,220,428 shares, against 296,822,497. The par value of the shares dealt in was $17,983,885,575, or about nine billions of dollars less than the year before. Bond transactions, on the other hand, were much larger, increasing from $2,473,588,050 to 82,495,821,750 for Government bonds, from $258,442,500 to $310,567,400 for state and municipals, and from $522,315,000 to $693,527,000 for those of private corporations.

Arbitrage dealings were restored between New York and London at the beginning of Dec., but there was little business of this character. The depreciated paper pound killed the market for American securities in London. Throughout 1920 a growing interest in foreign securities was shown by American investors, and a comparatively large number of foreign Government and municipal obligations were sold in the American security markets. Competition of domestic issues, however, was fierce, and no lit lie difficulty was experienced in inducing the American public

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to take up foreign bonds. This had a serious restricting influence on America's export trade, and owing to the inability of Europe to pay for her purchases by exports she had to depend largely on credit given by the United States. In 1921 the depression in trade became very marked, but later a recovery set in.

Paris. Down to 1911 Paris had been a powerful and per- sistent supporter of the world's money markets, because of the saving habits of the French people, but in the three years prior to the outbreak of war a change had developed. This was par- ticularly noticeable after the Balkan War of 1912 had disturbed the European bourses. France had begun early in 1914 to bring money home to meet her own needs. Excessive issues of short- term notes, the disturbances in Mexico, and the collapse of the St. Louis & San Francisco railway in 1913, caused a feeling of revulsion as regards American securities, and Paris, in the year prior to the outbreak of war, was steadily selling them. On the other hand, Germany was increasing her creditor position in the world's markets. The Paris bourse witnessed the end in 1911 of a bull campaign which had lasted for several years, and 1912 saw a persistent depression in gilt-edged stocks. The price of French 3% Rentes, which touched 105 in 1898, when Mr. Cochery dreamed of conversion, fell to 875 in 1912, and with the outbreak of the Balkan War there was a panic.

The bourse was reopened after the events of Sept. 1914, on Dec. 7, and thereafter there was a steady rise in prices. After 15 months of war the first war loan was raised. As a necessary pre- liminary the settlement of the long-deferred end of July 1914 bourse account was begun on Sept. 30 1915, and was carried through with comparative ease. The open account had been very largely reduced by gradual sales, and the Bank of France came to the rescue of both Parquet and Coulisse, lending the former about 150 and the latter 35 million francs. The plan of settlement adopted differed considerably from the London Stock Exchange scheme 5% interest was charged from July 1914, to Sept. 1915; holders were asked to pay their differences in full, or were given the option of paying 10% of their differences at the first settlement, and 10% on each subsequent monthly settlement until the balance was wiped off; 6% was fixed as the rate on all unpaid differences; from the make-up prices of the end-Sept, account differences had to be settled at each settlement as be- fore the war. After the first post-bellum settlement contangoes averaged about 45 per cent. All new business was for cash, deal- ing on account being confined to clearing up accounts which existed before Aug. i 1914.

Berlin. Before the war the Berlin bourse was subject to frequent attacks of nerves. On Sept. 4 1911 the bourse had what was described as its worst day of the year. It was alarmed by the foreign political situation. Nevertheless business was very active in that year, and the stamp duty on bourse transactions produced 75,000 more than in 1910. In 1912 the bourse was again much disturbed by political fears, and rumours of war caused heavy selling from time to time. Excessive speculation in the earlier months of 1912 caused the Government Commissary of the bourse to issue a public warning. On Oct. i of that year came news of the Balkan mobilization, and a panic seized the market. Settlement stocks in one day lost, on an average, 20 points. The total loss in values in that year was estimated at about 150,000,- ooo. On the outbreak of war, Germany imposed more stringent conditions upon the Stock Exchange business than any other country. The open market for stocks and shares was abolished, and the publication of prices was strictly forbidden. Towards the end of 1915, cautious efforts were made, with some success, to liquidate bourse transactions which had remained in suspense since the outbreak of war. In 1916 there was much speculation on the German bourses, and this was given as a sufficient reason for continuing the veto upon the publication of quotations. But at the end of that year, lists of prices were issued for the first time since July 1914, for the purpose of taxation assessments. The quotations showed many large gains in industrial securities, due, of course, to the enormous profits made by German compa- nies. In 1916 the dividends of 10 explosives manufacturing con- cerns averaged 22 %, a group of metal companies paid out 20%