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cecause the road to world prosperity does not follow the up-anddown of booms and busts our nation, as the world’s financial center and biggest world trader, also must do its part in helping to curb world wide inflation. With the exception of Spain the currencies of all nations are now greatly inflated and that is reflected in stock prices on the major exchanges of the world. On our own New York Stock Exchange the level is the highest in the last 25 years, although the ratio of yield to cost is below the figure that existed just prior to the stock market crash of October 1929.
The 1929 stock boom was financed by bank loans. The present boom is financed by our’ own national policy of e£sy money. Referring to that policy, the Wall Street Journal recently said: “The suspicion is that someone has been made timid by a bite from the political bug. Politics requires ‘prosperity’. Prosperity requires ‘easy money.’ So the requirements of good management must yield a bit so as not to interfere with enough easy money to make prosperous politics.”
The number of, shares of stock borrowed by short sellers on the New York exchange is at an alltime high, indicating that a substantial group does not believe present stock prices rest upon a sound financial basis. Regardless of the effect it may have upon the November 2nd election, it is ther duty of the Treasury Department and the Federal Reserve Board carefully to appraise this situation and, if necessary, exercise their power to control credit to the end that we do not have another “Black Friday” on the exchange that would have world-wide repercussions.
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