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Five Things Which You Must Need to Know for to Speculate and Opine Upon the State of Finance: Special Google Archival Edition

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What you need to know (and what it means)!

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Today Google is debuting a news archive search that includes articles from as far back as the 1700s. The first thing we did was Google ourselves. The second thing we did was Google all the key words from today's top Five Things stories. Most of the search results are pay-per-view archives. However, Time Magazine does allow historical articles to be viewed for free. Does history repeat itself, or merely rhyme? See for yourself.

Minyanville's Five Things Which You Must Need to Know for to Speculate and Opine Upon the State of Finance:

Huzzah Minyan reader-ship and welcome to another day of Five Things Which You Must Need to Know for to Speculate and Opine Upon the State of Finance. While affecting this morning's column on the new lead-infused type-setting tabloid machinery freshly arrived by ship from the great machine-making industries of western France, we poured a potent potable for ourselves from the deerskin pouch held fast upon the underside of our desk, lit a fine Virginia cigar and settled in for a most portentous and mindful pate-melding session on the following five topics of the day - inflation, deflation, the proper role of the Federal Reserve, real estate boom or bust? and The Gout.


I. Fighting Fire With Fire - June 13, 1932

  • The Senate Banking & Currency Committee last week produced a currency-inflation substitute for the Goldsborough bill as passed by the House, according to Time Magazine.
  • Author of the substitute was Virginia's Carter Glass, who made public haste to belittle his own measure, deny its necessity and usefulness, the magazine reported.
  • Under the Goldsborough bill the Federal Reserve would be required to inflate commodity prices by a deflation of the value of the dollar.
  • Presumably this would be accomplished by an intensive form of U. S. security purchases such as the Federal Reserve has been using to pump credit into the country.
  • As the quantity of currency in circulation increased its value would decline and the prices of commodities would climb until they reached the 1926 level.
  • Senator Glass summarily rejected this scheme for what its sponsors call "controlled inflation" on the ground that it put autocratic powers in the hands of a small Washington group, the Federal Reserve Board.


II. Out, Out, Damn Deflation - Jan. 25, 1932

  • To inflate or not to inflate was no longer a question last week. The only question: Will inflation succeed?, Time Magazine reported.
  • If it succeeds the downward spiral of deflation will be definitely checked. If it fails, historians may well look back upon 1932 with a shudder. (Editor's note: They do.)
  • The first step in this grand deflation-fighting scheme was the creation of the Reconstruction Finance Corp. (RFC).
  • Congress will appropriate $500,000,000 from the Treasury as starting capital, whereupon the RFC will then move to raise $1.500,000,000 from the public by the sale of its bonds, debentures, short-term notes, all underwritten by the U.S. government.
  • To pave the way for this great flotation the Federal Reserve has already started pumping money out into the market to create the necessary buying power, Time reported.
  • With $2,000,000,000 in hand, R. F. C. will be ready to function as a colossal credit agency, Time said.
  • R. F. C. credit will be largely used as a bank crutch. It will, its friends hope, relieve the strong banks of the job of carrying the weak ones, thus freeing their liquid assets for more constructive purposes.
  • And at that, looking back, we had to laugh.


III. Federal Reserve Comes Under Scrutiny - Feb. 16, 1931

  • Planting itself at the halfway point of the Era of Change, a subcommittee of the Senate Banking & Currency Committee has been seriously taking stock of the Federal Reserve system and its implications, Time Magazine reported.
  • To test the strength and flexibility of the Federal Reserve system there were three major inflations during the decade:
    1) the boom in western farm land values followed by the long collapse of Agriculture;
    2) the rise and fall in Florida land;
    3) the boom of "Coolidge prosperity" followed by the stock crash and Depression.
  • Some of the questions to which Chairman and Virginia Senator Carter Glass sought answers:
    1) Why did 6,000 banks out of 30,000 fail in the U. S. in ten years?
    2) What did the Federal Reserve do to check 1929 stock speculation?
    3) What new laws might stop excessive stock speculation?
    4) What new powers does the Federal Reserve system need?
  • The following rings today with an eerie familiarity:
  • "Most impressive, most lucid, most constructive witness before the Committee was Owen D. Young, a director of the New York Federal Reserve Bank. Said he of the stock crash: "The low [rediscount] rates were continued too long. An active, firm and decisive policy of advancing rates should have been carried out in 1928. The Federal Reserve Bank of New York did not make its recommendations for rate increases early enough or advance the rates rapidly enough. I was quite as much to blame for that as anyone."


IV. The Coming Real Estate Boom - - May 25, 1936

  • Last week another $1 yellow pamphlet appeared called The Coming Boom in Real Estate by Roy Wenzlick, according to Time Magazine.
  • Roy Wenzlick's name carries weight with economists as well as realtors, Time said. In 1929 he went into his father's real-estate firm to start another research department. Finding that his real-estate studies had far more than local interest, he launched Real Estate Analysts, Inc. as an advisory service to banks, insurance companies, real-estate firms.
  • Wenzlick's boom is predicated upon studies of the U. S. real-estate cycle, which is -much longer than the typical business cycle, Time said.
  • A case history of real-estate activity in St. Louis since the Civil War shows only four great depressions: one in the 1870-5; one following a towering peak reached in 1890; one during the War after a 13-year decline; one starting in 1925. "Few men under 50 today have been in business long enough to have experienced more than one general real-estate boom," Mr. Wenzlick points said.
  • The same forces that brought on the last three great booms are at work today, and they are the same forces that are making for the much-publicized, long predicted building boom. At the bottom of all this boom talk is the prospect of a U. S. housing shortage. Time said.
  • If only Mr. Wenzlick could have foreseen the following chart, which appeared in the New York Times last week courtesy Robert Shiller. His enthusiasm for real estate may have been subdued (if only briefly) based upon the crash in real estate that would appear barely four years later.




V. He's Got The Gout - Nov. 27, 1939

  • Hobbling gingerly after his first bout of gout (podagra) in 18 months, British Prime Minister Neville Chamberlain presided over a Cabinet meeting, his left foot swathed in an enormous flannel boot, Time Magazine reported.
  • Chief cause of gout is imperfect elimination of uric acid, and attacks may be caused by heavy consumption of rich food, malt liquors, or by mental shock.
  • Uric acid retained in the bloodstream is likely to form chalky, stony deposits in the joints and in the cartilage of the ears. Frequently first to suffer is the joint of the big toe, then ankles, knees, hands and wrists. Common symptoms: cramps, inflammation, fever, headache, neuralgia, together with hot, itching feet (known to ancients as "the lisping of the gout"), Time reported.
  • "Once gouty always gouty" is an old medical maxim, yet doctors believe that clean living and plenty of outdoor exercise can reduce attacks to mere demonstrations in force.
  • Rare in the whiskey-drinking U. S., gout is most common in aley Britain and beery Germany.

Bottoms up to chase the gout.

No positions in stocks mentioned.

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