Image from page 63 of "Forecasting business conditions" (1922)
Authors: Gowin, Enoch Burton, 1883-
Publisher: New York, American business ass'n
Contributing Library: Cornell University Library
Digitizing Sponsor: MSN
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Figure 13: Stock Prices, Bond Prices, and New York Clearings Stocks are represented by average prices of the twenty-two issues most heavily tradedin during a given year. The make-up of this stock average thus varies as speculationshifts from certain issues to others. Bonds are represfcnted by twenty-two industrialissues, selected and averaged in the same way.
Text Appearing After Image:
M ■JM ^^^5^^ Figure 14: The Security Market Curve This curve includes three series—stock prices, bond prices, and New York bank clearings—in its make-up. In preparing it, the statistical methods already described have beenemployed. On account of the way constructed, this curve reflects conditions in the se-curity market very sensitively. The Money Market, and Its Statistical Indices Almost all business and security transactions are carried on by meansof credit. Credit has come to be, in fact, the life blood of commerce. Thecirculation of credit is directed by banks, in part by granting or refusingloans in favor of one customer or business purpose as opposed to another,but more generally, and effectively, through raising or lowering interestrates. CONSTRUCTING THE INDEX 41 In determining when to raise or lower interest rates, and how much,bankers consider carefully, needless to say, the amount of their reserve,the ratio of loans to deposits, and similar items upon which a banks p
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