The Big Bull Pageant Swings Across the Stage
THE middle of 1927 saw a reaction in American business. On the domestic side the explanation is in large measure to be found in the fact that the Ford automobile establishment was going through a drastic reorganization. Model T was being discontinued and to produce new models and gear up the establishment for production of changing models meant Ford's withdrawal from production and sale from June, 1927 to December.1 On the foreign side increasing evidence was manifest of strain on the part of the Bank of England. This strain grew out of England's effort continued from 1921 on, to avert internal readjustment of prices and costs by an expansion of bank credit which England's gold reserves did not at all justify. Britain had gone through the prolonged coal strike of 1926 without readjustment through a forced expansion of bank credit, buying with sterling--that is to say with checks drawn on British banks--quantities of commodities, even of coal, from the Continent. This meant that the Continent had large deposits in London. The depositors were of course free to take these deposits in gold whenever they chose.
Uneasiness appeared in world finance bemuse of this over-extended position of England and a complication grew out of the fact that the Bank of France, in order to hold the price of the franc down, had to buy a heavy volume of sterling in Paris--sterling which it did not want.
Growth in American unemployment in the early part of 1927 showed itself in the heavy industries and appeared in the building trades, and some weakening was evident in agricultural prices. The red signals from agriculture had been winking trouble during all of Coolidge's years in the White House. Mr. Coolidge looked at the farm facts, and helped in the develo-____________________