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To: Ilaine who wrote (220)	4/26/2001 10:16:08 PM
From: JF Quinnelly	Read Replies (1) \| Respond to of 443

There's no indication that margin calls had much to do with the '29 market collapse. The much-repeated idea that "investors could put up only 10% margin" in that day is a lot of bunk. Margin terms were essentially the same then as they are now. The 10% margin rule applied only to a very small number of IPO issues, certainly not enough to wreck the market. What you had then is something similar to what we just experienced, a market bubble. And bubbles don't last. What made the Depression wasn't the stock market collapse, but rather the three waves of bank failures, in '30, '31, and '32, that followed the market crash. These bank failures were the cause of liquidity disappearing. 30% of the American money supply evaporated in those three years. Now that's a lack of liquidity.