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STRENGTH OF AMERICAN CAPITALISM 327

in the Chase Economic Bulletin, the organ of the Chase National Bank, has pointed out this very important contributory element in the maintainance of American "prosperity."

"The total volume of profits from capital appreciation which the last few years have brought forth, has been very great. Part of these profits have been re-invested, but a very considerable part has undoubtedly been spent in current consumption, increasing the volume of consumer demand substantially above what it would be if securities and real estate ceased to rise" (June 4, 1928). "Consumer demand has been swollen on a great scale by profits in stocks and real estate which have accrued with the speculative developments in these fields. The Federal Treasury reports in 1927 that almost 11 per cent of the income reported for taxation in the year represented either profits in stocks, bonds, and real estate, or capital net gains on assets held over two years. This percentage represents only the case of realized profits on transactions actually completed. In addition, we know very well that the successful speculator, who has large paper profits, has a tendency to increase his expenditures through drawing on his balance with the brokers, when the balance greatly exceeds margin requirements." Brokers' loans "have increased to offset these withdrawals, and thus in part represent consumers' expenditures, including trips to Europe and automobiles!"5

We have seen previously that the stock market boom alleviated to a degree the adverse effects which the unmitigated use of all the available credit would have had if used in commercial transactions. We see now that the speculative boom provided American capitalism with an important source of consumer purchasing power- not consuming purchasing power of the masses, but purchasing power of the bourgeoisie. The Guaranty Survey in the issue of February 25, 1929, which we already quoted, after pointing out that American "prosperity" could
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5. This is demonstrated especially in the income tax returns for 1928 which have just been made available. Profits taken in the stock market and in the sale of capital assets other than stocks and bonds, such as real estate, totaled $4,786,512,771 in 1928 as compared with $2,894,581,973 in 1927. It is significant to note that the increase in aggregate net income of individuals is approximately equal to the increase in amount of profits taken in the stock market and in the sale of capital assets other than stocks and bonds. The returns would seem to indicate the increases in individual income from profits on the sale of securities and capital assets were not confined to the higher income levels but extended down into the ranks of the petty bourgeoisie. (N.Y. Times. Feb. 3, 1930).