The Washington times., 1928-06-15
SPECULAT ION
DECLINE
SEEN
By RICHARD HATTON

y
two current subjects which seem tt
be occupying the minds Of econo
n1ists and commentators in the
United States. Col. leonard r
Ayres. vice president of the Cleve
land Trust Company. says in a bust
ness bulletin. issued yesterday by
his organization. that the two sub
jects are the outstanding develop
nlents in the business situation OF
the first half Of this year. He con
tinues: During the second half OF
1927 the Federal Reserve authorities
increased their holdings of Govern.
ment securities and reduced the re.
discount rates, with the object or
lowering the levels OF interest rates
In this country, so as to assist in the
redistribution abroad of our exces-
sive holdings 0f monetary gold.
'These moves were successful. for
gold exports shortly got under way.
and have continued ever since. 1t
now seems probable that gold ex-
ports would have begun shortly even
without any special stimulus An
excessive proportion OF the worlds
gold had come to this country in the
years since the war. chiefly because
our fiscal system was sound and
strong while the finances OF most OF
the other countries we're greatly
weakened as a result of the war. 1t
IS q law of economics that weak
money drives out sound. money, and
so while many foreign currencles
were deprecated, gold continued to
fiow here.
Return to Gold Standard
''In the past few years the coun-
tries of Europe have been return
ing to the gold standard, until now
nearly score have done so. Mean
while we have been purchasing Sc
curities from abroad in enormous
volume, but the foreigners who
sold them to US have been allowing
part of the proceeds of their sales
to remain in this country until their
own currency systems should be
solidly stabilized. That condition
has now been brought about. and
they are now withdrawing these
Accommodations in gold.
1.-THE presence here OF large
amounts of foreign credits, not
brought into existesce by any trade
or Industrial demand, largely ex.
plains the phenomenal activity OF
our security market during the past
three wears. and the additional. ease
OF credit caused by the Federal Re-
serve policy of 1927 accounts for
the additional burst of speculative
activity last autumn and winter, and
this spring.
Normal Economic Causes
''The. gold is now moving out
from normal economic causes, and
the Federal Reserve authorities have
substituted policy of tightening
credit conditions for one Of easing
them. The wave of exceptional
speculation still continues but the
economic forces which brought 1t
into being have been reversed. and
are now exerting increasing pres
sure against it. Fundamentally
this pressure must be considered
as natural rather than artificial.
The artificial condition was rather
that of the very low interest rates
to which we became accustomed
last. fall.
ssThe present prospects are that
short.tirne interest rates will re-
main relatively high, and that the
volume of speculation will decline
during the second half of the year.
A reduction in the market prices OF
over-buIled stocks is to be expected.
Bond prices are falling. and it Is
probable that their trend for the
wear as a whole will be a declining
one. The outlook is for poorer
prospects for speculation. and for
spotty and irregular. but neverthe-
less generally favorable. conditions
for business.
Vacation Funds
A humanitarian side of banking
is exemplified by the Mt. Vernon
Savings Bank through the mailing
to members of its Vacation Savings
Club OF checks totaling $51. 1887.
The Mt. Vernon maintains one or
the largest vacation savings clubs
in the city and the. amounts now
available for members insure added
vacation pleasures or provide neaE
beginning for permanent savings
account.
In connection with the Mt. Yer
mons thrift efforts, it is Of Interest
to record that the institution now
has some $4,000 in its School Saw
jngs Account. More than 81 900 was
deposited in this account from
June to s. Pointing to the value
of these school savings accounts
IN teaching thrift, officers of the
bank stated yesterday that less
than one-eighth OF the total sum
deposited by schooIchildren last year
had been withdrawn. The bank has
COOS schcolchildren deDositorS, Each
child is given a stamp folder and
makes deposit in an automatic teller
receiving stamp for the amount
deposited. When the folder con
tains 81 worth of stamps the amour.
is transferred to- a regular pank
account and bank book issued
Collections are made from the
schools each day.
Calls on ID. C. Friends
A. Elgy Waters, of Townsend
Scott Company. of Baltimore, spen
yesterday in Washington calling OF
friends in the financial district. Mr.
Waters. a leading figure in thu
financial life of the Monumental
City for many years, attended tn,
recent convention of the District o
Columbia Bankers Association a
Montauk Beach. In addition to hi
connection with the Townsend
Scott Company, Mr. Waters is pres
dent of the Cockeysvffle Nationa
Bank, and a world traveller of note
A quarterly dividend Of III pc
cent has been declared by the Cor
tinental Trust Company. The div
dend is payable June 80 to stock
holders of record June rs.
The usual extra dividend of pc