Evening star. [volume] (Washington, D.C.) 1854-1972, 1929-02-14
LAWS HELD NO BAR
TOSTOCK GAMBLING.
Officials Here Do Not Believe
Legislation Would Solve
Problem.

With Congress in a determined mood
to investigate the possibility Of curb
ing stock speculation, prediction came
from high Official quarters of the Gov
eminent today that legislation would
not solve the problem.
No law could help the situation, IN
the opinion of high Federal executive,
who has made a close study of the
whole financial structure Of the country.
ANY legislation which would go far
enough to actually control trading III
,oc5s on the exchanges would do posi-
tive injury to legitimate business, IN his
opinion.
Whether this view will be reflected
in the answer which the Senate has
requested from the Federal Reserve
Beard was matter of lively conjecture.
The Senate adopted the Heflin resolu-
IN calling on the board for Sugges-
t!cns to prevent Legitimate and harm
full Speculations."
Proposed Changes Held Harmful.
Several methods for control of specu-
l2tion already had been worked out by
certain members of Congress, 1t was
harmed today, but had been found on
closer scrutiny to promise more harm
than good Whether they have been
entirely dropped is not known.
Legitimate investment in securities OF
the sound business enterprises of the
country it was pointed out, has good
es37ct on the construction and promo
ten of industry. Too much speculation,
it was admitted has bad effect. but it is
lie free-working. buying and selling on
t. Stock Exchange, in this official
opinion, gives legitimate value to prin-
opal commodities.
Anything which Congress might do in
thu enactment of restrictive legislation
! 70 curb speculation would no doubt have
| to go SO far, it was pointed out, that the
LEGISLATION would take away from these
alues the benefit of free trading.
The sharp plunge which Stock Ex-
change prices took last week following
the warning of the Federal Reserve
T1ard against excessive speculation was
still source of discussion in official
quarters today Some officials were of
the opinion that in view of the COM
rcrative weakness of the board to en-
! fierce its warning through practical
measures, the fall in the general level
O. prices was due more to the stimuli
taneouS increase of l per cent in the
discount rate of the Bank Of England.
This international factor had a power
full effect in retaining the flow of gold
toward Wall Street.
Discount Rate is Blamed.
AS one official remarked today, "capi-
tai will always gravitate to where it is
most profitable" and it was believed
by this official that the discount rate
caused more of fall III prices than the
Federal Reserve warning.
Meantime much interest centered to-
day in what kind of answer the board
will give to the Senate's request for cor
receive suggestions. No intimationS were
forthcoming from the board
The advisory council of the board was
In session at the Mayhower Hotel, but
there was little prospect of any an
nouncement on the speculation ques-
ton coming from this meeting.
The growth of speculation in the
United States was described by officials
here as coming from a number of
sources largely stimulated by the gem
eral rise in prices of stocks over period
of years. There is a big difference.
however, it was pointed out, between
speculation and sound investment.
Many Americans of moderate means
have been withdrawing their savings
accounts to invest in sound securities
and paying for them outright with cash,
1t was pointed out, and this kind of in
vestment could not be criticized as
speculation. Such investment on the
part of the many who put their money
In good stocks, however has had the
consequent effect of enlarging some
what the activity on the exchanges.
But this has not been the largest fac
tor, it was said
The attraction of bigger profits
offered on the Street has caused many
big corporations, it was said, to loan
their funds on the Street at the call
J rate, thus realizing at times Substan-
TALLY larger return.
Investment Habit Is Growing.
The habit of investment has been
growing generally among the American
people for many years. officials believe
This was stimulated during the war
by the Government itself, which put
on campaigns to force wider distribu-
ton of Government bonds among the
! rank and file than perhaps ever before
had penetrated to new classes of in
VestQrs.
There is believed to be some difference
of opinion at the executive end of the
Avenue over the policies and powers of
the Federal Reserve Board concerning
operations of the stock market. But
the pronouncement today of high off,
4 cial strongly in opposition to any Iegis-
! lation restricting the free trading in
/ securities was held to be of large
significance.
There was no indication as to when
the Federal Reserve Board may answer
the Senate.
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