The Washington times., 1929-10-25
TELLS
|. HOOVER TRADE
IS SOUND

President Hoover was given O
complete picture of the New York
Stock Market debacle at the Cabi.
net meeting, today, by Secretary
Mellon and Secretary of Commerce
Lamont.
Both of these business experts
have watched the market closely
and communicated to the President
the viewpoints of their departments
and of the Federal Reserve Board
of which Mellon Is ex-officio chair.
man.
1t was understood he was assured
that the crash, although unpre-
cedented since 1914, did not indicate
any unsoundness in business or in.
dustry, but rather technical read
justment resulting from values out
or proportion to earnings.
Prior to the Cabinet meteinS
Mellon was in communication with
Federal Reserve Board members 10
receive the latest reports on the
markt and to discuss what could
be done about it.
Little to Be Done
The verdict among expert advis.
ors was little or nothing" Al.
though high officials regarded this
as a eighty pessimistic attitude.
Brokers loans have declined about
100000 since the market blew
up. While that is a mere drop in
the bucket compared to the more
than Sc, 100000 in loans from
the New York member banks, of.
ticials ppOpipnptpedp pout that it
indicates a diversion of bank credit
from the eppecppuplative market,
making available greater sums to
agriculture and industry.
The upshot of the market catas.
trophe, should the present tendency
continue or should an upward re.
action be slow, will be "easy money
and reduced rediscount rates at the
Federal Reserve banks. Whether
this will develop soon enough to
benefit trade during the Christmas
buying season, which Is just ahead,
officials declined to predict.
At the Treasury it was stated
fatly that the present market ten
dency did mean easier money, but
it was thought that possibly it
would not come for several months.
Expected Crash Earlier
Secretary Mellon and Governor
Roy A. Young, of the Federal
Reserve Board, take the attitude
that the plunge of stock prices does
not indicate an unsound position Of
commerce and industry. 1t was
simply an economic adjustment and
most officials were frankly sur
prised that it didn't come sooner.
Ever since last February the
Federal Res rye Board has been
maneuVering to divert bank credit
from speculative channels-that is
diplomatic and polite way of say
| ing Ito curb the market" Secrs-
tary Mellon call d attention to the
situation in his last annual report
attributing the rapid rise in stocks
| to the belief on the part Of the
| public that they never would come
down, and to activities OF powerful
| groups of spectators.
| TIL Treasury, on q, number Of
| OcCa siOns, has called attention to
| the well-known law gravity that
| what goes up toust come down.
| Twice the Reserve Board issued Of
! ficial and formal warnings that
| SpeCula ton was "Out of hand" i'm
| plying that price were inflat d and
| beyond reason compared to stock
! earnings. The Federal Advisory
| Council. made up of representatives
OF the r serve banks. sought more
drastic action on the part of the
board, in the way of 6 per cent
rates.
The final move was a hurried
call on the governors of the Re
| serve banks which suited in an
| increase of the New York rate OF
per cent. although the other
banks have remained at per cent.