Evening star. [volume] (Washington, D.C.) 1854-1972, 1930-06-24
NEED FOR CREDIT
ABROAD STRESSED
Question of U. S. Aid to For
eiun Nations Raised in
Hall Report.
BY JOHN F. SINCLAIR.

the CnleI creator natlOn OF the WOrlQ
| in 1929?
The analysis made by Ray O. Hall of
the Department of Commerce in the
eighth annual report on the balance of
international payments to the United
States raises that question.
A nation pays its international debts
by selling its goods and services, or by
sending gold, or by combination of all
three. If a combination of all three is
not enough, then that nation must bor-
row credit outside in order to live.
Many nations in Europe need credit.
The creditor nations must supply that
credits and the greatest creditor nation,
presumably, must be the greatest sup
plier of it.
But last year a decline of 1851, oO0, 900
in the net capital export of the United
States is shown by this survey. What
does this mean? Let Mr.. Hall answer !:
THAT decrease was no doubt in part
| responsible for some of the fiscal and
foreign exchange difficulties of certain
foreign nations, for some of the world
wide recession of business and for some
of the reduction in our merchandise
exports during the latter part of 1929
and the early part of 1880, which may
also have contributed to the world de-
cline in commodity prices"
No nation can live unto itself, not
even the United States, the greatest of
all creditor nations. This much the
report clearly shows.
How much further down can the
stock market go?
Thousands of harassed margin oper-
ators are asking New York brokers this
question daily.
r. w. McNeel, Boston financial OBJ
server suggests that in nearly every
major stock market decline stocks have
made double bottom" That is to say,
they have rallied from their lows, then
have reacted again to these lows from
three to eight months after the original
bottom" was reached.
Says Mr. McNeel: I'm the stock mar
ket recessions of 1920 and 1923 these
secondary bottoms came from seven to
eight months after the original lows
were made. Seven months have elapsed
since the lows were made in November,
and the stock market would be acting
true to form in making a secondary
bottom at this time"
Then he makes this optimistic state
ment Completion of the double bot
tom has usually inaugurated a steady
upward movement in stocks
Now, to be mere specific. The Dow
Jones industrial averages, at the peak
in october, registered 31817. Saturday
last, they reached 218.84, a drop of
about so per cent. The absolute low
established last November showed the
average at 1850, Many stocks--and
some excellent ones--have gone below
the lows of last November, but the aver
ages are still little above. But the
double bottom" has almost been
reached.
Mr.. McNeel concludes: indications
suggest very strongly that conditions
are about on bottom. The next thing
in business will be improvement
whether it is to come at once or will be
a little longer delayed is the question
now"
Only in recent years have bank stocks
been traded in daily. In earlier and
leSs-nerve- Wra cking days, stocks in the
big banks were held by estates and the
well-to-do. Few If any of these stocks
were up as collateral or even traded in.
But today thousands of shares
changed hands daily on the different
stock markets throughout the country,
just like stocks of companies dealing in
ice, sugar, milk, rubber, tin, electricity
and meat. With bank stocks in the
thick of the trading battle they are
naturally subjected to recurring declin-
ing movements, just like other stocks.
The American Banker has made a
survey Of the shares Of IS of the largest
New. York banks and has found that
they have dropped more than So per
cent in value since April, when their
aggregate market value had reached
STAT 100000 The market drop in
these bank stocks since then, according
to this publication, has been $2,015, 000,-
600.
A. P. Giannini, California banker,
who is credited with bringing the bank
stock into popular favor, has Just sailed
mi yF fnV nssta N11s. H.,
Europe. Having retired from active
business at so, he is now making good
his retirement. Not many men are able,
or wise, enough to do it at so.
Certain well known international
bankers believe that the Bank of Eng
land Will reduce its discount rate to
212 per cent this week to parallel the
New York and Paris rates, upon the
theory that cheaper money eventually
VIII bring about business improvement.
No one In 1923 would have pictured
Paris as world money lender. Quite
the reverse. France in 1928 was In the
center of a wild uncontrolled imitation
movement and headed for financial dis
aSter.
Then France woke up. An era of de-
tiation set in, wrecking and bankrupt
ing millions of her citizens. Unlike
England, France decided to stabilize the
franc at approximately the figure
reached in the imitation movement,
namely, 3.9 cents
So France set to work to build up her
gold reserves in the Speediest, most eff
IectiVe way. Wise, canny France! She
thus eliminated that slow, heart break
ing oefiatlonary road over which Eng
land has trod in order to bring the
pound back to pre-war level
True, the French methods were me-
orthodox as defined by the old school
OF economists, who believed in deflation
after imitation, but her very "unortho-
doxy" has put France in the vanguard
SO tar as industrial prosperity and bank
ing strength are concerned. It is one Of
the most paradoXical situation in fnan-
cial history.
France emerges with more gold in
her strong box than Germany and Eng
land combined. Her ambition now is in
the direction of making Paris at least
the equal of London and New York as
world financial center.
When Watson Washburn. Assistant
united States Attorney General and in
vestment trust investigator, suggested
the formation of an association to de-
velop code of rules for the investment
trust business, he found few boosters for
his proposal
Premature" some answered. mot
the right time" said Others who are
busy ironing out the problems, which
the stock market decline has created
The business is still too young to
codify and straight-jacket," suggested
others.
In a word, investment trusts officers
fee! that their experience Is too limited
and unssasoned yet to make worthwhile
suggestions in the formation of such an
association.
Mr.. Washburn still hopes for some
thing constructive" in this field.
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