Evening star. [volume] (Washington, D.C.) 1854-1972, 1930-10-23
MEETING OF BANK
LEADERS UNLIKELY
Failure of Dr.. Luther to At
tend Session May Cause
Postponement.
BY JOHN F. sINCLAIR.

BY JOHN F. SINCLAIR
Special Dispatch to The Star.
NEW YORK, october 23.-Dr. Hans
Luther, president of the Reichsbank,
has Cancelled his passage to the United
States for the present"
American business leaders, who have
been preparing for this visit of the
former German chancellor, successor to
DR.. Hjalmar Schacht as president OF
the ReichSbank, will be surprised at TINS
announcement.
Just what caused this sudden change
in Dr. Luther's plans has not been
stated, but many factors may have In
fluenced him. The vote of confidence
in Premier Bruening in his first Reichs-
tag test may have led DR.. Luther to de-
more important financial questions in
volved in the drastic cuts in government
expenses have been take care of. An
other factor may have been the pos
sible embarrassment caused by the
omission of some of the larger Ameri-
can banking houses in the new $685.
100000 German short-time loan.
No matter what the reason was, the
proposed meeting of the central bank
very likely to be called off. Eugene
Meyer, governor of the Federal Reserve
Board announced almost Immediately
after his appointment that he would not
attend any meetings of the central bank
leaders. However, with DR.. Luther alb
sent, New York Federal Reserve Bank
officials can confer with the officials of
the Bank of England and the Bank Of
France.
And it is not at all sure yet that the
governors of the Bank of France will
attend. So the meeting is gradually
fading away.
Bank Leans on Stock.
A. T. Miller, New York economist,
thinks that the common knowledge
that the banks Of the United States
have a stake of from 100000, 900 to
SIS, ZOO, 000,000 in the future of the
disquieting effect both in and out OF
Wall Street"
Banks are interested in the stock
market, not as owners of stocks as some
people seem to think, but as so-called
potential owners.
An example will show how banks be-
come interested in the stock market.
Say Mr.. Jones has $4,000 in cash and
decides to buy 200 shares of certain
stock quoted on the New York Stock
Exchange at 500 a share, the total cost
being $4,000. The stock is a high
grade stock, earning big money, and so
Mr.. Jones bank agrees to loan him the
$4,000 he needs and take the $20,0 900 in
stock as collateral for his note.
Let us further suppose that Mr.. Jones
is salaried man, making $400 a month,
with living expenses of $500 month.
So he agrees to pay 500 month to-
ward liquidating his Indebtedness.
Now let's suppose that this note was
made just before the break last Fall.
Mr.. Jones' stock keeps dropping in price
from 500 to 500, to $50, to $40, to $50.
When it reaches that point-perhaps a
little before-the banker becomes in
terested. Mr.. Jones has no more money
to put up.
What's the banker to do? Should he
agree to carry that loan without any
margin of collateral, or should the
banker tell Mr. Jones that he would
have to have more collateral, or that the
bank would have to sell the Jones stock
at the market price?
The banks of the United States
loaned hundreds of millions of dollars
on Stock Exchange collateral last year.
This has been a problem ever since.
Every time stock goes down one or
two points in value from the present
levels 1t brings new complications.
When one talks about banking sup
port coming in to help the market it
really means that the banks have de-
cfded to carry over certain customers,
backed up with their stock market COL
lateral, in the hope that market prices
will improve.
So this statement of Mr.. Miller's.
that between $4,000 900 900 and $I5,-
000, 100000 is the stake of the banks in
the present stock market, Is not an
overstatement Of the real situation.
Sound Movies.
Europe, too, has gone wild over sound
movies. A year ago $50 European the
aters were wired for the "talkies." Now
over 1850, including all of the first
run theaters, are sound" equipped.
Outside of Europe, the United States
and Canada there are about 1850 the
aters that have installed sound equip
ment.
What effect will this development
have on the American motion picture
sales abroad? 1t means far greater
competition in the non-English-sp
ing countries than ever before.
N. d. Golden, motion picture expert
of the United States Department of
Commerce. estimates that European
studios will produce some 300 features
in their own language this year. The
growing nationalism is another aid to
local pictures. In countries such as
France and Germany the language
barrier will tend to cut down the popu-
larity Of American films and give Eu-
ropean producers a better chance to
sell their products than ever before.