Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-07-14
FRANCE HOLDS REIN
ON PURSE STRINGS.
Continued Flight of German
Capital Becomes World
Trade Menace.
aneeial Dispatch TO The Star.

NEW YORK, July l4.-The Sltua-
ton in Germany grows darker. The
night Of German capital continues, and
there were more Withdrawals of French
and other foreign credits Saturday. DR..
Hans Luther's attempt to negotiate an
international credit apparently Is I'M
successful, and there Is some doubt
whether certain American credits fall
ing due in the next few days will be
renewed.
Before extending help to Germany
France would like certain political
guarantees. She wants Germany to
stop building battleships and to end
the economic agreement with Austria.
It Is considered improbable that any
German government can give these
guarantees.
Many European statesmen think
France Is pursuing relentless policy
which history may justify, but which
at this time looks absolutely selfish.
These critics of the French say that
because Of her enormous stock Of gold
France Is In an inpregnable financial
position. Here Is the situation as they
see it.
Balances Withdrawn.
The first taste of power came to
France in 1927 when without any rea-
sonable excuse, she started to draw
down her balances in England, thereby
embarrassing the Bank Of England.
The Federal Reserve Bank had to go to
the aid of England then.
To prevent the union of Austria and
Germany last month France withdrew
her balances from Austria, thereby pre-
cipitating the present trouble. To force
Germany to do her bidding France Is
now withholding financial aid to that
country. To force England to use her
influence with Germany to give IN to
the French wishes France is again
withdrawing money from England.
There have been heavy Withdrawals
Of French money from London during
the last two or three days. The ex-
change rate on Paris has been forced
to 1889, which is near the gold ex-
port point Should the rate go little
higher, England will be forced to ship
gold to France she sadly needs at home.
With a long history of invasions the
French have always yearned after abso-
Lutte security. They believe that at last
1t is within their power to secure guar
antees against attack for generations to
come. Every French loan made abroad
has political strings. Investment III pr1-
yate enterprises, which forms the basis
of American and British financial pol
icy, is not done in France. Money
loaned by France to other countries
must bring in return some political ad-
the ready money 10 put them into prac-
tice, France has become the greatest
political power in Europe today. But
France can make the very serious mis-
take of forcing Germany to complete
desperation.
Market Profit.
The United States has become great
creditor nation now, but has lot to
learn about international banking.
American investors subscribed to 81 .082,-
o00 900 foreign securities last year and
foreigners bought back at a great dis
count stocks and bonds previously
placed here in the amount of 100000
900. In other words, the foreigners sell
securities in the United States at or
around par and then buy them back at
greatly reduced prices, saving interest
charges, leaving fewer bonds to be re-
deemed at maturity and making a nice
market profit In the bargain.
American tourists spent $811 900 900
abroad in 1880. against 1858, 600, 900 in
1929. The Department of Commerce
finds that this decrease was not caused
by fewer tourists but by greater indi-
vidual economy in expenditure. AS a
matter of fact, more Americans went
abroad last year than ever before
Maybe Americans have dropped 1.-The
drunken sailor" ideas about spending
money abroad. Such spending earns
the contempt, not the respect, OF for
eigners.
One man who went to London for
a few months hired chauffeur. How
much week do you want?" He asked
the English driver. Two pounds SIR"
said the Englishman respectfully IN
give you four pounds" said the Ameri-
can employer who could not under
stand why his chauffeur took advantage
Of him right and left.
Short Sale Menace.
The financial world does not entirely
agree with President Hoover regarding
short selling in the grain market. Try
ing to teach the President Wall Streets
particular brand of economics brokers
are telling him how valuable short
selling is. Maybe 1t Is, under controlled
circumstances, but unbridled short
selling is menace and there is no
argument about it.
incensed over the short selling in the
stock market and perhaps, if the truth
could be told his power was behind
the New York Stock Exchange when it
sent out questionaires on the bears.
II short selling is absolutely necessary
it might be helpful at least to declare
a moratorium on the practice during
function normally when the world is
on its feet again. The false rumors
spread in Wall Street and In the f1nan-
ctal district in London In recent months
shows plainly that there are certain
people making capital out Of the world
mtsfortunes.
Bank Earnings.
Essential but improbable services
rendered by American banks levy an
annual cost of approximately $780,
100000 against bank earnings, accord
ing to Frank W. Simmonds, deputy man.
ager Of the American Bankers ASsoci-
alton, in a book on commercial bank
management issued by the Bank Man
agement Commission Of that associa-
ton Much of the money Is expended
in competition for new business which
is often improbable.
Future gains in bank income" says
Mr.. Slmmonds, Must be derived ilom
heretofore little tapped sources, Willie
established revenues are conserved by
the elimination of waste and loss"
The reception afforded by the public
to the increasing use of the service
charge on checking accounts indicates
the willingness of bank customers to
meet reasonable demands. Institutions
that have taken the leadership in the
movement to transfer the costs of serv-
ice to those for whom they are PEI
formed attest the ability of equitable
charges to transform loss into earning
power.
(Copyright, 1881 by the North American
Newspaper Alliance, Inc.)
------e------------