Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-09-20
Fear of Credit Collapse
Abroad Results in Heavy
Selling on Exchange.
LOSSES DOUBLE COSTS
RESULTING FROM WAR
Commodity Declines Apparently
Checked, but Prices Are
Still Irregular.
BY CHARLES F. SPEARE.

Special Dispatch to The Star.
NEW YORK, September 19.-Fear
Of q general credit collapse in Eu-
rope, and particularly the inability to
see through to satisfactory solution
OF the political and economic situation
In Great Britain, has again haunted
Wall Street this week and produced an
other low level of prices for American
stocks and bonds and for continental
dollar obligations.
In the two years since September 10,
1929, when the summit of the new
era" movement was reached, destruc-
ton in values of securities and Of COM
moditieS double the tremendous direct
cost of the World War has occurred,
while politically and financially Eng
land and Germany have gone backward
to a status approximating that of the
middle OF the nineteenth century.
Effects Of Foreign Crises.
The United States has tried to shake
itself free from the effects Of extraordi-
nary conditions abroad. In July and
August it accepted with surprising
calmneSs the breakdown of banking in
Germany and the subsequent and
| startling disclosure that q run was tax
! ing place on the Bank of England so
impressive that large credits by this
! country and France were necessary to
preserve the sanctity Of sterling. Lat
terly there has developed in Holland,
Denmark, Sweden, Switzerland and Nor
way, nations with strong credit nor
mally, succession of financial disturb
| ances that have had their effect on
London and on New York, also pan
icky days on the exchanges Of Paris
and Berlin
Now that these things have come to
pass, the country Is beginning to realize
that 1t is being affected by what hap
pens across the Atlantic and south of
the Gulf Of Mexico. Whether or not
good Judgment was shown by American
bankers IN lending so freely to Europe
and South America Is not today the
point at issue. The immediate concern
OF the washington administration and
OF business men and bankers with orig
inality and courage is to head of the
flight OF capital from Europe and avert
worldwide panic more intense than
that so Tar experienced, which would
react as much on the United States as
on its debtors.
1t Is Of no value to grant credits
to Germany or to Great Britain to
stabilize their exchanges if, as the out
come Of war debts, continued arma-
ment costs, excessive taxation and a
forlorn picture of economic and social
ne IN the next generation, their ma
tionals continue to send their funds
to this country or to France for safety's
sake. Craftsmanship and q higher de-
gree OF industrial and banking leader
ship than has so far been exhibited.
| together with the dismissal of small
political prejudices,, are required in the
present emergency.
Gold Stores Increase.
This week the gold holdings of
| the United States have risen above
$4,000, OOO, 900. Those of the Bank of
France have reached the highest figure
| in history. On the other hand. Ger
many has lost gold. So has the Bank
! OF England. The Aprocess of gold
sterilization" which was peculiar to
france last year is now going on In
1 this country. On the basis of the
monetary standard the United States
and France are becoming stronger, as
J the rest Of the world, with whom they
40 business, is growing poorer and po-
| Iittcally more radical.
The August figures Of foreign trade
this week indicate a phase of this in
American exports, valued A per cent
less than a year ago and Sc per cent
lower than those in the year Of the
| great high-tarih victory. For the first
time since 1914 imports last month ex-
ceeded exports. The British foreign
trade figures for the year to date toe
plainly speak Of the loss Of markets
and the consequent inability to main
! tam the traditional exchange parity.
Threat to Pound Sterling.
80 we have come to a situation In
the market for securities at the end
l OF this week, when it Is the threat 70
the pound sterling instead of the decay
OF the railroads, that forms the battle
cry OF the bears The mutiny In the
British Navy has made the world gasp.
Heavy liquidation of American securi-
ties mas been presumed to come from
British owners, though Just why Eng
lish investors should sell the best stocks
on the New York market at the same
time they are exporting their capital
can only be explained by those gentle
men Of Wall Street who sit I'D nights
TO hnd picturesque reasons for market
fluctuations. Involved In the British
problem Is the fear Of a national cleo
ton as a climax of the existing crisis
ana during which it might be impos-
sible to maintain the gold standard
The l2-shlling pound is being dis
cuSseo here as possibility.
1t may ease the pain which thii
thought gives to remember that thu
great periods Of prosperity In Germany
after 1924 and in France, after 1926
followed the revaluation of the mari
and the franc and financial crises o.
greater severity and political trouble
more acute than any Great Britain hai
so far experienced.
Liquidation Of Banks.
Turning to the domestic situation
where it may be separated from tn.
effects Of conditions abroad, the mos
encouraging development Is the pIaI
for early liquidation Of distressed bank
and prompt payment to depositors OF
substantial percentage Of their equity
| There Is little excuse for the long dela1
In relieving depositors that follows BANK
ing suspensions. Frequently receiver
are in possession Of from IS TO 80 pc
cent Of the marketable assets who's
withholding brings distress TO entr'
communities. The tnsistent demand Ioi
| greater latitude on the part OF the Feo
eral Reserve in rediscounting privileges
| is likely to ind an echo In Congress!
| next Winter. There Is much gooo papel
| whose acknowledgment by the Fedora
Reserve would release funds that toda!
are greatly needed by their owners x
| assist their credit standing.
Business Is suffering from the I'M
| willingness Of bankers TO grant accom-.
nodations 20 those previously regarded
as their best risks. Many 2 n1erchanl