Evening star., 1936-05-17
Trusts Reported Buying
Back Cheaper Stocks
During Month.
TRADING, PACE REACHES
LOWEST MARK IN YEAR
U. S. and British Move to Sta
bilize Currency Situation Fa-
vored as Aid to Recovery.
BY CHARLES F. SPEARE.

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NEW YORK, May 16.-The worlds
financial situation has been less dra-
matte this week than last. There has
been a more orderly movement OF the
foreign currencies and a cessation OF
gold exports from France. though
there has been the beginning of ship
mentS from Holland.
AS sequel to Italy's conquest OF
Ethiopia and her proclamation of SOW
ereign rights over the new territory,
increased tension has developed among
European statesmen. Italian dele
gates have withdrawn from League OF
Nations sessions. This will not i'm
prove Italy's chance of obtaining the
financial assistance which she so much
needs to repair the recent damage to
her internal economy and develop her
colonies.
There is no doubt that the French
currency crisis is being used as an ex-
cuse for deferring commitments in
American securities. 1t accounts for
the extreme dullness that has come
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transactions dropped TO the smallest
totals in year.
Cheaper Stocks Repurchased.
However, there has been, for the
most part disposition to retain stocks
purchased at even higher prices than
those current. and. where declines
from the April high of from 20 to IS
per cent have occurred, to add to in
vestments. This has been the policy
of several of the trusts that liquidated
a portion of their holdings early in
the Spring and have been buying them
back at the lower levels this month.
No fixed policy has yet developed
in France over the ultimate status of
the franc. The subject is being treat
ed from political rather than from
a monetary angle. Today devaluation
is proposed; tomorrow, its probability
is denied. However, the continued
flight of capital has compelled meas
ures which, if they do not take the
form Of an embargo on gold, have the
effect Of devitalizing Frances gold
standard.
Under the circumstances. and in
view Of their increasing commitments,
1t would seem a sound business policy
for the United States and Great
Britain to waive their previous OBJ
Jections and construct a program Of
currency stabilization that will ease
the international situation when the
franc is revalued.
Call Loan Rate Boosted.
The most significant incident in the
domestic money market this week was
the advance in call loan rates to / per
cent, the highest in over a year. This
did not result from any decrease in
the amount Of available funds, but
from an unwillingness on the part of
the metropolitan banks to hire out
their money at the previous nominal
rates. The effect of this was imme-
olately seen in the rise in the cost of
Treasury discount bills, the medium
through which the Government is now
accommodating reserves to pay out later
against the soldiers bonus On the
other hand, the better return on this
paper increased the demand for it.
Not much change occurred in long
term investments, while a new low
rate was established in the proposed
refunding of Standard Oil of New Jer-
sey notes with per cent coupon.
Legislative Influences Felt,
Complementary to the French crisis
as cause of market dullneSs and ir-
regularity. as well as to some leveling
of the business index. were the tax
bill in Congress. which now seems to
have reached the stage of revision to
avoid defeat. and the debate over the
Frazier-Lemke mortgage bill.
The most practical argument against
the latter was the one advanced by the
farm land bank system, in which 600,-
600 farmer borrowers have a large in
vestment and the United States Gov
ernment one Of $2l7,000,0O0. This
Federal agency could obviously not
compete with an organization set up
to loan mortgage money at lis per
cent.
The United States Circuit Court Of
Appeals declared the amended Frazier
Lemke farm mortgage moratorium act
unconstitutional while its proponents
were lobbying for their infiationary
measure in Congress, and Congress
finally defeated the bill by surprising
vote. So has another effort to start
the imitation ball rolling failed.
The effect of the vote on the mar
ket for common stocks was bullish,
which seems inconsistent if we are
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