Evening star., 1936-11-17

purchasing could HS@#A
be done by Amer sSSS$SS ly@A
leans in behalf of p,vid Lawrence.
established Amer
team companies in which foreigners
are already owners. 1t would De halo
to police such restriction.
What is generally assumed Is tnat
the administration wanted to accom-
plish two things by its reference 10
foreign money at this time. One was
to help out the French, who at the
moment are having plenty of jitters
about conditions in Europe relating
to peace.
Credit Stability a Factor.
Another motive has TO do with a
strictly American desire to keep the
foreign funds from disturbing our own
economy or credit situation. In other
words. when too much foreign money
comes in suddenly from abroad, the
prices of American securities are bid
up. speculation starts anew in the
United States because of the rising
market, and many persons are sucked
into the buying Of stocks, only to wake
I'D some day and find the movable or
floating capital from abroad going
around the globe to some other coun-
try where a profit seems available to
the owners of the So-called hot
money" or nervous money"
Basically, nobody here in the Gov
ernment would ever admit that they
care very much about the rise or fall
of the stock market prices. Their
only concern ostensibly is of police
character-to prevent pools and ma
nipulations. But, realistically speak
ing, the stock market does have a
relationship to credit and in this way
the Federal Reserve Board comes into
the picture by its power to fix the
limits Of margin requirements on
brokers' loans and on the power to
cut down the so-called excess reserves
in banks that theoretically at least
are supposed to find their way into
speculative channels or loan expan-
sion unless there is brake applied.
just now the Federal Reserve would
IKE TO see runaway markets prevented
and credit expansion kept in check
The Treasury. on the other hand, has
the big 100000 10000 stabilization
fund in gold which conducts all sorts
Of mysterious operations not known,
Of course. to the Federal Reserve It
Il assumed that when the Treasury
buys or sells gold in connection with
its gentleman's agreement with France
and Britain to keep the pound and
the franc stabilized, there is a natural
how Of funds back and forth which
IN turn finds its way into the invest
ment markets either in New York or
London or on the Bourse in Paris. In
other words, the gold exchange ar
rangements reflect transactions not
only Of a trade and commodity char
acter. but the ordinary movements of
funds in the channels Of investment
and speculation.
Wary for Raids.
The Roosevelt administration is very
aDSious to protect the American mar
Ket against raids that will on one
occasion shoot stock market prices up
and on another may bring about
sharp break In the market with
psychological repercussions as well as
effects on the credit situation where
stocks or bonds are held as collateral
for loans.
The trend toward economic nation
Alism has become so strong in recent
years throughout the world that the
discussion of ways and means of pro-
tecting even our own stock market
against foreign speculation does not
seem a strange happening any more
in world which once regarded gold
IS the yardstick of measurement for
the flow of funds of all kinds from any
country in the world and to any
country.
Unsettled conditions in Europe,
where war clouds gather from time to
time. are responsible for the discus
sions of measures to protect American
investors, spectators and trustees who
hold listed securities. but. just the
same, the administration probably
would like to keep the stock market
from running away to feverish heights
and 1t would also like to have more
power to control the operations of all
individuals who have financial trans
actions across our own international
boundaries.
U. s. Might Get Nervous.
This power might come in handy
some day If American investors get
nervous and want to carry on quiet
flight of capital to other countries. At
the moment the United States is sup
posed to be the safest place for any
kind of floating capital, which ac-
counts for the steady flow of invest
naent funds to America. But this con-
dition may or may not continue. de-
PENDING on what the world thinks Of
the American fiscal policy in another
year or so, after opportunity has been
eiven for q balancing of budgets and
curtailment Of the present spending
program.
To stop the now Of nervous money"
q going to require some new kind Of
neurologist, skilled in the ways Of for
sisn exchange and International spec-
ulaticn, than which there is no more
fertile field for intrigue and manipula-
tfon, especially with the splendid op-
efuting devices such as the radiogfan1
and the trans Atlantic and trans
Pacific telephone.
tcopyright. 1885,,