Evening star., 1955-01-23

senators and Congressmen are get
ting ready to take good look at the
stock market again.
A bull market in Wall Street has
been making the front pages for 16
months. Stock prices are about back
to 1929 levels. Congressmen well re-
call the tremendous collapse Of
stocks that year and the worlds
worst depression that ensued also
the startling disclosures Of evil be-
havior by prominent and respected
Wall Streeters which were revealed
In the famous Senate Banking Com
mittee hearings Of 1888 and 1884.
Now, the Senate Banking Commit
tee is again preparing to hold hear
ings on the stock market. It's chair
man, Senator ]. William Fulbright,
Democrat, Of Arkansas, wants to
make sure we don't get ourselves into
another 1929" What he plans is
more an inquiry than an investiga-
ton.
He knows Of mo specific frauds,
manipulations or wrongdoing." such
as those unearthed generation ago
by Ferdinand Pecora working for the
same committee; nor does he suspect
any. However, the remarkable rises
In market prices over the past 21a
months certainly warrants the COM
mittee's concern and study" Mr.. Full
bright said.
Other Questions
Others on the Hin are equally
curious. Senators John j. Spark
man, Democrat, Of Alabama, and
Ralph Flanders, Republican Of YER
mont, have 30 expressed themselves;
while Representative Wright Pat
man, Democrat, Of Texas, sees the
stock market exposing the Nation to
q new element of instability for
which "the Federal Reserve and
Treasury are to blame"
Mr.. Patman definitely suspects
something's wrong. He says: II shall
find out whether the fact that the
elections were held in the midst of
the spiral was responsible for the
failure to take any early preventive
action" He will find out whether
SPECTATORS influenced the Federal
Reserve In delaying until January
the hike in required margins" for
traders from SO per cent to so per
cent.
The term margin" ip the stock
market means the percentage Of his
own money which the speculator
has to put UP to buy stocks. The rest
Is lent him by the broker.
Margins are now required by law
of 1884 and are set by the Federal
Reserve Board. During the wild
speculation of the late 1920s the
brokers decided on how much mar
gin to ask, and trading was done
with as little as 10 per cent margin.
This brought many suckers" into
the market and gave Wall Street
sharpers opportunity to fleece them.
as the Senate hearings later showed.
The loose practices exaggerated
the boom and slump. Today the law
and the Securities and Exchange
Commission are there to see that
they do not recur. Therefore, many
people think, lit can't happen here
again"
New Fro?
Maybe we are in a new era so far
as gambling in stocks Is concerned.
There are certainly many impress
sive differences between the present
bull market and that of the late
'20s. But prophecy is always risky.
Back In August, 1929, Col. Leon
ard p. Ayres. well-known banker.
observed--and this was practically
on the eve Of the market collapse:
This 10 truly q new era In which
formerly well-established standards
Of values for securities no longer
retain their old significance"
Earlier that year the president Of
the New York Stock Exchange said:
"I question those who SO confidently
declare that our share prices are
today inflated I am not myself so
quick IN assuming that the entire
public has suddenly become luna
tics"
Later II seemed otherwise. When
In 1888 George Bernard Shaw ad-
dressed the Academy Of Political
Science-"twinkling professionally
at bankers Thomas w. Lamont and
jackson T.. Reynolds in the audi
ence--he declared:
ssrninaneierS live In 4 world of illu-
sion. They count on something
which they cali the capital Of the
country which has no existence,
Every S5 they count rs 500; and
that means that every financier,
every banker. every stockbroker, i
s5 per cent q lunatic. And It Is In
hands Of these lunatics that you
leave the fate Of your country"
1 This was Just ct the time when