Business: Money Matters

Assembled in Basle last week for the monthly board meeting of the Bank for International Settlements ("The World Bank"), bankers of Europe spent a large part of their expensive time sputtering about those incomprehensible Americans. It seemed that in trying to uphold its leg of the three-way gold accord with Britain and France, the U. S. was making the game of international finance entirely too complicated. One banker, related the New York Times, told a story about the governor of a small European central bank "who had come to the World Bank in despair, declaring the American instructions regarding gold completely bewildered him and asking help, only to be informed that these regulations left the World Bank experts at sea too."

Meantime in Washington the men responsible for this predicament were busy with plans to make the game, if anything, even more complicated. Called for this week was a conference between Secretary of the Treasury Morgenthau, Chairman James McCauley Landis of SEC and Chairman Marriner Stoddard Eccles of the Federal Reserve Board to study ways & means of discouraging investment of foreign funds in the U. S. With its gold sterilization program (TIME, Jan. 4), the Treasury is now keeping the incoming metal from inflating the credit base. But the huge volume of investments is itself a threat to U. S. stability, particularly in case of war when the money might be suddenly withdrawn. "The constant inflow of foreign capital is a source of worry to us," said Mr. Morgenthau last week in an obvious effort to prepare the public for subsequent action.

In a communicative mood was Mr. Morgenthau last week. He referred to a story about a possible U. S. loan to Germany as having been written by "one of those city slickers." Said he: "I think some country boy sold him the story." While Mr. Morgenthau was discussing bigtime money matters in press and private conference last week, Chairman Leo T. Crowley of Federal Deposit Insurance Corp. had something to say to the nation's bankers on distinctly smalltime money matters. Releasing his 1936 report, Mr. Crowley lit into the members of FDIC for dabbling in speculative bonds. Warned the man who has underwritten 14,000 banks: "Low earnings are making some banks reach out and deal in more or less low-grade bonds. They are in and out of the bond market, as you or I would be in or out if we were dealing in the stockmarket.