MARKETS: Prewar Suggestion

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Such a tidal wave of foreign-owned securities poured into the U. S. market at the outbreak of war in 1914 that the New York Stock Exchange closed its doors, did not reopen for nearly five months. Since then the U. S. has changed from a debtor to creditor nation and its markets are less susceptible to foreign liquidation. Also since 1914 the Government has acquired, in the Federal Reserve and SEC, a degree of financial control far firmer than even the elder J. P. Morgan could mobilize. Thus last week, as official Washington unofficially talked of war within a few days (see p. 15), and as the emotionally exhausted stockmarket fluttered weakly in an attempt to keep up with hourly news from Europe, Government officials busied themselves with plans fof putting the Exchange on a war basis.

To keep distress selling of the estimated $2,000,000,000 to $4,000,000,000 worth of Anglo-French-owned U. S. securities from cracking the market, already depressed by widespread bearishness on domestic business prospects, obvious aids would be: 1) to relax margin requirements to protect investors; 2) to further ease credit through the Federal Reserve; 3) to put a floor under Exchange prices by setting a limit on each day's fluctuation, such as the Government now does in the wheat market. One precaution Administration leaders took last week was to prod Congress into extending until 1941 the President's powers over the dollar and the $2,000,000,000 exchange stabilization fund.

While the nation pondered these prosaic devices to protect it from disaster brewing abroad, up popped a trial balloon for a scheme far from prosaic. The balloonist: William Stix Wasserman, a big, self-assured Philadelphian.

"Wild Bill" Wasserman started his business career with a $1,500,000 nest egg his father made manufacturing carpets. He has substantially enlarged it by managing two investment trusts, the Investment Corp. of Philadelphia and the Delaware Fund, Inc., and by using his sharp eyes in a number of ways. In 1931, for example, he took a look at Russia's bumper wheat crop, concluded that it would depress the world market, and took a short position in sterling that netted him $380,000.

The kind of international banker who, during crises, will spend a day at transatlantic telephoning, Bill Wasserman since the first of the year has traveled 18,000 miles, poking his head into various high places in search of useful information. At No. 10 Downing Street, London, in the office of Neville Chamberlain's economic adviser, Sir Horace Wilson, Banker Wasserman engaged in a conversation that last week proved highly interesting to the U. S. According to Mr. Wasserman, Sir Horace told him that at the outbreak of war the British Government would take over all the U. S. securities held by its nationals, use them as it saw fit. The Philadelphian discussed with Sir Horace the advantage of having them taken over at a "fair price" by some such U. S. agency as RFC, left the matter there.