Dollar's Flight

During 1923, undoubtedly huge foreign funds sought investment in the U. S. because of European capitalists' distrust of governmental and financial stability on their own continent. The effect of this shifting of funds from Berlin, Paris and even London to New York has at various times, whether correctly or not, been pointed out in the press. All sorts of price movements and trade conditions have been mysteriously explained as due to foreign buying. Undoubtedly the American bond market and American construction and realty enterprises have absorbed foreign funds--how much no one really knows. Now the foreign situation appears brighter, following the Dawes report, and financial scribes are confidently attributing almost everything to "the withdrawal of foreign funds." The movement of exchange rates to some extent accords with this assumption. Yet new tendencies in our building trade and our stockmarket cannot wholly be explained, by even so attractive a theory.

There is much conjecture, and rightly, over what effect a revival of European industry and international trade will have on our own business conditions. Yet any fear that it will leave us with insufficient capital is mere stock ticker hysterics. One glance at the embarrassingly high Federal Reserve Gold ratios is enough to establish that fact.