Hot Money (Cont'd)

In a press conference given just before sailing for South America, President Roosevelt expressed concern over what he called "hot money"--foreign capital temporarily seeking refuge in the U. S. during troubled times at home (TIME, Nov. 23).

What disturbed the President was what might happen if the tremendous sums of "hot money'' which have poured into the U. S. in the past two years were suddenly pulled out. The Government, said the President, was making studies of "hot money" with an eye to possible measures for control. Last week the Treasury published its first findings, a comprehensive report on capital imports & exports in the 21 months through September. The study will be kept up to date with quarterly supplements, so that authentic figures on foreign capital movements will now be available for the first time in U. S. financial history.

During 1935 and the first nine months of 1936, said the Treasury, foreigners bought $4,354,000,000 worth of securities in the U. S., sold $3,449,000,000 worth. Net purchase: $905,000,000. Of this, $633,000,000 is now invested in U. S. securities, $272,000,000 in foreign securities traded on U. S. markets. Britain was the biggest buyer on balance ($341,000,000), followed by Switzerland ($153,000,-00), The Netherlands ($130,000,000), France ($59,000,000).

As was expected, the capital imported in the form of security investments was exceeded by that in short-term banking funds ($1,353,000,000). This is the hottest type of hot money because it can be withdrawn the quickest. Though the Treasury was careful to point out that its figures were not necessarily complete, it set the total flow of capital to the U. S. in the period studied at $2,281,000,000. That amounted to nearly a 50% increase in the amount of foreign money invested in the U. S. at the start of 1935. Present total of foreign investment is estimated at $7,000,000,000.

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