How did stock speculators harm the companies they bought stock from?

"When a democracy is destroyed, it will not be from enemies from without, but rather because of enemies from within" means that Senator Joseph McCarthy was referring to the suspected infiltration of the Communists into the US Armed Forces.  

Why might Senator McCarthy have chosen to use this quote to support his claims?

He chose to use this quote to support his claims of  anticommunist hysteria of the Red Scare in America. He believed without substantial evidences that the US armed Forces has been infiltrated by the communist loyalist and if allowed unchecked could destroy their most cherished democracy. Unfortunately, all these came to ruins when he was shut down from his bogus fame when the soft spoke lawyer, with incisive wit and intelligence, Joseph Welch, special counsel for the U.S. Army, in a dramatic confrontation of the defense of the Armed forces in his celebrated statement “Until this moment, Senator, I think I never really gauged your cruelty or your recklessness.”