DIFFICULTIES AT GENEVA.
Of the various factors I have enumerated foremost place must be given to the situation at Geneva and the French Crisis. Without,. however, desiring to attribute aqy omniscient prescience to the City's views, it is none the less a fact that the developments in those two direc- tions have been rather in accord with-anticipations: Not, Of course, that the precise difficulties which have arisen in connexion with the formation of the League of Nations Council were foreseen, but, with a kind of sure instinct, market operators felt that the. good effects of the Locanki Pact had been rather liberally discounted in the optimism Which characterized the Stock Markets. at the end of the year. In vague fashion it -was -felt .that there were sure to be many difficulties to be contended with before accord was secured, and accordingly the disposition was to await such developments before increasing financial commit- ments. The caution was all the greater, because nowhere More than in the City is it recognized how much of the hopes of improvement in international trade and finance is based not merely upon European peace but upon a growth in-European confidence. Especially does the City recognize the importance of -the effect likely to be produced Upon the United States by the course of events at Geneva. At the time of the Locarno Pact, America was showing a . greater disposition. to take an active interest in the -work Of the League of Nations and both the adoptiOn of the Dawes Plan and, later, the' accomplishment of the LocarnO Pact gave a considerable stimulus to American activities in making loans to Europe. Conversely, it is believed that anything like- a breakdown of the Locarno Pact might easily occasion a drawing in on the part of America in the matter of making loans outside her own country, the effect of which upon the foreign exchanges might be very considerable.
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