TIM MONETARY SITUATION.
LAST week I endeavoured to show the close connexion which• existed between the rise in the Sterling Exchange and the monetary situation here, including the prospects of a lower Bank Rate. Even before the article - appeared in print, concrete evidence of that truth was afforded in the reduction by the Bank of England Directors last Thursday of the Official Rate from 5/ to 5 per cent. The Stock Exchange was not altogether prepared for the announcement, but both in financial and commercial circles the reduction came, of course, as a pleasant surprise. This effect on the stock markets, and especially upon gilt-edged securities, would have been greater but for the fact that in addition to a certain amount of monetary stringency, the stock markets are always affected during December by a certain amount of liquidation of positions previous to the end of the year. On the whole, however, gilt-edged stocks have been well maintained, and even the speculative markets have not done at all badly considering the paucity of business. For the most part, however, leading industrials nowadays are swayed by the tendencies of Wall Street, and the improvement which occurred in many shares at the beginning of the week was largely in response to a sharp rally there. * * * *
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