22 MARCH 1935, Page 56


TEE Stock Markets, which last week showed signs of recovering, received a fresh shock at the beginning of this week from the startling news that Germany was re-estab- lishing conscription and making arrangements for a large standing army. Although there has been alarm for some time past owing to the belief that Germany was secretly rearming, this open declaration and defiance of one of the clauses of the Treaty of Versailles, however much it may have cleared the air in disclosing openly Germany's intention, nevertheless occasioned grave concern. Prices on Monday fell fairly heavily in most departments, almost the only exception being a rise in armament shares and a rise in the price of wheat—neither of them very healthy movements in the circumstances. When, however, the terms of the British Note to Germany were published, and more especially

when the prompt acceptance of it by Germany, with a renewal of the invitation to Sir John Simon, became known, markets rallied generally and there was a renewal of hopes that out of a seemingly unfavourable development good might yet come in the shape of co-operation by Germany in securing the peace of the world.