Finance
Another Year of Recovery
Two years ago, when writing the financial article for the Christmas number of The Spectator, conditions were such that it was difficult to say anything of a very Christmassy or cheery nature. Last year, however, I was able' to describe the year 1988 as one of undoubted recovery, with a lifting of -the depres'Sion in some direc- tions, notwithstanding the fact that the year 1988 marked the collapse of the World Economic Conference in London. Today it is possible to describe the year 1934 as one of still further recovery, with many favourable features. In fact, it would be true to say that in some directions the year must have produced handsome Christmas boxes, and among those chiefly favoured in that respect must be included the Stock Exchange community and a certain section of British investors.
It may be well, of course, to remember that there is still another month of the year to run and, as usual, I shall reserve my more exhaustive survey of the year and the prospects for 1935 until the close of next month. And if in what follows I should be inclined to emphasize the favourable developments of the year, let it please be remembered that this is a Christmas number, an occasion, in fact, when we are supposed rather to count our blessings than dwell too greatly upon our misfortunes.
INTERNATIONAL INFLUENCES.
Nevertheless, in referring, as I shall do later, to some favourable features of the year, including the state of the National Finances, the improvement in home trade, and the rise in securities, it is necessary to recall the fact that these favourable developments have taken place in spite of the fact that one of the main factors in the situation, namely, international politics, has been a cause of increasing anxiety throughout the year. Assassin- ations of Statesmen at various foreign centres have dis- turbed markets from time to time, and there has been . _ growing uneasiness with regard to the situation- in Ger. many, with particular anxiety towards the end of the year in view of the approach of the date for the Saar. plebiscite, These unsatisfactory conditions. in international affairs occasionally caused some set-back in securities, but their influence. has usually been ilaii-t-li"yed mad; indeed, coupled with-Jhe-.-extrenie ease se in-.moriey,:anxTh'ety, with regard to international affairs seems to have accentuated the demand for high-class _ investment stocks.
• T RISE IN SECURITIES.
For undoubtedly the outstanding feature of the year has been file- continuance. and •intexisification'of• the ease in money: At periodS -during the year the GOvernment has been able to borrow on its Treasury Billi at the lmv rate of per cent. per annum, and theSe conditions, combined with the low rate of interest 'obtained by the public on their binking deposits, have foieed the investor into the Stock Markets, with the result 'ilia there has been quite an extraordinary rise in public securities. A year ago I stated that in the case of 365 securities selected by the Bankers' Magazine there had been an appreciation in market values for the first eleven months of 1933 of no less than £500,000,000. For the-first eleven months of the current year this same group of securities shows a further appreciation in market values of not far short of £600,000,000, and while the rise has been most marked in British Government securities, the advance has also extended into many other departments of the Stock Exchange, including prior charge stocks of English Railways, Industrial shares and also the shares of Gold Mining companies. In fact, so far as long-standing holders of securities are concerned, and also so far as speculative operators for the rise are concerned, the past year has been a golden one, and on paper, at all events, a good many investors must find themselves richer than a year ago.
ANOTHER SIDE OF THE PICTURE.
Needless to say, however, this extreme cheapness of money, with its effect upon investment securities, has not affected all interests alike, and however pleasant it may have been for old holders of Government securities to have the opportunity of selling their stocks at a very -high price, their joy has been chastened by the extreme difficulty of reinvesting the. money " equally sound securities giving an adequate return of income. More- over, it has been a year when, speaking generally, the Debtor, not only here but in other countries, has benefited at the expense of the Creditor and all lenders of money have been passing through a very trying time. This i3 particularly true as regards the banking and discount interests where the very low rates for money and the scanty demand for advances has probably made the year an exceedingly trying one for the banking world. More- over, and in spite of the fact that cheap . money has brought satisfactory results in certain directions, including the British Treasury, I do not find myself quite able to describe the abnormal cheapness of money as one of the really good features of the year. • REVIVING TRADE.
There have, however, been other directions in which recovery has been noticeable during the year 1934. Owing to the unsatisfactory international conditions already referred to, our export trade has not" made much progress, but there has been a further expansion in home trade, both wholesale and retail, and these conditions have found their reflection in a further moderate improve- ment in the figures of unemployment, the total at the end of October showing a decrease of nearly 200,000, compared with the same date in last year.. Moreover, this same evidence of greater trade activity and increased spending power has been expressed in the traffic receipts of the English Railways. Thus, for the first forty-five weeks of the current year the aggregate receipts of the four trunk railways showed an increase of no less than £5,057,000, whereas for the corresponding period of 1933 the same companies exhibited a decrease of £1,014,000.
NEW CAPITAL ACTIVITIES.
Moreover, the cheapness of money and the more hopeful feeling with regard to the domestic outlook his given a
(Continued on page xiv.)
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