Finance--Public and Private
Hesitating Markets : Factors Operating SEASONAL and natural are the terms. to apply, to the more restricted character of dealings on the Stock Exchange and the duller tendency _noticeable of late. " Seasonal," because I think it will be found that the Christmas optimism often extends well into January and is frequently followed by a reactionary tendency in February and March, with an upward tendency again often noticeable after the Budget. " Natural " because the factors operating during the past few weeks have been sufficiently adverse to affect the stoutest market ; and when these adverse influences are duly considered, I think that is it really remarkable that markets should have withstood them so effectively.
COAL STOPPAGE REPERCUSSIONS.
It must be remembered that notwithstanding the prolonged coal stoppage, prices on the Stock Exchange at the end of the year °showed a considerable appreciation for the twelvemonth, attention being focussed far more upon hopes of a trade revival and anticipations of a decline in the-Bank Rate than upon the after-effects. of the coal stoppage. During the past few weeks, however, we have witnessed in many forms the after-effects of last year's industrial. upheaval. Its blight has been seen in our trade returns, in many of the annual reports of our great industries and, in particular, its effects have been. revealed in the disastrous railway reports, upon which I commented last week. Finally, however, the effect of these conditions has also been seen upon the foreign exchanges, so that, instead of gold flowing here as had been hoped after the turn of the year, the movement has been outward once again and hopes of an immediate reduction in the Rank Rate have disappeared. . .
THE CHINESE FACTOR.
Moreover, to the factors already enumerated must be added one of the most important of all, namely, the critical situation in China.. Even apart from the Bol- shevist activities and the attitude of some of our Labour extremists, the Chinese situation would contain infinite possibilities of an unpleasant character. It is scarcely surprising that the Stock Exchange views the situation with considerable uneasiness ; -indeed, but inr the wholly correct attitude and the admirable firmness displayed so far by the British Government, that uneasi- nes4,--would he even greater than it is.
BUDGET UNCERTAINTIES.
Supplementary Estimates for the current year are proving exceedingly heavy and the Revenue, although spurting a little during the last few weeks, promises to fall considerably short of last Year's - hopes. Of course, the circumstances operating have been excep- tional, and beCause of that fact Mr. Churchill may consider that he is justified in invading sinking funds, or in some other way capitalizing the deficit instead of applying further taxation. Such a course might bring a feeling of temporary relief, while the reverse effect might be produced if there were to be some increase in direct taxation. As a matter of fact, however, the real point of concern is the state of the Nationa1 Expenditure itself. -Sooner or later that expenditure must be cut down and taxation must be reduced if we are to have increased commercial prosperity, but at present the City sees no signs of any Such determination on the part of the Chancellor of the Exchequer to effect the necessary economies. Conse7, quently, there must be added to the factors affecting the Stock Markets at the moment uncertainty and uneasineas. .with regard to the forthcoming Budget.
CONFLICTING INFLUENCES.
• And yet the fact remains • that while these adverse influences have occasioned a moderate reaction in prices in some departments and have undoubtedly checked any tendency to increase investment or speculative commit, ments, the reaction in prices, on the whole, is so- moderate as to be a matter for some surprise. I- think that one explanation is to be found in the sound technical posit of markets. That is to .say, the speculative account o is comparatively small as compared with the pre-1V period, while the take-up of stock by the genuine hives as well as by financial companies has been very great. am afraid, however, that a further reason is to be found the belief that no very big trade revival on lines calculat to affect the Money Market is yet in sight. •Consequent] as against the adverse factors already enumerated, as against the possible influence during the next few wee of further gold withdrawals and firm money rates, has be set the fact. that the volume of money seeking employ ment in securities is a very large one, while in nia markets the supply of stock is comparatively scarce. the whole, therefore, T find that the general opinion is t anticipate—apart from any specially serious derelo ments in China—quietude in public securities as a whol with a possible sagging tendency in prices rather than an
Previous page
