29 JUNE 1929, Page 36

BANK RATE PROSPECTS.

We start the half-yeaf with a' holding of gold at the Bank of England of about t10,000,000- leis thaii at the same time a yeir Elio; and while we may Conceivably be favourably affected during the autumn by a lower price of Wheat, the fact that the New York exchange is now at a point favouring gold shipments to that country, whereas a year ago the exchange was almost in favour Of gold corn- ing to us, suggests' the danger of gold withdrawals for the United States. Moreover, emphasis is given to this question of gold withdrawals by the fact that the German exchange also favours further gold withdrawals for Berlin, and a settlement of the Reparations question followed possibly by the withdrawal, of troops from the Rhine should tend to increase Germany's power to borrow abroad, thus moving the exchange still further in her favour, though, of course, allowance must be made 'for the effect of the - Reparation payments themselves. Unless, therefore, there should be some great change in the financial situation in the United States, a change sufficient to make it likely that America will commence lending abroad largely, I am inclined to think that antici- pations of a higher Bank Rate, and possibly the realiza- tion of those anticipations, may occasion dullness in the investment markets during the early part of the autumn. Whether such dullness will extend to 'the speculative departments it is quite impossible to say, because it is even conceivable that such markets might be stimulated in some degree by Wall Street Support, and even that in a section such as that for Home 'Railways the Government plans for aiding unemployment may Vbe of 'a character occasioning 'speculative buying' of the ordinary stocks on hopes of electrification and other schemes leading to better financial results later on.. As regards the gilt-edged Section, I incline to the view, however, that failing a radical change in the money situation in New: York, prospects during the next six months, and especially perhaps during the earlier part of the period are not too hopeful.