FINANCE-PUBLIC & PRIVATE.
[BY OUR CITY EDITOR.] MARKETS HESITATING. [To the Editor of the SPECTATOR.] SIR,—Most of the influences operating upon the Stock Markets during the past week have been favourable to high-class investment securities and unfavourable to Home Rails and industrials and to the more speculative descriptions, Serious as may be the perpetual strike movements in this country and the -industrial unrest which they reflect, I have frequently explained in these columns that by very reason of the check to trade, capital tends to stagnate and money rates to become abnormally easy, while the effect of these conditions is quickly reflected in a demand for high-class interest securities.
Moreover, in the present instance, the weakness of discount rates in the City has been emphasized by the fact that, owing to the large excess of Government Revenue over Expenditure, rather more than £50,000,000 in outstanding Treasury Bills has been paid off during the past month, and the reduction in the volume of these bills at a moment when commercial paper is also scarce has, naturally, accentuated the downward movement in rates. Finally, the cause of this cancellation of Debt, namely, the satisfactory position of the National Accounts, has also tended to strengthen British Government securities.
In other departments of the Stock Exchange, how- ever, less favourable conditions have prevailed. In the first place, the recurrence of the strikes and the threatening outlook in the coal-mining industry are rightly regarded as reflecting a most unsatisfactory economic position. Especially is it a matter for concern that there should be such a complete absence of discipline, so that instead of these industrial disputes being settled by an impartial tribunal, the country should be perpetually held up to ransom and the whole industrial machinery thrown out of gear. It is, unquestionably, this restoration of the spirit of discipline in all sections of the community which has been so remarkable a feature of the Fascist movement in Italy. Mr. Manzi Fe drew attention to it in his striking address last week to the shareholders of the British Italian Banking Corporation, of which a full resume appeared in our last issue. After mentioning how the restoration of discipline had raised the whole _ standard of honesty—in the highest sense of the word— amongst Labour, Mr. Manzi Fe went on to say : " Another feature of the Fascista regime deserving particular comment is the practical disappearance of strikes. Two figures will illustrate this. The number of working days lost during the period from November 1st, 1921, to. October 30th, 1922, was 7,336,393. For the same subse- quent period (November 1st, 1922, to -October 30th, 1923) the loss was 246,975 days ! The advent of Fascismo to power took place in October, 1922." In this country, however, the trouble seems to be that the Labour Unions are really more supreme. than the Governm' eat itself, a position which has been growing ever since the passing of the Trades Dispute Act in 1906. Partly as a consequence of the recurrence of the strike movement, Home Railways have been particularly dull, and Home Industrials generally have been rather depressed, while most of the speculative descriptions dealt in on French account have tended to weaken. This leads me to mention a further cause of dullness during the week, namely, the extraordinary recovery in the French franc to which I referred in your last issue. I then explained that the main cause of the recovery was the extensive credits raised by the French banks both here and in the United States, but the trouble now seems to be the use made by the French banks of the opportunity afforded -by these credits. While most of the depreciation of the franc was really due to un- satigfactory -economic conditions within the country, the fall was also accentuated by heavy " Bear " sales both on the -Paris Bourse' and in foreign countries, in- cluding, no doubt, our own. The fullest advantage has been taken of the raising of these foreign credits to squeeze the " Bears " to the last farthing, and, in accord- ance with an edict imposed by the French banks, all (Ccmtinued on next page.) those unable to deliver francs were promptly charged something like 60 per cent. in interest, while, in addition, many of the French banks seem to have shut down upon credit facilities in a most extraordinary fashion. As a result, anxiety concerning the future of the franc has, for the moment, given place to concern with regard to the losses sustained by Bear " operators in French currency. I am not concerned here either with defending or censuring the action taken by the French banks, and certainly there is no need to waste any pity over those who aggravated the financial difficulties of France by selling " Bears " of her currency. Moreover, at the moment of writing, there are signs that the French banks arc modifying their attitude, in which case the situation may soon show some improvement. So far as markets are concerned, however, all that I am wishing to make clear is that the rather curious spectacle of dullness on the Paris Bourse at the very moment when French currency was improving is to be attributed to appre- hensions with regard to the losses sustained by " Bears " in the franc.-I am, Sir, yours faithfully,
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