FINANCE AND INVESTMENT
Most investors will have taken their leave of 1937 without regrets. The year was one which opened with rare promise. Incipient recovery in the United States offered the hope that trade improvement, already well under way throughout the Empire, would broaden out and that this in turn might bring political appeasement, leading the world back along the road to rational economics and freer interchange of goods. The story of 1937 was a long good-bye to all that. Recovery in America, after faltering in the late spring, gave place to a recession which gathered alarming momentum in the autumn, with disastrous effects on the world's principal financial markets. International political tension, although it has probably diminished in recent months, is still a threat to stability and not merely investment psychology but the spirit of enterprise in trade itself has become impaired. In these conditions I need scarcely say that the keynote of investment policy for 1938 should be restraint. By this I do not suggest that caution should be pushed to the point of cowardice and money simply left in the bank until the war danger has passed. The political risk, in my view, is not so serious as that. But investors and speculators should pay for their purchases and avoid building up unwieldy commit- ments in the hope of making substantial capital gains. As I shall argue later, I do not think that the scope for capital appreciation has entirely disappeared, but investment policy is not going to be easy. * * * *
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