MONETARY CONDITION'S.
-• One explanation of the firmness of investment stocks during the week is to be found in the fact that, in spite of the rise in Bank Rates, easy monetary conditions have prevailed in Lombard Street. This has been due, in the first plaec, to the large disbursement at the beginning of the month of Government dividends, the effect of which has not yet been offset by the ingathering of the Revenue. In a few. days, however, this plethora is likely to dis- appear and harder rates may be anticipated. The case in the Discount Market has also been -accentuated by the rise in the Bank Rate having occasioned a good deal of American buying of English bills, but this movement has subsided, and it would not be surprising if before a week has passed we were to find that market rates of discount here had approximated 'more closely to the official Bank Rate. Another influence, favourably affecting markets 'during the week has been the hopes that the pact negotia- tions in Paris may lead to some kind of international agreement making for a cementing of European peace and a further restoration of European confidence. Again, the markets have also been strengthened by the fact that the Bank Rate, although occasioning a temporary set-back in values, also showed that the technical position of markets was fairly sound, while a final influence may be said to have been exerted by hopes of the forthcoming Budget providing for a small reduction in the Income Tax. More- over, as has been demonstrated by the success which has attended one or two further new capital issues, the volume of available resources is still quite large.
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