FINANCE PUBLIC & PRIVATE.
[By OUR Cuy EDITOR.]
THE CITY AND THE RUHR CRISIS.
[To the Editor of the SPECTATOR.] SIR;—It would be wrong to assume from the comparative placidity of the Stock Markets during the past week that the City is not vitally concerned with regard to the Ruhr crisis. The reverse is the case, and one of the explanations of the comparative calmness of markets now that the crisis is upon us is to be found in the fact that weeks ago those who foresaw what was coming realized securities, preferring to await the developments of the next few months, even if compelled to acquire their stocks later on at a rather higher level.
Moreover, while the portentous character of the British Note, published on Monday, was nowhere more clearly recognized. than in the City, it must be remembered that it was not as if it came like a thunderbolt out of a blue sky. On the contrary, chaotic conditions in German currency as represented by hourly fluctuations in the mark; expressed in millions to the £, together with the mutterings of political and social storms, following in the wake of this currency chaos, had jarred the nerves of business men for some time past, while, all the time, these same conditions of disorganized exchanges have obtained an increasing stranglehold over the trade of the country. Therefore, while taking the most serious possible view of all that is involved in the British Note, the City recognizes that its aim—whether successful or not remains to be seen—is to relieve and not worsen a desperate situation. If, however, you ask me to say quite candidly what is the opinion of the City with regard to the Note, and whether financial and business experts are " pro-French " or " pro-British " in the particular points at issue, I am bound to record that views are very sharply divided. The balance of opinion would, I think, come down strongly in favour of the Baldwin Note if it were not for two important clauses, both of which, curiously enough, you dealt with in your leading article last week. Even before the issue of the Note you seem to have put your finger on what business men instinctively feel to be one of the weak points in the document—viz., the emphasis now publicly laid upon the illegality of the French occupation of the Ruhr. Although nine out of every ten men would be inclined to assert that when the French went there it was virtually with a benediction from Mr. Bonar Law, probably enough the ex-Premier may even then have privately given the French Government warning with regard to our interpretation of the legality of the French course of action, and doubtless it was only the desire not to embarrass our Ally which prevented our views being proclaimed from the housetop. Nevertheless, as you say in your leading article, we should have made our position clearer at the time, " otherwise the courts will hold us responsible for any bad results that follow from our inaction." In giving you the City's opinion concerning the British Note to France I emphasize, therefore, this point at the start, because it will explain why, in a sense, business men agree with the course now adopted by Mr. Baldwin andyet at the same time feel France. The sympathy with ance. The ether point, though in a sense a minor one, which the City does not like in the Baldwin Note is the tone adopted with regard to the repayment by France of its Debt to us. To a certain extent, no doubt, our references in the matter were prompted by a rather regrettable disposition on the part of French statesmen in their public utterances to treat the obligations rather lightly, and whereas, we never suggested to America that our payment must depend on what we got out of Germany, France has been rather inclined to assert that the repayment of her IOU's to Britain might depend upon the measure of German Reparation payments. It is impossible, however, to think that France really regarded her obligations other than seriously. Indeed, had she been in earnest in, her " protests," Great Britain would have had all the more cause for taking a strong line in objecting to French methods for extracting payments from Germany. Because, however, of the natural, and in most respects well deserved, sympathy which is felt for France, opinion in the City concerning the British 'Note_ is, as I have already said, somewhat divided. Nevertheless, it is perhaps worth noting that while on the Stock Exchange the continued strength of British Stocks and a downward tendency in French and Foreign Loans generally have been a feature of the week, so in the Foreign Exchanges the French franc has established a fresh low record, although some of the other foreign currencies have improved a little. The Belgian franc, it is true, has rallied slightly, but that' has been due...to the reports of France making ' a large loan to Belgium 'with the object of steadying the Brussels exchange. In these tangible facts-Of the week as distinct from mere expressions of opinion possible that we get indications of relief, in some quarters at all events, that our Prime Minister is making a determined effort to end a deadlock which seems as injurious to the peace of the world as it is to international trade. Of Mr. Baldwin's real sincerity in this matter there can be no question, and it is probably a recognition of that sincerity and straightforwardness which may yet save the whole situation. Those who believe that his policy will achieve its ends are expecting that, as time proceeds, and the illeffects of the prolonged political unsettlement begin to tell, not only upon international trade generally, but upon French finances and the French franc, there will be greater disposition to trust the lead of Britain as being designed to promote not the interests of Germany, but the interests of Europe, including France, and the interests also of international peace. That America will intervene in any real sense of the word is most improbable, but even if she should become at all restive with regard to the indebtedness of Europe to her that attitude may, perhaps, serve as a not altogether untimely reminder to Europe of the supreme need for the establishment of international peace and a salvaging of the wreckage from the War, if anything approaching to general solvency is to be preserved. Meanwhile, it is scarcely surprising that with European politics in the melting-pot and with such infinite possibilities pending almost in the necessarily near future, operations on the Stock Exchange should be mainly confined to investments in short term gilt-edged securities. The cheapness of money, however, is an influence which serves to keep all markets steady for the time being.—I am, Sir, yours faithfully, The City, August 15th. ARTHUR W. KIDDY.
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