FINANCE AND INVESTMENT
As most of us expected, August has brought markets back to the old tug of war between economics and politics, and so far the strong pulling from the political side has been very effectively resisted. Everybody realises that the European situation is delicately—not to say precariously—balanced and yet there is practically no evidence of nervous selling. Speculative positions on the "long" side have been liquidated long ago and the fairly substantial " bear " position in many groups, notably gilt-edged, is helping to keep prices up. If markets can stand up to the kind of news that has been pouring out of south-eastern Europe for the past ten days, it is hard to see what will put them down short of war itself or something very like it. So commendably is the investor acquitting himself in the " war of nerves."
On the economic front the news, with one exception, is con- sistently good. America's business recovery, if a little jerky is showing signs of broadening out, France's financial position goes from strength to strength and all the accepted barometers, such as employment, rail traffics, motor regis- trations and bank clearings, point to the continual improve- ment of business in this country. The black,spot has been the Mendelssohn affair in Amsterdam, the result, it seems, of over-trading in short credits. A surprise of this kind is always unpleasant and unsettling, but markets have taken it very well. It is now recognised that this bank's troubles are not symptomatic of any general financial weakness in Continental centres and that they will not involve any sub- stantial liquidation. So far as London is concerned, some " short " credits may become longer loans, but I shall be surprised if there are any real losses to be faced.
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