FINANCE - PUBLIC AND PRIVATE
OPTIMISTIC MARKETS
BY ARTHUR W. KIDDY.
SirOTWITIISTANDING certain untoward circumstances, such, for example, as the continued weakness of the franc, the failure of the investor to respond to the Gold Coast Loan, and the avalanche of fresh capital issues, an unmistakable feeling of optimism is 'noticeable in the City. .
On Monday the investment markets had to stand up against such influences as offerings of new capital-- largely of an investment character7.--to the amount of £6,000,000, and the intimation that -underwriters of the Gold Coast Loan for £4,600,000 offered a week previously had to take up 97 per cent. of the issue. These were conditions which ordinarily_ might well have damped the investment markets.. . As a matter of Tact, after yielding small fractions, they closed firm, with a slight upward tendency. The failure of the public to respond to the Gold Coast Loan came as no surprise, as it had been recog- nized that the price was fixed too high and therefore the result was not regarded as any criterion of the real con- ditions of the investment market, and in the loan operations already announced, and those which have yet to be made known, it is felt that there is much of a character calcu- lated to stimulate commercial activity and ultimately to stimulate prosperity.
EFFECT OF LOCARNO PACT.
Moreover, while the many economic problems still to be faced are fully recognized, it may be said that the pre- dominant influence, and the one mainly responsible for the greater feeling of optimism, is the hope that within a short period. the Locarno Pact may be ratified by the Parliaments of the various countries concerned, and that the present year may close with a general feeling of greater confidence with regard to the international political outlook. This, it is felt, in its turn must give a stimulus to financial and business activities generally and, indeed, there are not wanting already some indications of a slight improvement in our own trade condition..;, ITALIAN DEBT SETTLEMENT.
The announcement of the agreement reached at Washington for the funding of the . Italian Debt has also contributed to . the generally 'hopeful feeling in the stock markets. It is felt that the "settlenient is of a character wbich indicates a reasonable attitude on the part of the United States and of determination on the part of Italy to fact. resolutely her financial obligations -to all her creditors as a preliminary to dealing later with the stabilization of her currency. 'This, in its turn, should also give a strong lead to France and, although it is true that the funding of the French External Debt might involve sonic extra strain on the French Exchange, it is felt that such effect would be more than offset by the improvement in French credit generally, which in turn would react upon the value of the franc.
THE TRADE POSITION.
Our own Trade Returns, too, for the month of October, iwhile not exhilarating as regards the total turnover, were none the less better in the sense of the adverse visible trade balance being a good deal smaller than for the :corresponding month in the, previous year., . Thropgbiatt the-past year--=indeed, it might be said •throiighout the past two years—the outstanding feature. of the Trade Returns has been the very great increase in imports un- accompanied by a corresponding expansion in' exports. Within limits, both as regards voitmie and period of time, it is no infrequent experience for a trade recovery to be preceded by large imports of raw materials as a prelude to an expansion later in our exports of manu- factured articles. On the present occasion, however, it has only been too evident that the growth in imports.has been of a character indicating more than anything else an expansion in our consuming activities. In other words, owing, no doubt, in a large degree, to the extensive application -of. the ;" dole,"- prolonged ..trade depression has not been expressed in the usual degree in a reduction in imports. On the contrary, determination on the part of the community to maintain at all costs the standard of living has produced an expansion in imports -entirely unrefleeted at present in our exports of maim• tictured goods.
OUR INDUSTRIAL PROBLEMS.
It must be hoped, of course, that in due time we shalt be able to grapple with this great industrial problem. of paying for our imports by exports, and, although, con, ceivahly, expansion in international trade, following upon more peaceful conditions in Europe, may bring home even more-forcibly some of our Labour problems ris aggravated by Continental competition, we may fairly hope as it result of a more settled political outlook to be • able to concentrate more completely and more effectively upon any shortcomings in our industrial organization, whether those shortcomings arise on the side of Capital, of Labour or of both. A recognition of that possibility has probably also played its part in contributing to the feeling of optimism manifested in the Stock markets, during the past few weeks.
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