FINANCIAL NOTES.
The success which attended the flotation of the Austrian Loan in this country for £14,000,000 is a highly satisfactory event, but it is important that its precise significance should not be misconstrued. It is true that many were attracted by the flat yield of 71 per cent., with a still higher yield including redemption, and the fact that allotments were on such a small scale owing to the large over-subscriptions explains the rapid rise in the scrip to over 7 premium, though during the past week there has been some reaction. It would, however, be wrong to imagine that this premium and the extreme interest in the loan constitute a precise appreciation of Austrian credit, because that is some- thing which at present is entirely in the melting-pot. I have frequently drawn attention in these columns to the undoubted improvement in economic conditions in Austria, but much—very much—remains to be done before the financial rehabilitation of Austria can be regarded as an accomplished fact.
The Austrian Loan owed its success in the first instance to the powerful auspices under which it was issued in this country, the Bank of England for months past having taken considerable interest in aiding what may be termed the League' of Nations movement for helping Austria to recover its financial independence. A few years back a good deal of indiscriminate financial aid was given to the Austrian Government, and the money might almost as well have been thrown into the sea. A moment came, however, when Austria was disposed to commence in earnest Budgetary and currency reforms, and advantage was taken of that disposition to evolve a scheme whereby a number of nations guaranteed a loan, the proceeds of which, how- ever, were to be rigidly controlled by outside com- missioners, so that every penny of the loan was to be used in backing the reforms necessary to secure a Budget equilibrium in Austria and a stabilized currency. It was, in short, a recognition of that fact and of the approval of the scheme given by the Bank of England that ensured the success of the Austrian Loan. If within the next two years the Austrian Government should fulfil its pledges, and as a result of the financial aid just rendered should regain its financial inde- pendence, there can be no question that a great step will have been taken in relieving the economic chaos in many parts of Central Europe. bIn fact, only a recog- nition of the important issues at stake in that respect really justified the guarantors of the Austrian Loan in extending financial aid to that country.
* * * * Needless to say, the utmost disappointment has been experienced by the holders of the Junior securities of the Grand Trunk Railway of Canada by the character of the Canadian Government's reply to the memorial which had been presented to it on behalf of the Preference and Ordinary shareholders. Not only was the reply to the shareholders' protest at being wiped out regarded as somewhat callous in character, but apparently the memorial had been simply submitted to those charged with the presentation of the Canadian Government's case for the acquisition of the Grand Trunk Company on the cheapest terms—a point which causes the Grand Trunk shareholders to feel that their memorial has scarcely been given the broad judicial consideration which has been earned by the services of British capital to Canada in creating the Grand Trunk system. A. W. K.
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