Hopefulness in the City
Finance
THERE must have been few occasions when greater con- cern existed, not merely in the City, but throughout the country, with regard to developments in international affairs, and there can have been few occasions when that concern was more justified than it is at the present time. Nevertheless, the fact remains that this concern finds very little reflection in the course of price-movements of Stock Exchange securities. It is true that present conditions of uncertainty have occasioned a general slackening of business on the Stock Exchange, so that dealers and investors seem, for the moment, to be marking time pending developments. Nevertheless, prices are, for the most part, well maintained, and those potential investors who may have been waiting for an occasion to acquire stocks at a much lower level have found their opportunities few and unimportant. THERE must have been few occasions when greater con- cern existed, not merely in the City, but throughout the country, with regard to developments in international affairs, and there can have been few occasions when that concern was more justified than it is at the present time. Nevertheless, the fact remains that this concern finds very little reflection in the course of price-movements of Stock Exchange securities. It is true that present conditions of uncertainty have occasioned a general slackening of business on the Stock Exchange, so that dealers and investors seem, for the moment, to be marking time pending developments. Nevertheless, prices are, for the most part, well maintained, and those potential investors who may have been waiting for an occasion to acquire stocks at a much lower level have found their opportunities few and unimportant.
CAUSES OF STEADINESS.
And for this comparative steadiness of markets, I think three main causes are responsible. In the first place, there is an underlying note of hopefulness even with regard to the political situation itself. In the City the view is held that not one of the countries concerned in the recent events is desirous of war, though, in that respect, perhaps, insufficient attention is given to the failure last year to prevent an outbreak of conflict between Italy and Abyssinia. There is also, however, a feeling that notwith- standing the violation of the Locarno Treaty by Germany, Herr Hitler's proposals and the nature of the preliminary reply given to them at the recent Conference in London, do hold out some measure of promise of negotiations calculated to lead to a better basis of peace than that ,arising out of the Locarno Pact and certainly better than that arising out of the Versailles Treaty. In short, in some quarters in the City it is felt that the recent events may hasten, rather than retard, the establishment of better international relations.
CHEAP MONEY.
Yet another reason for the underlying hopefulness on the Stock Exchange is to be found in the continuance of that important factor—cheap money. Quite re- cently we have had the declaration from the Financial Secretary of the Treasury that the financing of Defence is not to be allowed to disturb in any way financial and banking facilities for trade and commerce, nor is it apparently to be allowed to divert, in any way, the policy pursued by more than one nation at the present time—rightly or otherwise—of striving for the main- tenance of cheap money.
INDUSTRIAL PROGRESS.
Finally, however, I think that the main reason for the general feeling of hopefulness is to be found in the number of favourable reports from leading British industrial concerns, to some of which reference will be found in the adjoining column of Financial Notes.
An event of the past week has been the setting out of the ' Queen Mary' from her building-yards to the open sea, and the completion of that latest triumph of British shipbuilding embodies, in itself, a tangible expression of the improvement which has taken place in the iron and steel industry and in some other industries in this country during the past three years. That revival has affected the country at many points, including even the great problem of unemployment. It is true that there is a feeling that the progress cannot continue indefinitely until there is a better state of things in international trade, but equally and naturally there is also the feeling that if such things have been accomplished at a time when international trade has been fettered at many points and in many ways, what might not be accomplished if, with an assurance of international peace, there were to come greater international co-opera- tion in everything making for trade expansion. Of course, it might well be argued that it does not follow
(Continued on page 596.)
Finance
(Continued from page 595.) that other nations which have been less fortunate during recent years in their general conditions, both social and economic, have the same impulses as our own in the direction of peace and international co-operation. There is. however, probably a wider recognition than is generally believed on the part of many countries of Great Britain's desire to promote international prosperity and a desire for such conditions must surely prevail in special degree in countries such as Germany, Italy and even France.
At all events, I should be giving a wrong picture of conditions in the City at the present time if I were not to add to the statement that business in the Stock Markets is " hanging fire," the further statement. that there is an underlying strong spirit of optimism.
ARTHUR W. KIDDY.
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