By ARTHUR W. KIDDY..
IT is very seldom that, with regard to the financial and commercial: outlook, the signal of " All Clear " can be given. Indeed,-_-it might almost be said that such a signal could be regarded in itself with some suspiciOn. If there were no uncertainties or risks in finance and commerce, there would also probably be less of the spirit of enterprise, and it is certainly in no spirit of pessimism that cautious people in the market temper optimism after the strike with a recognition of certain serious difficulties which have to be overcome before it is possible to take anyti.ing like a clear view of the outlook; or even to cal- culate t ultimate effects of the recent general, strike. There are difficulties which have to be overcome lioth as regards mining organization and readiness on the part of miners to co-operate in increasing output, and some- what the same conditions also apply in some of our Iron and Steel industries where recent reports have revealed a most unsatisfactory state of affairs. In short, it will take some time to get back our key industries on an economic basis and to restore them to general prosperity, especially if renewed activity is to be achieved along the lines of enlarged and cheapened output and not merely by restricted output and high prices.
DISTURBING TRADE FIGURES.
And if proof were required of the urgency for the re- sumption of the coal output and a quickening of industrial activities, it is certainly to be found in the monthly Trade Returns, for once again the figures for April make a melancholy showing. As compared with the same month of last year, the value of imports declined by 47,853,000 and -Exports were down. 49,274,000. It is true that as regards the Imports a favourable point was the effect of lower prices, especially in the case of foodstuffs and raw cotton, but, on the other hand, as regards Exports, the decline of shipments abroad .of cotton and Worsted piece- goods was more pronounced than- ever, and for the first four months of the current fiscal year there is now a visible adverse trade balance of 4133,00;000, while -that figure will certainly be greatly increased during the current month and in the mohth following by the effect of the strike-and' the coal -stoppage. Fbr experience shoivs that after a great industrial upheaval occasioned by a coal strike' it is a long time before exports quicken up again, and, unless there is to be a very marked revival in the autumn, it.. looks as though our adverse visible trade balance for the current year will be the worst since the War period. Sinai]: wonder, then, that a good many in the City should be putting a restraint on optimism until the end of the coal stoppage is announced.
THE FALL IN THE FRANC.
Nor, in considering the outlook, must the further de- moralization of certain must Continental currencies be over- looked, for it nSt be' rethembered that, so long as cur- rencies -in France, Belgium 'and. Italy are depreciating, the power of those countries to compete with us in manu- facture and in exports is greatly stimulated. Miring the past ten days we have had the French franc so low as 178,, and the.. Belgian franc falling to about the same level, while at one time there was a serious- slump in the Italian lira to about 140. As regards the Italian currency, however, there is little doubt that the movement was due more to outside speculative orierationS_ based upon the fall in the franc than to any material deteriora- tion in theleConomic pOsition of Italy itself. Indeed, there have been reassuring statements both as to the position of the national finances and the„ currency in -Italy: In some respects the fall in the irate is the more note- worthy because it has occurred at a time whenj certain factors such as the negotiations for funding the French foreign debt to this-Country and to the. States, -and :the reported balancing of the French Budget -might have been Supptiga" to 'hid a reassuring influence. Nor was there anything in the temporary industrlai disturbance here to occasion weakness in the franc, for, as a matter Of faCt,- the. coal stoppage is a point not without its favourable influence upon some of the com- peting countries, including France. In some quarters in Paris the rather absurd suggestion was made that to protect sterling there had been heavy sales of francs in the English market, but it is in other directions that we have to look for the slump in the franc during the past few weeks, and, as on many previous occasions, the decline iri the French exhange has been due not to attacks from without but to a lack of confidence on the part of the French people in their own currency.
FOREIGN CREDIT RUMOURS.
There is little doubt, indeed, that the pressure believed to have been brought to bear by some previous French Governments upon the Bank of France in the matter of excessive Note Circulation and advances to- the State imparted a blow to confidence from which the franc has never really recovered, so that even now, when there is talk about co-operation between the Bank. of France and the State with regard to measures for dealing with the franc, there is a general disposition, both within and without the country, to have it clear beyond all question that any such schemes have not •only the sup* but the full approval of the Bank of France. Partly as, a result of the recent visit of leading AmeriCan bankniviutherities to Europe, all kinds of rumours were circulated as to the French Government obtaining fresh 'credits abroad for the purpose of steadying the exhange, but, so far as I have been able to discover, such reports arepremature if not actually unfounded. Indeed, it will readily be seen that such foreign credits may be worse than useless if-they do not form part and parcel of a scheme for placing French finances and currency on a really sound basis.
WISE USE OF GOLD. • -.
Such a scheme, too, must surely involve a scientific use of the stores of gold held in the Bank of France. It would have been impossible, for instance, to imagine that a successful return to the Gold Standard could have been made by this country based upon any kind of tacit understanding that, no matter what point the exchange might stand at, gold would not go out freely from the Bank of England. As a matter of fact, we sent abroad at one time during the past year many millions of gold, and our doing so tended both to correct the exchanges and to inspire confidence. It has always been one of the weaknesses of the' French system that, despite huge holdings of gold, the Reserves of the metal have been kept more for ornament than for use. Of course, it is true that the Note Circulation of the bank of France is vastly greater than the Note Circulation of the Bank of England, but in this country we have not hesitated to place the stability of our exchange-and the requirements of a free gold market before every other consideration and the result has been to maintain confidence in our credit abroad and it has certainly not weakened financial confidence at home. Both discipline and courage are greatly needed in France at the present time if con. fidence is to be restored in the stability of the franc.
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