FINANCIAL NOTES
QUIET MARKETS.
For the reasons I have explained in recent letters, the Stock Markets remain in a more or less becalmed condition and, with the Easter holidays at hand, to be followed shortly by the Bud- get and conceivably by a decision concerning the Gold Standard, it is scarcely surprising that there should be a general indis- position to increase commitments. At the same time, the underlying steadiness of markets amidst these quiet conditions should not be overlooked, for, when some of the uncertainties referred to are out of the way, it may easily be that activity will become pronounced in a good many sections of the Stock Exchange. In fact, I think that there are probably very few who would not be inclined to take a moderately optimistic view of securities, but the difficulty at the moment, especially under the monetary uncertainties, is to determine the direction of such activities.
* * * * THE 0 crrLoorc.
With regard to monetary conditions themselves, the position is fairly simple so far as the immediate outlook is concerned. By the time these notes appear in print the money market should, temporarily at all events, be easy owing to the release of something like £30,000,000 in Govern- ment diVidends, the effect of which will probably be felt both on the money market and on investment securities. More- over, in the money market the ease may be all the more pronounced by reason of the stagnation of trade. Looking a little further ahead, however, it is quite impossible to tell what may be the effect upon money rate of our return to the Gold Standard if the decision is made in that direction. Meanwhile, however, I should not be inclined to follow the arguments of those who maintain that, because Wall Street has recently been exhibiting depression, a further rise in the Federal Reserve Re-Discount Rate is imminent. On the contrary, it seems more probable that the Federal Reserve Rate was raised a few weeks ago because over-speculation was discerned and that, the higher Rate having accomplished its purpose of liquidating weak positions, the authorities would be slow to make any immediate further advance.
* * THE ALLEGED " LEAKAGE• ."
It speaks well for the manner in which Government secrets; and especially those affecting financial affairs, arc kept that on the merest whisper—started nobody knows where- of a leakage of information having occurred in the matter of the new issue of Conversion stock, the Treasury should have acted with the utmost rigour in investigating all the circum- stances. Not only, however, has investigation failed to reveal cause for the slightest breath of scandal, but it has served to show that the cause of the rumour itself is easy of explanation.
* * * * For at least twenty-four hours before the fact of the issue was announced, all securities had become somewhat dull and gilt-edged descriptions in particular. Not only, however, was the weakness in British Funds by no means so pronounced as would have been the case if there had been heavy selling based on inside information, but ample explanation of the general dullness of markets was to be found in the fidgetiness occasioned by uncertainty with regard to the monetary outlook and Gold Standard prospects, a matter to which I referred fully in my letter last week. All the same, I am inclined to think that in case of all new Government loans the older plan of no announcement whatever being made con- cerning the issues until the morning newspapers is the better course to pursue. In the case of both of the two Conversion issues made this year, the formal announcement has been made on the Stock Exchange at 4 o'clock—that is to say, immediately after business hours. In all the Government's big war loans and other operations, however, the announcement was usually made late at night in the House of Commons, followed by the details in the Press next morning. A. W. K.
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