cfc_19330415.pdf

Volume 136

141i .gilmercati 1

financial

New York, Saturday, April 15 1933. Number 3538

The Financial SituationLEGISLATION at Washington is proceeding alongthe lines to which the country has becomeaccustomed since the advent of President Rooseveltto control of the Government on the 4th of March,which means that it is proceeding in very energeticfashion. No week passes now but brings some twoor three propositions of one kind or another fromMr. Roosevelt, to which Congress, after some showof opposition and greater or smaller delay, yieldsfinal acquiescence. Nearly all the propositions in-volve some novel features, where they do not gofurther than this, and are distinctly radical, andfurnish some concern as to how they are going towork if they do not prove absolutely impractical.The present week has been no different in that re-spect from other recent weeks. And it is not neces-sary to enumerate here the communications thathave come to Congress from the President, or theletters he has written apart from his messages toCongress, in which he expresses his views on onesubject or another, since these have been pub-lished at length in the daily papers and are alsogiven in our news columns on subsequent pages ofthe present issue.But quite as much attention is being directed to

the renewed decline in interest and discount rates,to wholly unprofitable figures, and to the inferencesand implications to which the decline leads andregarding which it is not possible to dismiss alto-gether feelings of anxiety. The money market ispursuing a perfectly natural and a perfectly logicalcourse. It is drifting back into a state of profoundand abnormal ease. Following the severe upwardspurt in rates which marked all branches of themoney market during the period of the general bankholidays, or more accurately the moratoria on bankpayments, we have during the past two weeks beenreturning with great rapidity to the abnormal stateof ease in the money market which existed beforethe upheaval caused by the general banking collapse.So far as this indicates that the banking system hassuccessfully surmounted the acute stage of the bank-ing crisis, which it certainly does indicate, there isgenuine occasion for gratification and encourage-ment. But there is another side of the matter whichcannot and should not be overlooked. If it be held,as there appears to be good reason for holding, aswe indicated in our discussions of the subject in thisarticle last week, that the banking upheaval wasitself in no small measure due to the abnormal easereferred to (since it removed all inducement forholding foreign balances and foreign funds in thismarket, and, accordingly, accentuated the foreign

takings of gold), then the future cannot be regardedas altogether free from some occasion for anxiety.In other words, though we have safely and success-f uly, and with great rapidity, passed the criticalstage in the situation, some further essential stepsare necessary before we can regard ourselves ashaving reached an absolutely normal situationwhere we will no longer be subject to these recurringforeign drains.

This week, as was the case last week, the declinein money rates has been proceeding at a pace calcu-lated to cause consternation. And this has referenceto money rates and discount rates of all classes.After the numerous previous reductions, call loanrates on the Stock Exchange were on Wednesdaymarked down to 1%, while outside the Stock Ex-change call money was readily obtainable at 3/4 of1% per annum. During the period of tension inMarch the call loan rate on the Stock Exchangeruled at 5% for several days. Time loans on securitycollateral, which also were up to 5% the middle ofMarch, the present week likewise dropped to 1%.Most important of all, bankers' acceptances, afterthe numerous reductions last week, suffered furthersevere cuts the present week. On Tuesday open mar-ket rates for acceptances were marked down % of1% in both the bid and ask columns, and on Wednes-day they were reduced another % of 1%, making 3/4of 1% altogether the present week. The result isthat bills for 30, 60 and 90 days are now down to% of 1% per annum bid and y2 of 1% asked, whichis only 1/4 of 1% above the figure prevailing earlyin February, before the banking collapse. In Marchrates for the same class of bills were quoted as highas 33/4% bid and 3%70 asked.The result of all this is reflected in the sale of

Treasury bills on a discount basis by the "UnitedStates Government. During the acute stage of thecrisis the Treasury found it very difficult to placeTreasury bills, and had to pay high rates of discountto dispose of them. For example, on March 1 Secre-tary Ogden L. Mills, just before retiring from office,invited tenders for $75,000,000 93-day bills datedMarch 6 1933, and maturing June 7 1933. Tenderswere asked up to Friday, March 3 (the new Adminis-tration was to come into power the next day), andthe applications footed up no more than $94,101,000,out of which $75,266,000 were accepted and the pricerealized was only 98.900, making the rate on a hankdiscount basis 4.26% per annum. On Monday of thepresent week Secretary Woodin received tenders for$75,000,000 of 91-day Treasury bills, dated April 12and maturing July 12. The bids now aggregated

Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

2470 Financial Chronicle April 15 1933$404,325,000, of which $75,733,000 were accepted,and the Treasury was able to obtain 99.806, makingthe average rate on a discount basis 0.77%.Except for the fact that the United States Govern-

ment is thus able to do short-term borrowing at ab-normally low cost, which itself is occasion for mis-giving, since it is the result of wholly artificial cir-cumstances, namely, the flooding of the country withunneeded Federal Reserve credit, the extremely lowfigures to which money rates have been driven are amatter for the deepest regret, because of the menacethey carry in other directions. They involve seriousinjury all around. Consider first the effect on therate of interest the banks pay on deposits. Withthe yield on all classes of loans so inordinately low,the banks of course cannot allow high interest rateson deposits. At the time of the speculative craze in1929 the banks in this city allowed 21/2% interest ondeposits subject to call._ Just before the recent banking collapse the in-terest allowed on deposits was only 1/4 of 1% perannum. With the upward surge in rates the NewYork Clearing House on March 3 gave notice thaton March 6 the rate of interest allowed on demanddeposits would be raised to 1% per annum. Thepresent week the Clearing House institutions foundthemselves obliged to reduce rates again, this timeto 1/2 of 1% per annum. All business concerns findit necessary to keep larger or smaller balances inbank to check against, and, accordingly, the ordi-nary business concern, in addition to the dwindlingaway of its business and the inability to carry onwithout serious loss, finds even the small returnwhich accrues from its deposits in the banks furtherwhittled down.One of the curious things connected with the vast

accumulation of idle funds in the financial centersis the stress that is being laid in current commenton the falling off in bank deposits. This, we areasked to believe, is one of the deplorable things ofthe times. With deposits so much smaller than theywere back in 1929 the banks, we are told, havecorrespondingly smaller amounts to loan out, andtherein lies the hardship to the business world, weare admonished. With deposits so low the needarises to provide some scheme of inflation in theshape of new banking credit, or new circulationissues, to make up the deficiencyso the argumentruns. This view obviously entirely overlooks thefact that if there were real demand for funds in ex-cess of current supply, interest and discount rateswould not be dancing around the zero point.As a matter of fact, the huge volume of idle funds

for which it is impossible to find employment save atnon-compensatory rates is itself the strongest factorin reducing the volume of deposits and keeping themlow, since the effect is to induce the business manand the corporate enterprise to hold their balancesin bank down to the lowest figure consistent withcurrent needs. Instead of holding the money in thebank, it is invested in short-term obligations, whichoften can be obtained to yield a better rate thanthe 1/2 of 1%, or 1/4 of 1% which the banks find them-selves able to pay. In a recent examination of theannual reports of different corporations, as theyhave been coming to hand, we were surprised to seehow many corporate undertakings reported largeror smaller amounts of short-term certificates of in-debtedness, or Treasury bills in their balance sheetsall with a view to getting a somewhat higher yield

than that offered on deposits by the banks. Thusthe shrinkage in deposits, of which so much is madein current discussions, has no such significance asthat commonly attributed to it.Clearly the mass of depositors are not advantaged

by the low rate of return which it is possible toobtain on ordinary bank deposits. Nor can it be

said that the banks themselves are deriving advan-tage from the abnormally low rates for money whichare such a conspicuous feature of the day. It is noexaggeration to say that it is impossible for thebanks to eke out a profitable existence at the meagerrate of return they are able to realize on their loansand discounts, their bills and other liquid invest-ments. Indeed, the very solvency of many banks maybe jeopardized should the existing meager return belong-continued. The Administration at Washingtonis at present engaged in endeavors to place the banksof the country on a sound and enduring basis, wherethere shall never again be a lapse to the unfortunatestate of things which led to the closing down of allthe banks in the country during the past month.Yet by the easy money policy of the Federal ReserveSystem, which is finding support virtually every-where, we are bringing about a state of things wherethe banks are deprived of the opportunity of aprofitable existence. What an anomaly! Is it nothigh time that the banks themselves protestedagainst being reduced to such an extremity?The trouble is, not that there is an insufficient

supply of banking credit, but that there is an excessof it, and thus causing such a congestion of idlefunds. This excess of credit has been brought aboutby the open market operations of the Federal Re-serve banks. The member banks themselves are notborrowing to any great extent at the Federal Re-serve institutions, for they have no need of so doing,but the Reserve banks obtain the same result bymeans of their open market operations in the pur-chase of United States Government securities, andto some extent also in the purchase of bankers' ac-ceptances in the open market. During the recentextremely critical period, the member banks werein urgent need of accommodation at the Reserveinstitutions, and they did not hesitate to apply forthe same. Member bank borrowing is reflected inthe discount holdings of the Federal Reserve institu-tions, and these discount holdings of the 12 Reservebanks ran up, as a consequence, from $286,373,000Feb. 15 to $1,413,936,000 March 8, an expansion con-siderably in excess of a billion dollars. That wasright and proper. Now they are back again to $428,-456,000 April 12. This also is as it should be; theneed of borrowing having diminished or disap-peared, borrowing should be correspondingly re-duced. From all of which it is apparent that thebanks themselves can be in no degree held respon-sible for the glutting of the money market with hugemasses of idle funds.It is the total of the bill and security holdings

which is the measure of the volume of Reserve creditoutstanding and of the grand total of $2,518,144,000of these bill and security holdings reported forApril 12 (according to this week's statement) only$428,456,000 consists of discounted bills. The restof the amount is made up to a preponderating extentof United States Government securities, the aggre-gate of which the present week stands at $1,837,-183,000. Of this mass of Government securities closeto $1,000,000,000 has been added within the last 12


Volume 136 Financial Chronicle 2471months. It seems idle to urge that the whole of the$1,837,183,000 of United States Government securi-ties, as well as the $246,964,000 of acceptancesbought in the open market, together with the corre-sponding amount of Federal Reserve credit whichit reflects and supports, ought to be non-existent,for public opinion appears to be so strongly backinthe movement, yet such is undeniably the fact. Forthe time being credit and currency inflation seemseverywhere to be the watchword. The menace in-volved in the gigantic congestion of idle funds, withdeplorable results all around, is completely ignored.Everyone is urging inflation as a means of restoringcommodity and security values, but during the lastfour years the Federal Reserve authorities have beenactively engaged in the process of credit inflation,and yet current market values have been rulinglower rather than higher. Of the $2,518,144,000 ofReserve credit now outstanding, only the $428,-456,000 of member bank discounts represent creditoutstanding in the way it was contemplated whenthe Reserve System was organized.Another point is worth making: If Reserve credit

in amount of over $2,000,000,000 in excess of realneeds has failed to raise prices, have we not in thatfact the strongest reason for thinking that the levelof commodity values cannot be restored by any suchmeans. Why not, therefore, reverse the rule, with-draw the artificial creation of credit, thereby bring-ing money rates back to normal figures, and seewhether by the removal of such artificial props busi-ness cannot be revived. We are of the opinion that re-vival will never be brought back except in such ways.Another phase of the problem comes up for con-

sideration, and this brings us to the leading eventof the week, the sensational turning of all the for-eign exchanges against the United States. Withmoney rates tumbling in every direction, these for-eign exchanges on Thursday all turned suddenlyagainst the United States. On that day, after thedrop the day before in bankers' acceptances andother classes of loans, foreign exchange ratesspurted upward in a way not previously witnessedfor a long time. French francs on cable transfersadvanced to 3.991/4c., or 43/4 points, and 3 pointshigher, it is stated, than the previous peak sincestabilization of the franc. Belgas rose 14.11c., again of 14 points. Sterling rose to $3.471/2, a newhigh for the year, and a rise of over 6c. for the day.Dutch guilders advanced 21 points to 40.68c; Swissfrancs rose 23 points to 19.60c. Spreading talk ofinflation of the dollar has been given as a reason forthe sharp rise, but the truth in all probability isthat it was broutht about by the further drop ininterest rates, which made it unprofitable to retainforeign balances here. The banks reduced theirallowances on foreign deposits, the same as on do-mestic deposits; that is, from 1% per annum toonly 1/2 of 1%.As corroborating this view it should not escape

notice that the foreign holdings of acceptances inthis market, which rapidly increased when moneyrates were ruling relatively high, have this weekagain been reduced now that rates have dwindled tofigures where the rate of return is next to nothing.According to the returns of the Federal ReserveBoard, these foreign holdings of acceptances in-creased week by week from $27,478,000 March 15until on April 5, when they aggregated $50,330,000.This week (April 12) the aggregate has dropped

back to 48,274,000.;$ and as showing that the presentforeign holdings of such bills is far below the normal,it is only necessary to note that 12 months ago, onApril 13 1932, these foreign bill holdings stood atno less than $325,684,000.

y the sharp rise in foreign exchange rates onThursday (which, however, was not fully main-tained at the close of the day), a condition was againcreated where exports of gold from the United Statesonce more became possible. But, as is known, anembargo now exists on export shipments of themetal by Presidential order. Whether this embargowould be lifted except as far as relates to goldpreviously earmarked was open to question, butafter the close of business on Thursday it becameknown that the Treasury Department had given alicense for the export of $599,900 gold to Holland.This quieted apprehension. But the problem is notso easily solved as this. If gold exports from theUnited States are once more to be freely permitted,will we not before long, because of the inability tofind profitable employment for foreign idle funds,be faced with a repetition of the experience duringFebruary and March, where gold exports had to bebanned lest they lead to the drawing down of thegold holdings of the Reserve banks to a point belowlegal Reserve requirements. Elimination of the arti-ficial ease in money, rather than more credit andbanking inflation, appears to be the imperative re-quirement of the hour.

THE news this week that the Bank of Germanyhas actually repaid the balance of $70,000,000still owing by it of the $100,000,000 credit extendedto it in June 1931 by a coterie of foreign centralbanks, including our own Federal Reserve System,carries a lesson with it that should not pass un-heeded now that Congress is considering amendingthe Federal Reserve Act. The credit was extendedat the time of the German crisis by the Bank ofEngland, the Bank of France, the Bank for Inter-national Settlements and the Federal Reserve banksof this country, each carrying a 25% participation.In other words, the Federal Reserve banks partici-pated to the extent of $25,000,000. The credit wasoriginally for a period of three months, but has hadto be extended again and again, and has during thewhole of the period since then been a frozen asset.As a result of urgent pressure on the part of thelending institutions, but mainly the Bank of Franceand the New York Federal Reserve Bank, the creditwas by degrees reduced from the original figure of$100,000,000 to $70,000,000, $16,000,000 of the repay-ment having only recently been made, namely, onMarch 4.The Bank of Germany considered it very hard to

make the partial payments which it was compelledto make, and had it not been for the brilliant ideaconceived by the new President of the Reichsbank,Dr. Hjalmar Schacht, that he would pay the wholebalance of the loan in actual gold for the purposeof saving the interest on the credit, even though thisinvolved drawing down the gold holdings of thebank, already extremely low, to figures that seemclearly inadequate for an institution of the size ofthe Bank of Germany the credit would have re-mained a frozen asset indefinitely.The point we wish to make is that the Federal

Reserve banks should not be permitted to engage inthe wholesale extension of credit to foreign central


2472 Financial Chronicle April 15 1933banks or to foreign governments. They should notbe allowed to place their resources in jeopardy inan endeavor to help a crippled foreign bank or atottering financial structure of a foreign govern-ment. Our Federal Reserve banks hold the entirereserves of the member banks, and this reserveshould always be religiously held intact. The Fed-eral Reserve banks are still holding foreign creditpaper of some other, though minor, central banks,which cannot be regarded otherwise than frozenassets, but they have also been engaged in the pastin extending credit to other foreign central banksfor many times the amount of the German credit,notably in the case of Great Britain, where on twoseparate occasions the amount at stake ran into thehundreds of millions. Back in 1925 a credit of$200,000,000 was placed at the disposal of the UnitedKingdom, and on Aug. 1 1931 another credit for$125,000,000. The fact that these credits were re-paid does not minimize the objections to them. Theyall involve more or less jeopardy, and this risk shouldnever be run. There is something appealing in thethought of coming to the rescue of an embarrassedforeign bank or foreign government. But, never-theless, and regardless of the merit of the propo-sition in any particular cases, there ought to be apositive ban against action of that kind on the partof those charged with the duty of administeringthe Reserve institutions. If aid is to be granted itought to be the province of the Administration andof Congress to decide the question. The Carter-Glass Bill, in the form in which it was passed bythe United States Senate, in the lame duck sessionof Congress, provides that no Reserve bank shallengage in the extending of foreign credits exceptwith the consent and approval of the Federal Re-serve Board. But that is not enough. The per-suasive influence of the New York Reserve Bank inurging the dire consequences that are sure to followif the credit is refused can always be depended uponto overrule the objections that may be entertainedby the Reserve Board. There ought to be a positiveprohibition in the law itself against engaging inpropositions of that kind.

THE weekly condition statements of the FederalReserve banks the present week show changeslike those in the immediately preceding weeks,though much more moderate in character, and theyindicate that after the recent great expansion inthe volume of Reserve credit outstanding a processof contraction is now going on, even though theprocess of contraction has now slowed down veryconsiderably. At the same time the Reserve banksare also strengthening their position by adding totheir gold holdings, though what would happen ifthe embargo on further takings of the metal on for-eign account should be lifted still presents a veryknotty problem, as indicated by our discussions ofthe Subject in the earlier portion of this article.Perhaps the most striking feature of the returns thepresent week is that the member banks have furtherslightly reduced their borrowings at the Reserveinstitutions, as indicated by the diminution in thediscount holdings of the 12 Reserve banks from$436,177,000 last week (April 5) to $428,456,000 thepresent week (April 12). At the same time memberbank reserves with the Reserve banks have increasedfrom $1,975,731,000 to $2,096,079,000. Holdings ofacceptances purchased in the open market have been

further drawn down from $285,973,000 to $246,-964,000. Holdings of United States Governmentsecurities have been maintained virtually unchangedat $1,837,000,000. The result altogether is that thetotal of the bill and security holdings, which is themeasure of the volume of Reserve credit outstanding,has been reduced during the week from $2,565,-059,000 to $2,518,144,000, at which figure, however,comparison is with only $1,669,911,000 a year ago,on April 13 1932.The amount of Federal Reserve notes in circula-

tion has also been further reduced during the week,the amount having fallen from $3,644,137,000 April 5to $3,547,285,000 April 12, but here again compari-son is with no more than $2,537,035,000 on April 131932. The amount of Federal Reserve bank notes incirculation against which no cash reserves are re-quired keeps increasing, but only in a small kind ofway, and the total has risen to only $19,890,000,which compares with $15,930,000 a week ago. GoldReserves have further increased during the weekfrom $3,278,837,000 to $3,315,446,000, and the resultof this increase in the gold holdings concurrentlywith the reduction in the amount of Federal Reservenotes in circulation, but accompanied by an increasein the deposit liabilities from $2,196,055,000 to$2,273,730,000 (mainly owing to an increase in mem-ber bank reserves, as already indicated, from $1,975,-731,000 to $2,096,079,000) is that the ratio of totalreserves to deposit and Federal Reserve note liabili-ties combined has risen from 59.7% to 60.6%. Theamount of United States Government securities heldas part collateral for Federal Reserve notes out-standing has been reduced during the week from$853,700,000 to $768,000,000.

THERE have been the usual dividend reductionsand omissions by corporate undertakings.The Nash Motors Co. voted to defer the payment ofthe quarterly dividend on common shares "untilsuch time as conditions justify." This is the firstoccasion that this company has omitted its commondividend since disbursements were begun in Febru-ary 1918. Interstate Department Stores, Inc.,omitted the quarterly dividend of 134% due May 1on the 7% cumul. pref. stock. General Foods Corp.reduced the quarterly dividend on common from 50c.a share to 40c. a share. Central Illinois PublicService Co. declared a dividend of 50c. a share onthe 6% cumul. pref. stock, par $100, and on the $6cumul. pref. stock, no par value, payable May 15.This is only one-third of the quarterly payment of$1.50 a share made on both issues on Jan. 16 last.The Bangor Hydro Electric Co. rtduced the quar-terly dividend on common stock from 50c. a shareto 371/2c. a share.

THE winter wheat crop, sown last fall, makes avery poor showing at the opening of the springseason. The crop in many sections wintered poorly,and the outlook at this time is for a poor yield. TheApril 1 condition this year, as announced by theDepartment of Agriculture in its regular report,issued at Washington on Monday of this week, wasonly 59.4% of normal, the lowest on record. Thecondition of the winter wheat crop harvested lastsummer was 75.8% of normal at this time last year,while the 10-year average condition, 1921-1930, fig-ures out 79.4%. The present estimate of yield forthis year is now placed at 334,087,000 bushels, corn-


Volume 136 Financial Chronicle 2473pared with the harvest last year of 462,151,000bushels, and an average yield for the years 1926-1930 of 589,436,000 bushels. The lowest yield ofwinter wheat in the past 20 years was from the cropharvested in 1925, when the April 1 condition was68.7% of normal, and the harvest was 402,070,000bushels. The area sown for this year's crop was39,902,000 acres; for last year's crop it was38,368,000 acres, and for the crop of 1925 it was39,951,000 acres.In its report the Department of Agriculture says

that much of the winter wheat acreage, in the greatplains area, planted last fall, was seeded under un-favorable conditions. Drouth conditions prevailedthroughout the winter in much of this territory, andare still unrelieved, with the result that abandon-ment will be exceptionally high. Winter killingwas also excessive in the Pacific Northwest. It is

thought that the total abandonment will be as highas 30% of the area planted last fall. The low con-dition is in the important winter States of Kansas,Oklahoma and Washington. The condition of therye crop on April 1 this year was 72.5% of normalagainst 79.0% a year ago. Farm stocks of wheat this

year are estimated at 178,354,000 bushels, against165,903,000 bushels a year ago. The ratio of thisyear's farm stocks of wheat to last year's harvestis 24.5%, compared with 18.4% a year ago. Farmstocks of corn, at 1,126,616,000 bushels, are 44.9%of last year's harvest. A year ago the amount heldover was 907,469,000 bushels, representing 41.0% ofthe previous year's crop. The condition of pasturesthis year is 72.0% of normal against 73.8% ayear ago.

MERCANTILE insolvencies in the United Statesfor the month of March were very much re-duced, both in the number and in the amount ofindebtedness involved, in comparison with precedingmonths back for a year and a half. Furthermore,the March figures contrast very significantly withthe heavy totals heretofore recorded. Not sinceMarch 1925 has the number of business defaults inthat month been as low as those chronicled for themonth just closed. Dun & Bradstreet, Inc., report1,948 business failures in March this year. This com-pares with 2,378 similar defaults in the shortermonth of February, the decline for March beingequal to 18.3%. A year ago, in March, businessfailures numbered 2,951, and in February of thatyear were 2,732, the former showing an increase of8.0% over February. It is not unusual for the num-ber of business defaults in March to exceed thoseof the preceding month. The present March failuresshow a reduction from March a year ago of 34.0%;in February the decline from last year was 13.0%.The liabilities reported for March this year were$48,500,212, against $65,576,068 for February and$93,760,311 for March 1932. For the first quarterof 1933 there were 7,245 business failures in theUnited States, involving an indebtedness of $93,-176,882, against 9,141 similar defaults in the sameperiod of last year for $275,520,622. The greaterpart of the reduction this year occurred in the monthof March.

All three classes in the failure reports for Marchshow a large reduction compared with a year ago.Manufacturing defaults for the month numbered462, involving $17,582,887 of indebtedness; in thetrading division there were 1,336 insolvencies, for

$23,204,442, and for other commercial lines, in the main agents and brokerage concerns, 150 defaultsoccurred, with $7,712,883 of indebtedness. ForMarch 1932 there were 642 manufacturing failuresfor $31,293,421; 2,108 trading failures involving$44,117,955, and 201 defaults among agents andbrokers with $18,348,935 of liabilities.So far as the reduction in number of defaults

for March this year is concerned, relatively the bestshowing appears for the trading class. In all of the14 leading classifications under traders for March,constituting nearly 80% of all trading failures,fewer defaults occurred this year. This is especiallytrue as to the heavy grocery class; as well as fordealers in clothing and dealers in dry goods. A largereduction also appears in the case of general stores;furniture lines; shoes and leather goods; hardwaredealers; druggists and jewelers. In the manufac-turing divisions failures last month show an in-crease over a year ago for the iron and steel division;also, for printing and engraving and producers instoneware, clay and glass. Marked reduction ap-pears for the large lumber and building class; also,for makers of machinery and tools; for clothingmanufacturing and milling and bakers. For mostof these lines the reduction in liabilities was veryheavy.

THE New York stock market this week has ad-vanced to a distinctly higher plane. Prices ofthe active stocks moved up several points on Mon-day, and after a reaction on Tuesday and again onWednesday, during which a considerable portion ofMonday's advance was lost, again surged forwardon Thursday. The controlling consideration in thisimprovement in values seems to have been the co-incident rise in commodity values, grain prices inparticular, but developing firmness being also inevidence in a number of other commodities, includ-ing cotton, rubber and quite a few other, thoughminor, commodities. There is much talk in the com-mercial world, no less than in the financial world,that the legislation in Congress must result ininflation, which will find reflection in higher com-modity prices, and this week the fluctuations in thestock market have run altogether parallel with thefluctuations in the commodity markets. Com-modity prices displayed a clearly marked risingtendency on Monday, and stock prices spurted up-ward in equal measure. On Tuesday and Wednesdaythe commodity markets were reactionary, and stockprices also moved lower. On Thursday the com-modity markets again pushed forward with greatvim, and stock prices followed, and also manifestedgrowing buoyancy.

There are also, however, distinct elements ofstrength in the situation entirely apart from thebelief that a period of inflation lies ahead. In thecase of wheat, for instance, the report of the Agri-cultural Bureau at Washington, made public onMonday, revealed, as already noted in our remarksabove, a condition of the fall sown wheat so low thatit was nothing less than sensational in the poorpromise of yield which it disclosed. The Depart-ment of Agriculture noted that the indications wereof a winter wheat crop of only 334,087,000 bushels,the lowest since 1904, and comparing with an actualharvest in 1932 of 462,151,000 bushels, and a harvestof 787,465,000 bushels in 1931. The condition of thewinter wheat crop on April 1 was put at only 59.4%


2474 Financial Chronicle April 15 1933of normal, the lowest on record, while the conditionof rye at 72.5% was the lowest in 54 years. It isnatural that grain prices should show a rising tend-ency in such circumstances, especially as it is fig-ured that with the failure of the winter wheat crop,and with the spring wheat crop of normal size, theproduction of wheat the present year will hardlymeet the need of wheat for home consumption,though it is undeniable, at the same time, that thereare large hold-over stocks of wheat both in thiscountry and in Canada. The May option for wheatin Chicago sold above 60c. a bushel on two daysthe present week, and it closed on Thursday (theChicago Board of Trade being closed yesterday onaccount of its being Good Friday) at 603/8c. in com-parison with 57y2c. the close on Friday of last week.At the opening of March, May wheat in Chicago wasstill selling at 47c. a bushel, from which it is easyto see what a change for the better has occurred dur-ing the interval since then. Spot cotton here inNew York was quoted at 6.85c. on Thursday asagainst 6.55c. on Friday of last week. Silver hasalso moved higher, the London price on Thursdaybeing 18 pence per ounce, against 171/2 pence onFriday of last week.Accounts regarding the steel trade have also again

been distinctly more encouraging. In the firstplace, the statement of the United States SteelCorp., issued Monday, on the unfilled orders on thebooks of the subsidiary corporations, proved a dis-tinct surprise, in showing for March 31 a decreasefrom the low figure of Feb. 28 of only 13,198 tons,whereas a reduction of some 100,000 to 250,000 tonshad been booked for, owing to the bank upheavalduring the month. Then the "Iron Age" statementon the condition of the steel trade was of a dis-tinctly encouraging character. The "Age" reportedthe largest rise of any week of the year in steel ingotproduction, the mills of the country being reportedas engaged at 191/2% of capacity as against only161/2% the previous week. Better automobile manu-facturing schedules were said to be largely respon-sible for the sharp increase, but there has also been,it was stated, improvement in other lines, notablytin plate for can manufacturers. Orders for sheetsfor beer barrels and beer bottle cases are reportedas also having contributed in some measure. Andthe bond market has displayed great firmness con-current with the rise in stocks. Of the stocks on theNew York Stock Exchange 142 touched new highlevels for the year the present week, while 53 otherstocks touched new low levels. On the New YorkCurb Exchange 51 stocks attained to new high fig-ures for the year and 176 stocks touched new lowlevels. Call loans on the New York Stock Exchangeafter ruling at 11/2% were reduced on Wednesdayto 1%.Trading this week has been fairly active. On the

New York Stock Exchange the sales at the half-daysession on Saturday last were 439,120 shares; onMonday they were 1,759,654 shares; on Tuesday1,434,500 shares; on Wednesday 747,960 shares;and on Thursday 1,659,970 shares. Friday beingGood Friday, the Exchange was closed. On theNew York Curb Exchange the sales last Saturdaywere 72,330 shares, on Monday 201,180 shares; onTuesday 199,385 shares; on Wednesday 127,205shares, and on Thursday 178,835 shares.As compared with Friday of last week, prices are

considerablyihigher as: a rule. General Electric

closed on Thursday at 1484 against 133/ on Fridayof last week; North American at 1834 against 165%;Standard Gas & Elec. at 8 against 63'; ConsolidatedGas of N. Y. at 45% against 403/2; Pacific Gas &Elec. at 223% against 20; Columbia Gas & Elec. at12 against 9%; Electric Power & Light at 43% against334; Public Service of N. J. at 373 against 33 8;International Harvester at 245% against 233'; J. I.Case Threshing Machine at 499 against 45; Sears,Roebuck & Co. at 193.' against 17%; MontgomeryWard & Co. at 14% against 13%; Woolworth at 303/gagainst 27; Safeway Stores at 36% against 343/s;Western Union Telegraph at 21% against 18%;American Tel. & Tel. at 933/i against 91; Inter-national TeL & Tel. at 7 against 53/s; American Canat 62 against 583/2; United States Industrial Alcoholat 25 against 233/s; Commercial Solvents at 14%against 135%; Shattuck & Co. at 7 against 6%; andCorn Products at 593/ against 565%.

Allied Chemical & Dye closed on Thursday at853 against 803 on Friday of last week; AssociatedDry Goods at 6 against 5; E. I. du Pont de Nemoursat 403/ against 35%; National Cash Register "A" at9% against 89'; International Nickel at 934 against8%; Timken Roller Bearing at 17% against 16;Johns-Manville at 2014 against 183'; Gillette SafetyRazor at 13 against 123/2; National Dairy Productsat 14% against 13%; Texas Gulf Sulphur at 20%against 19; American & Foreign Power at 53% against43'g; Freeport-Texas at 24 against 2134; United GasImprovement at 15% against 143/2; National Biscuitat 40 against 37; Coca-Cola at 82% against 81;Continental Can at 463/ against 433; EastmanKodak at 5534 against 493'; Gold Dust Corp. at163 against 153/s; Standard Brands at 1634 against15%; Paramount Publix Corp. ctfs. at % bid againstVI; Westinghouse Electric & Mfg. at 283/a against253'; Drug, Inc., at 35% against 339.; ColumbianCarbon at 323/ against 29%; Reynolds Tobacco classB at 32% against 3034; Lorillard at 149 against139; Liggett & Myers class B at 663 against609, and Yellow Truck & Coach at 33/b against3%The steel shares are also much higher. United

States Steel closed on Thursday at 33 against 263/ion Friday of last week; United States Steel pref. at6434 against 61; Bethlehem Steel at 1734 against153%, and Vanadium at 133 against 113.. In theauto group, Auburn Auto closed on Thursday at 3634against 333/i on Friday of last week; General Motorsat 13% against 123/2, Chrysler at 123% against 103%;Nash Motors at 1234 against 13%; Packard Motorsat 1% against 1%; Hupp Motors at 2 against 2, andHudson Motor Car at 4 against 39. In the rubbergroup Goodyear Tire & Rubber closed on Thursdayat 18 against 16 on Friday of last week; B. F. Good-rich at 5% against 5, and United States Rubber at4% against 4.The railroad list has shared in the general upward

swing. Pennsylvania RR. closed on Thursday at173/i against 16 on Friday of last week; AtchisonTopeka & Santa Fe at 4234 against 3934, AtlanticCoast Line at 2034 against 183%; Chicago RockIsland & Pacific at 2% bid against 2 8; New YorkCentral at 1734 against 163.'; Baltimore & Ohio at934 against 93/s; New Haven at 1334 against 12;Union Pacific at 66 against 62; Missouri Pacific at15% against 134; Southern Pacific at 143/ against1334; Missouri-Kansas-Texas at 734 against 7; South-ern Railway at 63/ against 5%; Chesapeake & Ohio


Volume 136 Financial Chronicle 2475at 283/i against 27; Northern Pacific at 12% against113/ and Great Northern at 83' against 69.The oil shares show only moderate changes, but

in an upward direction. Standard Oil of N. J.closed on Thursday at 283% against 273/i on Fridayof last week; Standard Oil of Calif. at 24% against2434; Atlantic Refining at 17 against 15%; and TexasCorp. at 143/i against 13. In the copper groupAnaconda Copper closed on Thursday at 83/ against73% on Friday of last wek; Kennecott Copper at 12%against 10%; American Smelting & Refining at 18%against 173/s; Phelps Dodge at 8 against 6%; Cerro dePasco Copper at 113/ against 9%, and Calumet &Hecla at 23/ against 23/.

STOCK EXCHANGES in the leading financialcenters of Europe were extremely quiet in thefour sessions this week that preceded the extendedclosings for the Easter holidays. The markets atLondon, Paris and Berlin were in session from Mon-day to Thursday, inclusive. They were closed yester-day, and will resume business next Tuesday. Trendswere irregular on all the European exchanges, butnet gains predominated for the short business week,despite the general uncertainty. The question ofgold payments by the United States, which has agi-tated European circles for some time, was given amore assured aspect late on Thursday, though notuntil after the close of business, when a license wasissued for a gold export to Holland. The Europeanmarkets were closed when this incident occurred,but they were influenced favorably early in theweek, when the directors of the B. I. S. authorizedordinary dealings by that institution in dollars, on asimilar basis with other gold currencies. Someother questions of great importance remained un-answered, among them the probable effect on Euro-pean trade and political relations of the new Hitlerregime in Germany. The London market gainedmaterial cheer Wednesday, from an annuncementin the House of Commons by Walter Runciman,President of the Board of Trade, that the outlines ofan agreement with Germany had been reached onquestions affecting the British coal industry, andthat agreements also were near completion with theScandinavian countries and with Argentina. Boardof Trade figures covering March foreign trade ofGreat Britain also were considered favorable, asthey reflected a substantial gain in imports and ex-ports as against February totals. These indicationswere partly offset by the disturbing political situa-tion in Europe, and by further declines in com-modity price indices in the leading industrialcountries.Trading on the London Stock Exchange was on a

restricted basis, Monday, owing to the impendingEaster holidays. There were no changes in Britishfunds, but other sections of the market improvedsubstantially, despite the light trading. Home railshares were firm and most of the industrial issuesalso advanced. South African gold mining shareswere especially good. The international list wassteady. In Tuesday's dealings British funds soft-ened slightly, but the tone otherwise was againcheerful. Industrial stocks reflected optimism, andthere were also extensive gains in the internationalsection. After an uncertain opening, Wednesday,prices again rallied on the London Stoak Exchange,partly as a result of unfounded rumors that Presi-dent Roosevelt had been authorized to defer the

June 15 war debt instalment. British funds movedup, while industrial stocks were steady. Anglo-American trading favorites recovered early lossesand closed unchanged. Holiday influences wereespecially pronounced, Thursday, and turnover waslimited. British funds remained strong, however,and some good features also appeared in industrialstocks. The international group of issues lost alittle ground.The Paris Bourse started the week with general

improvement, both French and international securi-ties advancing in a quiet market. There were signsof public buying, and also some short covering, dis-patches said, and prices closed at highest levels ofthe day. The market maintained its firm tone Tues-day, until near the end of the session, when a slightreaction carried values down from the best levels.Leading French securities closed with modest gains,while some improvement also was registered in theinternational section. Liquidation appeared on theBourse Wednesday, but on a small scale, and priceswere not greatly affected. The selling was attrib-uted to the impending four-day holiday, and thecoincident mid-month settlement. The declineaffected all issues with the exception of South Afri-can gold mining stocks. The Bourse regained itsgood tone in the final session of the week, Thursday.Shares of both gold and base metal mining com-panies were in demand, and the entire market wasstimulated by the advance in these sections.The Berlin Boerse was very quiet Monday, and

stocks declined, with only a few exceptions. Thelosses were held within moderate limits, chiefly as aresult of the modest trading. Leading sharesdropped 1 to 2 points, with the exception of auto-mobile stocks and one or two coal mining issues.The trend became more favorable Tuesday, notwith-standing continued small dealings. Stocks andbonds were alike marked up, with securities of someleading steel companies especially in demand. Aftera favorable opening Wednesday, prices receded alittle on the Boerse, but most stocks registered netgains for the session. I. G. Farbenindustrie im-proved nearly 4 points, and steel and colliery sharesalso reflected a good demand. The upward tendencywas resumed in very quiet trading Thursday.Gains were general in the session, some stocks mov-ing 5 to 6 points higher, and closing levels werethe best of the day, despite the protracted holiday.

iNTERNATIONAL discussions to be carried on inI Washington beginning next week, as a prelimi-nary to the World Monetary and Economic Confer-ence, have assumed ever greater importance in recentdays. Successive disclosures have indicated thatinvitations were sent to 11 major .countries for in-formal conversations, to be carried on by speciallyqualified representatives. In addition, invitationswere sent to 42 countries to participate in the Wash-ington talks through their regular diplomatic repre-sentatives in the capital. Although the plans nowmade are an outgrowth of the requests of the debtorgovernments for reviews of the war debt settlements,the forthcoming conferences in Washington willapparently be less concerned with intergovern-mental debts than with other problems of economicimportance. It is apparently planned to begin awidespread frontal attack on trade barriers, as oneof the forces tending to aggravate and prolong theworld-wide depression. There are signs in some


2476 Financial Chronicle April 15 1933foreign quarters, however, that the question of thedebt reviews will be uppermost in the minds of afew of the visitors to Washington, and the develop-ments, therefore, will be unusually interesting.The first invitations to be dispatched by the Wash-

ington Government were sent to Great Britain andFrance, on April 5, these countries being invited tosend personal representatives for discussions on abroad range of economic subjects. Prime MinisterRamsay MacDonald of Great Britain accepted withalacrity, and it was made known early this weekthat France would send former Premier EdouardHerriot. Washington reports of April 7 indicatedthat invitations to send delegations to Washingtonhad been transmitted on that day to the governmentsof Italy, Germany, Japan, China, Argentina, Braziland Chile. The list was finally extended to 11nations last Sunday, when similar invitations wereforwarded to the governments of Canada andMexico. Secretary of State Cordell Hull announced,Sunday, that this completed the list of "States towhom invitations were being addressed to send per-sonal representatives to Washington for prepara-tory discussions in connection with the World Eco-nomic Conference." Secretary Hull made known ata press conference the same day that the RooseveltAdministration is prepared to turn away from eco-nomic nationalism and begin the task of tearingdown tariff barriers, embargoes and import quotasbuilt up in the last 10 or 12 years. The representa-tives of the 11 nations will be dealt with individuallyand not as a group, it was emphasized.Further extension of the list of countries invited

to participate in the Washington preliminaries tothe World Economic Conference was announcedWednesday. A good deal of dissatisfaction had beenindicated in press dispatches among the diplomaticrepresentatives of countries not invited originally.Cognizance of this situation was accordingly takenby means of invitations to all the remaining 42 coun-tries which will participate in the World EconomicConference, and which also are represented at Wash-ington. These States were asked to join in the dis-cussions through their regular diplomatic channels.In a personal note to each of the 42 diplomatic repre-sentatives concerned, Secretary Hull stated that"there is so short a time remaining before the prob-able opening of the (World) conference that a de-tailed examination with a special representative sentto this country would seem possible only with a veryfew countries." In the formal invitations accom-panying the notes, the advisability of an early ex-change of views preliminary to the World EconomicConference in London was urged.It was pointed out in Washington dispatches that

even among the 11 nations invited to send specialrepresentatives, those that owe large sums to theUnited States Government are in a minority. Thisfactor, it was added, will tend to place the inter-governmental debt discussions in the background.Whether this interpretation is correct remains tobe seen, as it is evident that the individual natureof the discussions may make it necessary to discussthe debts primarily, in some cases at least. In anaddress at Washington, Monday, Secretary of Com-merce Daniel C. Roper called upon the country torecognize that purchases from abroad were as essen-tial as exports, and this expression also was acceptedas indicative of the plans of the Roosevelt Adminis-tration. Secretary Hull took an aggressive step in

the same direction, Tuesday, by issuing a statementdesigned to combat domestic opposition to reducedtariffs. Criticism that lowered tariffs would floodthe United States with cheap foreign goods andthrow thousands out of work were answered withsome force by Mr. Hull, who stated that similar"antiquated, obsolete and bewhiskered argumentswere made by some person 60 years ago." Thevalidity of the arguments may well be questioned,he observed, in view of the fact that 13,000,000 Amer-ican wage earners have been thrown out of theirjobs indefinitely under the operation of the highesttariffs in human history. Efforts will be made byPresident Roosevelt in. the forthcoming conversa-tions to negotiate reciprocal trade agreements, itwas indicated at the State Department, Tuesday,and the President also will seek a free 'hand in deal-ing with the June 15 payments on war debts. Re-ports from Washington, Thursday, indicated thatPresident Roosevelt appears to favor a moratoriumon the war debt payments for a limited period, onthe theory that the problem is too complicated forsettlement prior to the next important paymentdate.Views entertained by other nations with regard

to the forthcoming Washington conversations wereoutlined rather fully in a few instances, while inothers no intimations of any kind were given. PrimeMinister Ramsay MacDonald was interpellated inthe House of Commons, in London, on several occa-sions this week regarding the visit to Washington.He was asked Monday if he intended to discussGreat Britain's return to the gold standard, andassurances were requested that the wishes of Parlia-ment will be ascertained before any action is taken."I do not place any limit on the range of questionswhich may be considered in Washington," Mr. Mac-Donald replied. He added, however, that as thepurpose of his visit to America is discussion onlyand not the conclusion of agreements, the questionof assurances to Parliament does not arise. ThePrime Minister made no response to a request thathe do everything possible to prevent Great Britainfrom being the only country to pay her debt to theUnited States.In a foreign affairs debate on Thursday, Prime

Minister MacDonald outlined the objective of histrip to Washington as an attempt to bring thenations of the world closer together, for a co-opera-tive effort to solve economic and political problems.His predominant interest in Washington, however,will be the war debt question, he said. "June rushesahead of us," he said, "and the Government is stillas convinced as it was in November that preliminaryto any action that may be taken June 15 there oughtto be a personal, candid examination of the wholequestion. Anyone who has had the responsibility ofconducting Anglo-American affairs in the last 10 or15 years knows perfectly well that these paymentshave had a very important political effect, and asettlement of the debt question which is acceptableto both sides would be one of the greatest blessingsthat could be." The Prime Minister asserted thathe had received no pledges from Washington withregard to the debts, and he emphasized that thereis not the slightest foundation for reports in theBritish press that an agreement already had beenreached. Mr. MacDonald will sail from Southamp-ton on the Berengaria, to-day, accompanied by hisdaughter, Miss Ishbel, and by Sir Robert Vansittart,


I,

Volume 136 FinancialPermanent Under-Secretary for Foreign Affairs;Sir Frederick Leith-Ross, of the Treasury; A. E.Overton, tariff expert of the Board of Trade, andB. A. Darlow, the Prime Minister's private sec-retary.

After some uncertainty last week, it was statedin Paris, Sunday, that former Premier EdouardHerriot will be the special representative of Franceat the Washington preliminary conference. Inorder to permit three-cornered conversations inWashington, if such are found advisable, arrange-ments were made for M. Herriot's departure nextMonday on the Ile de France, the sailing date ofthe ship being advanced two days. M. Herriot willhave no official investiture as a Minister of State,and his role in Washington will be simply that ofan observer and an informant. In an address beforethe Foreign Affairs Commission of the Chamber ofDeputies, Wednesday, M. Herriot declared that hismission of informative character will "in no senseinfringe on the liberty of action of the French Gov-ernment, or on the liberty of action of the FrenchParliament, or on my own personal liberty." Theproblem of the forthcoming meeting in Washingtonwas discussed by the French representative, Thurs-day, in a protracted conference with PremierEdouard Daladier, Foreign Minister Joseph Paul-Boncour, and Finance Minister Bonnet. The onlycomment on this gathering was contained in a com-munication which stated that the officials hadexamined with M. Herriot the different problems onwhich the latter is charged with giving and gather-ing information. The new French Ambassador, M.Andre Lefebre de Laboulaye, arrived in Washington,Tuesday, and stated that he was simply an Ambassa-dor without a special mission.

Italy will be represented at the Washington pre-liminary conferences by Finance Minister GuidoJung, according to information made available inWashington, Thursday. The Italian attitude, asindicated in an Associated Press dispatch fromRome, will be based on a policy of solid internationalcollaboration. Warning was given at the sametime, however, that payment of the Italian debt tothe United States, other than with merchandise andservices, is "unthinkable." The German Govern-ment decided Monday that a special envoy for thediscussions is needless, and it was made known thatDr. Hans Luther, the new Ambassador of the Reich,will represent his country. Acceptances of theinvitations also have been received, or are expectedsoon, from Japan, China, Argentina, Brazil, Chile,Mexico and Canada. Numerous acceptances alreadyhave been received, dispatches state, from countriesinvited to participate through their diplomaticrepresentatives accredited to Washington.

EUROPE was a beehive of diplomatic activity thisweek, as statesmen hurried from capital tocapital in their various efforts to foster or check-mate the four-Power accord proposed by PremierMussolini and seconded by Prime Minister Mac-Donald. The probable ,outcome of the proposal isfar from clear, and the entire Continent remainsin a state of acute anxiety regarding the possibilityof a major clash. Two of the leading officials ofthe present German Government journeyed to Rome,last Sunday, apparently with a double mission.Vice-Chancellor Franz von Papen visited the Italianapital for a conference with Premier, Mussolini

Chronicle 2477and a series of meetings with Pope Pius. CaptainHermann Goering, Minister without portfolio, andchief aide of Chancellor Hitler, also conferred withIi Duce. The conferences with the head of theItalian State apparently concerned the possibilityof an alliance between Germany gnd Italy, whilethose with the head of the Catholic Church weresaid to concern the possibility of support by PopePius for the German Government's campaignagainst Communists. Interest in the conversationswas raised to a high pitch, Tuesday, when Chan-cellor Engelbert Dollfuss of Austria also arrived inRome, presumably to join the Italo-German parleys.At the conclusion of their visits, Thursday, the twoGerman Ministers made statements which indicatedthat Germany and Italy hereafter will work in har-mony toward the same objective and would standside by side on most international questions. Vice-Chancellor von Papen, on the other hand, is under-stood to have received little encouragement fromPope Pius.

Foreign Minister Nicolas Titulescu of Rumaniavisited London late last week as spokesman for allthe Little Entente countries in an effort to blockthe four-Power pact proposed at Rome. He de-parted last Sunday, a dispatch to the New York"Times" said, "much dissatisfied with the resultsof his conversations with Prime Minister MacDon-ald and Foreign Secretary Sir John Simon."French views on the proposal were elaborated Mon-day, in a meeting of the Council of Ministers, anda reply to the British and Italian suggestion wassent to London and Rome, but not published. Itwas understood, however, that the usual diplomaticassent was given, together with reservations regard-ing the fitting of the accord into the framework ofthe League of Nations. "The policy of M. Daladier'sGovernment has been to re-express the terms of theoriginal four-Power idea in such a way as to safe-guard the French viewpoint," a Paris report to theNew York "Times" remarks. The four-Power pro-posal also was the subject of a bitter discussion inthe London House of Commons, Thursday. FormerForeign Secretary Sir Austen Chamberlain criti-cized Prime Minister MacDonald for consideringtreaty revision at this time. Europe is menaced andGermany afflicted, he declared, by the narrow, ex-clusive, aggressive spirit now prevalent in the Reich."Is that a Germany to which Europe and we canafford an offer of equality of status?" he asked.Prime Minister MacDonald and Foreign SecretarySir John Simon explained in reply that there hadbeen no commitments and no agreements on the partof the British. The conferees in Rome, moreover,had no thought of revising any frontier, it was de-clared. They wished merely to devise machinerywhereby treaty revision might some time be under-taken and thus prevent Europe from being dividedinto two camps opposed to each other, Sir Johnremarked.

I N THE course of his inaugural address as Presi-dent of the Reichsbank, Dr. Hjalmar Schacht

made several statements late last week which aredistinctly reassuring to the numerous foreign credi-tors of Germany and her citizens. Shareholders ofthe Reichsbank were informed by its new Presidentthat the stability of the Reichsmark will be firmlymaintained, and he-also expressed *a determinationto fulfill all German commercial debt obligations to,


2,478 Financial Chronicle April 15 1933foreign nations. Some doubt on both these pointswas occasioned last week by the announced inten-tion of Dr. Schacht to repay the outstanding $70,-000,000 of the credit extended the German centralbank in June 1931 by the Bank of England, the Bankof France, the B. I. S., and the Federal Reservebanks, as it was realized that the repayment wouldreduce the German banknote coverage markedly.Dr. Schacht admitted frankly to the shareholdersin the meeting on April 7 that the status of theReichsbank's gold reserve is "extremely serious,"but he left no doubt of his conservative views on thecardinal points of international finance. Repay-ment of the $70,000,000 credit actually was effectedearly this week, according to dispatches from Berlinand Basle. It is likely, a Berlin report to the Associ-ated Press adds, that the $45,000,000 balance of a$50,000,000 advance to the Gold Discount Bank ofGermany, made by private American bankers, willalso be repaid on June 30 next.Dr. Schacht commented briefly on the political

overturn in Germany, which was followed by theresignation of Dr. Hans Luther and his own electionas President of the Reichsbank. The National-Socialist revolution, he said, has cured Germany ofthe illusion that economic improvement could beobtained with foreign help alone. Earlier recog-nition of the need for self-help would have saved theReich much economic suffering, he added. Repay-ment of the $70,000,000 credit was decided upon,he remarked, because it was so encumbered with con-ditions that "its use for any other purpose thanbeautifying our weekly balance sheet was quite outof the question." Pointing out that the credit costGermany 55,000,000 marks ($13,090,000) in interest,Dr. Schacht added: "If the repayment of this loanhas as a consequence that foreigners come to realizethe seriousness of the German exchange situation,then a happy result will have been reached."German export surpluses have dwindled in recent

months, the new Reichsbank President said, and headded cryptically that "this development neces-sarily leads to automatic results." Whatever theconsequences, however, "we must fulfill our com-mercial debt obligations to foreign nations. in orderthat confidence in Germany, which we require forour future connections in world trade, may be main-tained," he declared. That Germany merits foreignconfidence was held obvious in view of her feat inpaying 10,000,000,000 marks ($2,380,000,000) indebt service during the last two years at the costof terrible economic sacrifices. Dr. Schacht criti-cized as particularly unpardonable the policy of theGerman banks in accepting large foreign credits, andthe policy of foreign banks in offering the funds,in view of the growing knowledge of the transferproblem as it was occasioned by reparations. Thetransfer problem now appeared also in relation tocommercial debt, as a result of the extraordinaryamount of the transfers, he pointed out.The German foreign exchange situation has grown

steadily worse, despite the constant tightening ofexchange restrictions, Dr. Schacht stated. The re-strictions can be lightened or removed only whenthe Reichsbank's reserves of gold and foreign ex-change are enriched, he added, thus giving Germany"new freedom of movement within internationalpayments traffic." Remarking that stability of theReichsmark forms the basis of confidence in theGerman economic system, Dr. Schacht stated em-

phatically that "the Reichsbank has ever before itseyes the goal of maintaining the constant value ofthe mark." German depositors were informed inprecise terms that "the Reichsbank keeps a tirelessvigil on its post when it is a question of maintainingwhat the working and saving of the German peoplehave accomplished." Rumors that the Reichsbankwould advance huge credits on work creationschemes were flatly denied by Dr. Schacht, who de-clared that more consideration would be given anapplicant for a credit of 1,000 marks than to anapplicant for 100,000,000 marks of credit. Genuineeconomic impetus can best be given, he remarked, bydeveloping the Reich's agricultural production,which would save the foreign exchange now ex-pended for imports.After delivering this address, Dr. Schacht hurried

to Basle, for the regular monthly meeting of B. I. S.directors on Sunday and Monday. Although hewas sharply questioned in regard to policy, accord-ing to a report to the New York "Herald Tribune,"the Reichsbank President is said to have made fewstatements beyond the remark that he was at theB. I. S. meeting to listen and learn. The Basle meet-ing was preceded by a long conference between Dr.Schacht and Montagu Norman, Governor of theBank of England, held last Saturday in the littletown of Badenweiler, in the Black Forest. The twobankers carefully canvassed the world financialsituation, a dispatch to the New York "Times" indi-cated. They are said to have agreed "upon closerco-operation between the British and German cen-tral banks, particularly in regard to exchange andcredit problems."

POWER in Germany has been concentrated to anextraordinary degree in the hands of the Fas-cist regime in Berlin, during the last 10 days, andthere appears to be ever less likelihood of successfulopposition to Chancellor Adolf Hitler and his Nazifollowers. The country was summarily convertedfrom a Federation of States into perhaps the mosthighly centralized regime in the world, April 7,through Cabinet approval of a law for rule of theStates by regents appointed by the President withthe advice and consent of the Chancellor. The sig-nificance of this move was made apparent, Tuesday,when the Nationalist, Franz von Papen, was removedfrom his post as head of the Prussian State and theNational-Socialist, Hermann Goering, was ap-pointed to the office. A further indication of thegrowing concentration of power in the hands of theNazis was given last Sunday, when decrees werepublished placing control of all budgetary mattersunder the direct control of Herr Hitler. The latteravoided the acute difficulties of German finance forthe time being by simply extending for three months,until the end of June, all the provisions of the bud-get for the fiscal year ended March 31.The campaign of intolerance and extreme nation-

alism was continued this week, some of the stepsseeming almost incredible. An undergraduateorganization fostered by the Nazis decided Wednes-day to burn all books in the possession of studentswritten by Jewish authors. Fifteen university pro-fessors, including some of the most eminent men oflearning in the Reich, were dismissed from theirposts Thursday, because of Jewish blood or pacifistopinions. A drastic law, published last Sunday,aims at the replacement of all Jewish officials in


Volume 136 Financial Chronicle 2479the Reich Government, the States and the localgovernment units by Aryan "Nazis." The very ableDr. Paul Schwarz, who has been German Consul inNew York for four years, was informed Tuesdaythat he would have to take "an immediate leave forpolitical reasons."

ACAUSE CELEBRE in Moscow, which may in-fluence Anglo-Soviet relations profoundly,was started Wednesday, when five British engineerswere placed on trial on charges of espionage andsabotage. Russian officials have developed the in-teresting habit of staging tremendously sensationaland diverting trials whenever the internal strainbecomes very great. It may not be quite correct toconnect the present trial with the food shortagethroughout Russia, but the fact remains that thespectacle in Moscow has placed the food difficultiesfar in the background. The engineers, who are allemployees of the Metropolitan-Vickers ElectricalCo., Ltd., of London, were brought to public trialdespite strenuous efforts for their release by theBritish Government. One of the group, W. H. Mac-Donald, made a startling confession of guilt whenthe process began, and a damaging deposition byL. C. Thornton, one of the accused, also was readinto the record. Mr. MacDonald changed his pleato not guilty on Thursday, while Mr. Thorntonrepudiated his deposition in its entirety the sameday, intimating at the same time that it was madeunder pressure applied by the OGPU, or secret policeof Russia. All of the other British engineers main-tained their innocence. Demands of the BritishGovernment for release of the accused having provedunavailing, preparations were made by the Londonregime early this month for reprisals if such arefound advisable. An enabling act, giving the Lon-don Cabinet power to impose an embargo on importsfrom the Soviet, was passed by the House of Com-mons on April 5. The reprisals could be madeeffective under the measure for a period of not morethan three months. There is little doubt that themeasure will be employed, if the British engineersare convicted under circumstances that the LondonGovernment considers in any way doubtful.

VRATERNAL co-operation among the 21 repub-lies of America was urged by President Roose-

velt in a speech at Washington, Wednesday, de-livered in connection with the celebration of Pan-American Day. In the course of his address Mr.Roosevelt indicated that the attitude of the newAdministration toward the Monroe Doctrine willbe much the same as that of previous regimes. TheDoctrine, also referred to by the President as the"Pan-American Doctrine," is for the protection ofthe Western Hemisphere against outside aggressionand the maintenance of independence by the peoplesof the American continent, he said. Reminding hisaudience that he had dedicated the United Statesin his inaugural address to the policy of the goodneighbor, Mr. Roosevelt remarked that "it is onlyby sympathetic respect for the rights of others anda scrupulous fulfillment of the corresponding obli-gations by each member of the community that atrue fraternity can be maintained." Although hedid not mention by name the four countries of SouthAmerica at present engaged in armed disputes,President Roosevelt emphasized that he regards ex-isting conflicts between four American republics

as a backward step. The Executive also remarkedon the vital importance of immediate action by allthe American Governments for abolishing unneces-sary and artificial barriers and restrictions whichnow hamper the healthy flow of trade between theirpeoples.No important change has occurred, in the last

two weeks, in the conflicts between Paraguay andBolivia regarding the Gran Chaco, and between Co-lombia and Peru regarding the Amazon River portof Leticia. Three small Bolivian forts in the Chacoarea were captured by Paraguayan troops early thismonth, according to official statements at Asun-cion, but two of these places were retaken hardlya week later by Bolivian forces, La Paz announce-ments indicated. Fighting this week has been desul-tory, owing to inclement weather, but there arerumors of an impending encircling movement oflarge proportions by the Bolivians. A group ofSouth American neutrals, composed of Argentina,Brazil, Chile and Peru, is continuing its efforts tofind a basis for the settlement of this conflictthrough arbitration, but the likelihood of successappears at this time to be no greater than that whichattended the previous attempts of the Commissionof Neutrals at Washington and the League of Na-tions. The similarly undeclared war between Co--lombia and Peru is continuing, but on a very modestscale at the moment. Findings by the League ofNations, in which Peru was held the aggressor atLeticia, are of material importance, and it is heldpossible that they will contribute to a peaceful ad-justment of this struggle.

THERE have been no changes the present weekin the discount rates of any of the foreignCentral banks. Present rates at the leading centersare shown in the following table:

DISCOUNT RATES OF FOREIGN CENTRAL BANKS.

Country.Rats faRfnot4pr.14

DateEstablished.

Pre-stoutRate.

Country.Rate inAwedApr.14

DareRstablishea.

Pre-stowRaid.

Austria-- 5 Mar. 23 1933 6 Holland... 214 Apr. 18 1932 3Belgium 314 Jan. 13 1932 234 Hungary 414 Oct. 17 1932 5Bulgaria 814 May 17 1932 911 India 314 Feb 16 1933 4Chile 414 Aug. 23 1932 514 Ireland. 3 June 30 1932 314Colombia.

- 5 Nun. 19 1932 6 Italy 4 Jan. 9 1933 6Csechoslo- Japan 4.38 Aug. 18 1932 6.11

vakla____ 314 Jan. 25 1933 414 LIth uanla_. 7 May 5 1932 734Danzig _ _ _ . 4 July 12 1932 6 Norway... 4 Sept. 1 1932 434Denmark__ 314 Oct. 12 1932 4 Poland 6 Oct. 20 1932 714England. __ 2 June 80 1082 234 Portugal.._ 6 Mar. 14 1933 6Estonia_ _ _ _ 534 Jan. 29 1932 614 Rumania_ - 6 Apr. 7 1933 710nland___ 6 Jan. 31 1933 7 South Africa 4 Feb. 21 1933 6France_ ___ 234 Oct. 9 1931 2 Spain 5 Oct. 22 1932 634Germany - - 4 Seot.21 1932 5 Sweden__-_ 334 Sept. 1 1932 4Greece 9 Dee. 3 1932 10 SwItserland 2 Jan. 22 1931 234

In London open market discounts for short billson Thursday were 3/2@9-16%, as against 9-1.6@%%on Friday of last week, and 9-16@%% for threemonths' bills, as against %@l1-16% on Friday oflast week. Money on call in London on Thursdaywas %%. At Paris the open market rate remainsat 234% and in Switzerland at 13/2%.

rr HE Bank of England statement for the weekended April 12 shows a gain of 1,976,079 in

bullion, bringing the total up to 179,336,484, thelargest amount ever held by the Bank. Last weekthe figure was 177,360,405, which was the largestamount up to that time. Previous to last week thehighest figure on record was 176,584,789, whichoccurred Sept. 12 1928. At April 13 1932 the Bankheld only 121,448,645 of gold. Circulation, duringthe past week, expanded 4,701,000, resulting in aloss of 2,725,000 in reserves. Public deposits rose3,889,000 while other deposits decreased 20,-335,772. The latter consists of bankers' accounts,


2480 Financial Chronicle April 15 1933which fell off 20,935,559 and other accounts whichincreased 599,787. The reserve ratio is up to44.42% from 41.52% a week ago; last year it was32.13%. Loans on Government securities decreased14,120,000 and those on other securities rose095,396. The latter includes discounts and ad-vances which fell off 16,621 and securities whichincreased 12,017. The discount rate remains 2%.Below we show a comparison of the different items forfive years:

BANK OF ENGLAND'S COMPARATIVE STATEMENT.

April 121933.

April 131932.

April 151931.

April 161930.

April 171929.

E Circulation a 376,370.000 356.753.055 354,363,504 361,321,558 358,940.958Public deposits 17,972,000 12.258.974 8,372.224 14.798.522 17,876,233Other deposits 123,758.596 111.270.357 96,361.015 102.118.709 96,795.717Bankers accounts_ 88,663.327 78.446.795 61.230.462 65.815,639 60,779,118Other accounts_ _ _ 35.095.260 32,823,562 35,130,553 36.303.070 36.016,599

Govt. securities 68.860.779 55.385,906 34,334,684 58.282,629 48,346.855Other securities 27,561,401 46.101.306 36,227,575 16,823.819 26,650,421Dint. & advances_ 11.632,097 11.267.453 8,375.954 6,386.083 11,028.809Securities 15.929,304 34.833,853 27,851,621 10,442.736 15,621.612

Reserve notes & coin 62.965.000 39 695.590 51,838,890 59,466.768 57.330.825Coin and bullion 179,336,484 121,448,645 146.202,394 160,788,326 156,271.783Proportion of reserve

to liabilities Ftnnk rah.

44.42%25"

32.13%fll%.

49.49%are

50.86%244%

49.99%Al.4%

a On Nov. 29 1928 the fiduciary currency was amalgamated with Bank of Englandnote Issues, adding at that time 234.199,000 to the amount of Bank of Englandnotes outstanding.

THE Bank of France in its statement for the weekended April 7 shows an increase in gold holdingsof 3,190,649 francs. Total gold is now at 80,412,-053,150 francs, in comparison with 76,909,171,154francs last year and 56,107,297,136 francs the previ-ous year. Credit balances abroad reveal a decreaseof 52,000,000 francs and bills bought abroad of1,000,000 francs. Notes in circulation show a con-traction of 736,000,000 francs, reducing the total ofnotes outstanding to 85,360,030,325 francs. Cir-culation a year ago aggregated 82,523,540,150 francsand two years ago 78,707,502,760 francs. An in-crease appears in French commercial bills discountedof 167,000,000 francs, while advances against secur-ities and creditor current accounts register declinesof 5,000,000 francs and 98,000,000 francs respectively.The proportion of gold on hand to sight liabilitieswhich is now 77.06% compares with 70.16% lastyear and 55,5% the year before. Below we furnisha comparison of the various items for three years:

BANK OF FRANCE'S COMPARATIVE STATEMENT.

Changesfor Week. April 7 1933. April 9 1932. April 10 1931.

Francs. Francs. Francs. Francs.Gold holdings +3,190.649 80,412.053,150 76,909,171,154 56,107,297,136Credit bals. abroad..a French commercial

bills discounted _ _

52,000,000

+167,000,000

2,353.678.976

4,318,163.108

4,230,399,327

4,005.259,763

6,911,796,825

5.534,200,508bBills bought abroad 1,000,000 1,969,324.353 8.169,890.597 19.397.913.724Adv. against securs_ 5,000.000 2,708,329,457 2,807,043,296 2,926,756,650Note circulation_ _ _ _ 736,000,000 85,360,030.325 82,523,540.150 78,707,502,760Credit current accts. 98,000,000 18,986,850,324 27,101,903,868 22,228.475.569Proport'n of gold onband to sight Bab_ +0.61% 77.06% 70.16% 55.59%

a Includes bills purchased in France. b Includes bills discounted abroad.

THE Reichsbank's statement for the first quarterof April reveals a loss of gold and bullion of92,884,000 marks. The total of bullion is now at645,761,000 marks, in comparison with 878,742,000marks a year ago and 2,343,644,000 marks the yearbefore. Reserve in foreign currency, bills of ex-change and checks, silver and other coin and noteson other German banks record increases of 12,679,000marks, 44,232,000 marks, 23,746,000 marks and5,250,000 marks respectively. Notes in circulationshow a decrease of 87,166,000 marks, bringing thetotal of the item down to 3,432,508,000 marks.Total circulation last year was 4,085,675,000 marksand the year before it was 4,377,850,000 marks. Adecrease appears in advances of 137,609,000 marks,in investments of 82,987,000 marks, in other assets

of 122,057,000 marks, in other daily maturingobligations of 121,003,000 marks and in otherliabilities of 197,185,000 marks. The proportion ofgold and foreign currency to note circulation whichstands at 22%, compares with 25% the same timelast year and 57.3% the previous year. A comparisonof the various items for three years is furnishedbelow:

REICHSBANK'S COMPARATIVE STATEMENT.

Changesfor Week. April 7 1933. April 7 1932. April 7 1931.

Assets Reichsmarks. Reichsmarks. Reichsmarks. Retchsmarks.Gold and bullion 92,884,000 645.761,000 878,742,005 2,343,644,000Of which depos. abroad No change 49,257,000 92,922,000 207,638.000Reserve in foreign curr. +12.679,000 109.640,000 141,708,000 165,605,000Bills of exch. and checks +44,232,000 2.859.327,000 3,176,374.000 2,023.860.000Sliver and other coin._ +23,746.000 200.225.000 175,964,000 143,228,000Notes on other Ger. bks. +5,250,000 8.086.000 7,465,000 9,119,000Advances 137.609,000 72.719.009 100,415.000 155,219,000In vestments 82,987.000 484,304,000 361,517,000 102,690,000Other assets 122,057,000 047,669,000 855,489,000 519,932.000

LlaDitittesNotes in circulation__ _ 87.166.000 3,432,508,000 4.085,675,0004,377,850,000Other daily matur. obilg. 121,003.000 321,877.000 370,263,000 332,848.000Other liabilities 197.185,000 404,322.000 674,310,000 258,572,000Propor.of gold & foreign

curr. to note circurn. 1.7% 22% 2531, 57.38t

THE easy tendency prevalent in the New Yorkmoney market since the banking crisis endedwas again in evidence this week, rates in all depart-ments sagging further under the relaxed conditionsand the pronounced official easy money policy.Bankers' acceptance rates were lowered %% Tues-day, and a further IA% Wednesday, and quotationsalso were shaded on commercial paper. The ClearingHouse Committee met Monday and announced thatinterest paid on demand and time deposits effectiveThursday would be lowered to 12% and 1%respectively, as against the former rate of 1% ondemand and 13/2% on time deposits. The informalcommittee that acts on foreign deposits met Thurs-day and indicated that rates would be cut to ondemand and 1% on time deposits, a reduction ineither case of

Call loans on the New York Stock Exchange werequoted at 1 Monday and Tuesday, both forrenewals and new loans. The renewal rate Wednes-day was again 13/2%, but the level for new loansdropped to 1% later in the day. The rate Thursdaywas 1% for renewals and new transactions. In theoutside or street market call loans were reportedavailable at 1% while the official rate was 13/2%, andat VI% while the official rate was 1%. Time moneywas moderately easier. An issue of $75,733,000 in91-day Treasury discount bills was awarded Mondayat an average rate of 0.77%. Brokers' loans againststock and bond collateral declined $1,000,000 in theweek to Wednesday night, according to the reportof the Federal Reserve Bank of New York. Goldmovements in the same period resulted in a net gainof $8,407,000 in the stocks of the country.

DEALING in detail with call loan rates on theStock Exchange from day to day, on Mondayand Tuesday the rate for new loans and renewalswas 13/2%. On Wednesday, after renewals had beenmade at 13.'%, the rate on new loans was reduced to1%, which was the rate on Thursday for both newloans and renewals. There has been no movementin the market for time money this week. Rates arenominal at 3% of 1% for 30 to 60 days and 1% forthree to six months. There has been very little busi-ness transacted this week in commercial paper.Trading has been extremely light, though the shortageof high class paper is still the prime factor. Ratesare nominally quoted at 2M@234% for all classesof paper.


Prime eligible bills

Volume 136 Financial

THE market for prime bankers' acceptances hasbeen very quiet this week. Very little businesshas been transacted and only a small amount ofpaper has been available. Rates were reduced onTuesday of 1% in both the bid and asked columnsfor all maturities. On Wednesday there was afurther reduction of of 1% all around. Thequotations of the American Acceptance Council forbills up to and including three-months' bills are4% bid and 4% asked; for four months, 4% bidand 34% asked; for five and six months, 14% bidand 1% asked. The bill buying rate of the New YorkReserve Bank is 2% for bills running from 1 to 90days. No rates are quoted for bills of longer ma-turities. The Federal Reserve banks' holdings ofacceptances have dropped during the week from$285,973,000 to $246,964,000. Their holdings ofacceptances for foreign correspondents also decreasedduring the week from $50,330,000 to $48,274,000.Open market rates for acceptances are as follows:

SPOT DELIVERY.180 Days-- 150 Days 120 DaysBid. Asked. Bid. Asked. Bid. Asked.

Prime eligible bills 1% 1 1% I M90 Days 60 Days 30 DaysBid. Ailed. Bid. Asked. Bid. Asked.Si Si Si Si

FOR DELIVERY WITHIN THIRTY DAYS.Eligible member banksEligible non-member banks 1;6% bid

1%% bid

THERE have been no changes this week in therediscount rates of the Federal Reserve banks.The following is the schedule of rates now in effectfor the various classes of paper at the differentReserve banks:DISCOUNT RATES OF FEDERAL RESERVE BANKS ON ALL CLASSES

AND MATURITIES OF ELIGIBLE PAPER.

Federal Reserve Bank.Rate inEffect on Date PrertattsApril 14 Established. Rate.

Boston 3% Oct. 17 1931 2 %New York 3 Apr. 7 1933Philadelphia 3% Oct. 22 1931 3Cleveland 3% Oct. 24 1931 3Riehmond 3% Jan. 25 1932 4Atlanta 3 % Nov. 14 1931 3Chicago 33.i Mar. 4 1933 25iSt. Louis 33 Oct. 22 1931 23Minneapolis 3% Sept. 12 1930 4Kansas City 3 % Oct. 23 1931 3Dallas 3% Jan. 28 1932 4Elan Francisco 334 Oct. 21 1931 234

STERLING exchange has been extremely dull, asis characteristic of the Easter holiday seasonexcept for the panicky rise on Thursday in whichsterling shared in common with the rest of the foreignexchanges. Almost all the financial markets through-out the world are inactive during Holy Week. OnGood Friday all markets were closed and in manymarkets trading is practically suspended for severaldays before and after Easter. From Saturday lastuntil shortly after the opening of the market onThursday sterling appeared stablized at [email protected]. Just before noon on Thursday adrive against the dollar developed in Europe, withrenewed attempts to withdraw balances held here,sending sterling exchange to a record high for theyear of 3.474 for cable transfers. The extremelyhigh rate, however, was largely nominal and thetransactions effected at this figure were few andsmall. Moreover, part of the rise was lost before theclose, and in the limited dealings here on Friday (theEuropean markets being closed) trading was at thelower figure reached during the reaction at the closeon Thursday, namely [email protected]. The rangefor the week has been between 3.41 and 3.474 forbankers' sight bills, compared with a range of between3.414 and 3.4254 last week. The range for cable

Chronicle 2481transfers has been between 3.414 and 3.474, com-pared with a range of between 3.414 and 3.4234 aweek ago. Thursday's market was spectacular, with-out any commercial or other transactions to justifythe extremely high quotations for sterling and forother European currencies with respect to the dollar.It is well understood that the dollar occupied thespotlight in exchange transactions for some few weeksbefore March 4, when President Roosevelt pro-claimed the banking holiday. Following the rehabil-itation of the banking situation here in the first weekof the new administration the interest of foreignexchange operators in all markets was centered onthe firmness of the dollar. Hence the upswing inthe European units and the drive against the dollaron Thursday this week was the more surprising.However, all the high rates quoted, whether for ster-ling or other European currencies, were purely nom-inal and banks' traders were unable to establishmarkets in many curreneies. One authority said,"Offerings of foreign currencies dried up completelyin the face of active bidding and the violent fluctua-tions reflected the extreme scarcity of exchange inan exceptionally thin market."The break in dollar exchange was the signal for

an outburst of unfounded rumors regarding inflationand possible devaluation through a reduction in thegold content of the dollar. These rumors, howeverwild, nevertheless found some support in recentutterances of members of Congress. There can beno doubt, of course, that seasonal factors now favorthe European currencies and will continue to do sountil about the end of August. With the resumptionof normal trading after Easter it will be extremelysurprising if the high quotations registered for sterlingand the major European units can be sustained. Itis usual for sterling to firm up just before Easter, asthe season is characterized by large private gift re-mittances and has always been especially effectivein firming sterling, francs, marks, and lire. Allbusiness factors at this time are against forces whichmight assist a speculative drive against the dollar.The National Industrial Conference Board pointsout that foreign trade throughout the world droppedat the rate of about $10,000,000,000 a year for thelast three years. The total value of foreign tradeof 24 countries which together account for aboutfour-fifths of the world's trade, the Board reports,declined from $52,895,000,000 in 1929 to about$20,051,000,000 in 1932. The European currenciesgenerally receive extraordinary support from Ameri-can tourist trade following the Easter holidays. Thepeak of expenditure for American tourists, includingthose in Canada and Mexico occurred in 1929,whenthe amount totaled $868,000,000. In 1930 thefigure had dropped to $811,000,000 and in 1931 to$570,000,000. It is doubtful if American touristexpenditures abroad in the current year will reacheven $400,000,000. The dollar will continue firmand every European interest of importance is underthe necessity of building large balances on this side,as their present funds here are supposed to be at lowlevels. Nevertheless the two further reductionswhich :took place in bill rates in New York this weekand reductions in other money rates together with theplethora of idle domestic funds in our banks are notencouraging to a transfer of European funds toAmerican markets at this juncture.

Disregarding the extraordinary foreign exchangemarket of Thursday, the sterling situation is essen-


2482 Financial Chronicle April 15 1933tially unchanged from what it has been for severalmonths. Throughout the world there has been acomplete reestablishment of confidence in sterling andin the prospects for the pound. It is generally be-lieved