The sun., 1913-10-13
FINANCIAL REVIEW
OF The PAST WEEK
Forecast Made Abroad and How
II Compares With Events
and Prospects.
FL ROPES HARD PROBLEM
World Conditions and COmplica-
tions Threatened by
Policies.
RI ROPES HARD PROBLEM

EffeFhl VI lUe sIedt MON vi
London and Smiths Bank. Limited. Sir
Felix Schus,er the governor Of the bank.
made something Of a forecast Of proba bic
Developments in the balance OF the year
which Is particularly interesting to recall
at this time. Sir Felix is one Of the most
, eminent OF British bankers and authority
usually attaches to his utterances on
financial conditions. His remarks which
are about to be quoted here attracted
wide attention at the time because Of
! their moderate optimism. but have proba-
bly, been forgotten by now. lie said:
The late Lord .Avebury used to say
that. given a s per cent bank rate for a
| fairly prolonged period. gold would he
sure to flow into London. and although h
| the demand from many quarters had
Srown of late years think the saying
remains tru. even though a little more
| time than formerly may be required tn
| bring about the result. Thus there seems
to be no reason whatever for taking an
| alarmist view Of the monetary situation
| IL only We hold OUR hand for little while
| and do not lend too freely to foreign ma
| tions the economic position of the country
IL 30 strong that gold will flow In natur
| ally and We shall well he able to deal with
the usual autumnal demands as they arise.
J \ certain amount Of self-restraint, how
ever, is necessary in the matter OF new
isues OF capital. and the general develop
men; which has been 80 rapid during the
past Few years may possibly be some " hat
| retarded but with the exercise Of a fair
| amount OF caution II In probable that va
| need not appfehend any excessively high
\ rates for money during the autumn. 50
that the large and prosperous trade Of the
country may progress without disturbance
Or hindiance. That there will he con.
| doubt IL Is needed for the development,
OF the newer countries which in recen,
years nave added NJ greatly to the volume
OF our own Exports and 1t Is desirable tina
such development should not be suddenl,
restricted but peace must be restored. and
a reduction should tax. plac. in tn. vas,
sc'le of unpioduciNe expenditure among
all European nations. an -xpcnd.tur.
which must have the most serious conse-
! ouenc"s on the economic Developments ot
| the world at large"
/ Comparing this survey with the hap
penings ~ the last three months and
with the Impending prospect what Il" W.
J find" Among other things we find tina,
I gold has not flowed into London hut gu,
of il. To b- sure the Bank Of England.
discount rate from April IL last I,
October was 81. per cent. and not j
hut the first week ~ return To ! per cent
did not check the outward flow of gold
! especially from the bank itself Efforts
! wer. made during the summer to spare
| the lending hand in London but neither
! this nor the economic position Of the
country sutiic-d. to bring in much goo
| while exports of gold continued. The
ability Of financial London to deal with
autumnal demand has become debatable
aud certainly since the advent of autumn
there has been no practice of selr-re.
straint in the new issues of capital. de
, spite the increasing congestion Of ths
| investment market. British trade. accord
| ing tn the August and September state
| ments. has not progressed without hin
dranc- or disturbance. for the reports
| show reactionarN tendencies Further
more. the exploitation of wealth creating
resources IN new countries has been sud
denly restricted by the rtailment oi
capital and credit supplies with which
Great Britain and the rest ~ Europe
have for years past been satisfying vora
| cious appetites. Nor has there been q
restoration uf peace in the Balkans moi
! "A reduction in the scale OF unproductivs
expenditure by the nations OF Europe =,
, far AS concerns the toll taken Of wealth
/. to support huge military armaments.
| These are reasons why there has beer
: fresh financial unsettlement abroad IL
the last few DAYS. and they partly explain
why whatever trend there may he in oul
! own country toward contraction of vol
, 'imes and values has received some accsl
! ration. What was said in these columns
a week ago about the mOmentOus siR
niicance of the restoration OF the Bank
~ t.ng,a nd's discount rate to 8 per cent
has been emphasized by the occurrences
and Indications since. II was point ell ou
here that the elevation OF the bank rate
| was q warning sign. although II was ad
mitted that immediate differences Of q
definite character as to the causes Of tn,
warning might not he any more readil!
drawn than IL usual, the case when tn
most significant of all financial per
centages changes in the direction o
money market stringency. Events seem
however to make the meaning OF the
per cent. bank rate little clearer.
The weekly statement Of the Bank %
Ensla nd published last Thursday showe'
that II has lost almost $4,000, 0O~ gol'
| after raising the rate. Its present golt
holding. are almost 100000, 900 below
those of n wear ago which were In turi
decidedly below an amount that woul'
he considered normal or satisfactory ever
! in relatively undisturbed times. Mean
while the Bank of France. the Bank q
Germany and most OF the other centia
banks abroad have been able. although
very much at the expense OF domesti
, conditions. to recruit gold supplies abov
last years figures. and In some cases
notably at Berlin to establish recor'
maximum, Circumstances would there
fore suggest that the worlds centra
money market and its central institution
are at a disadvantage which cannot b
permitted lcns to continue and that ther
il an imminent likelihood OF a furthe
rise in the London bank rate II there ar
special causes for neasiness regarding
the British financial position. Are ther
not?
Is not something OF the sort signife'
by the relapse Of cOnsOls to about tn
low record price" How about the "hoke'
and suffocated status OF the British In
! yestuent market. on which new caDita
promotions have been pouring In hood
the offerings coming from evcrywhc' Z
stO. 900. 600 Of st. Petersburg 4 ias at 9.'y
si7. 500, 600 OF New Zealand - at 9s'a
and 40 on This. too although under