New-York tribune., 1921-11-07
Cheaper Money
Hoped to Help
British Bonds
Reduction in Bank Rate
Expected to Stimulate
Demand for Government
Securities: Not a Surprise
improved Outlook Is Seen
Collapse of the Mark Gives
Much Concern, However:
War Debts Still Talked
From Tae Tr,ouns-s snron,., ,5,,r.,,,

~'pSF'snt' lS2l. New York Tribune Inc
LONDON. Nov. 6,-~The feature of
Vhe nhanclal week mere was the reduc-
eion In the redlscount rate of the Bank
W ol England from IA to per cent. but
the action of the banks directors
caused comparatively little surnrise
Experts agreed that the unsettled
uomestlc, international and political
situations have been the chief factors
IN keeping the rate UP so long. The
action by the New York Federal Re-
serve Bank undoubtedly precipitated
the move here. although it had been
Il oked for last week in some quarters.
Ihe government hopes the lower rate
VIII stlnptate subscriptions to the 3 10
per cent treasury bonds and enable it
to curtail the floating debt, which now
amounts to 81 ,337 ,733, 900
The statement in New York of pegi-
nald McKenna, former Chancellor of
the Exchequer, that America had
reached the turning point in the re-
adjustment period created much ia
terest here Recent symptoms in the
investment market here seem to iustifv
the prediction that if Great Britain
mas not reached the turning point she
IS making real progress in the right
direction.
The reduction in the bank rate must
almost certainly benefit trade and re-
store confidence generally The long
period of business stagnation has been
due in no small degree to the uncer-
talnty OF future Developments Of
course there have been other obvious
factors, but there is no mistaking the
utter lack of confidence that has pre-
vailed in business and financial circles
for many months.
Normally the rate would be moving
higher at this time, but these are
abnormal times. Representatives of
leading manufacturing and trading in
terests were quick to express their ap-
proval of the reduction. Cheap
money they declared, was essential to
industrial recovery.
The natural Interpretation is that the
reduction reflects the view of those in
authority that the foreign political situ-
alton is improving. There are some
obvious facts to justify this view. The
failure of the Hapsburg coup, the con-
ciliatory spirit shown by the delegates
to Washington and signs of stabilizing
the Berlin government are all calcu-
lated TO reassQr.s authorities here.
On the otsSg hand, there is nothing
encouraging Il be found in the conspic-
uous weakness of the German mark,
which has deprecated steadily until it
has IaiISn 10 IJOO 10 the pOunU SCoTllnR.
There are those who assert that the
fall Of the mark is largely due TO poll
ties and that the depreciation is part
OF a game to arouse sympathy and
thus ultim ately pave the way for relief
IN reparations paym ents.
Although the question of cancellation
of war debts is not an item among the
Washington conference agenda, deci-
sions reached there will have important
reactions on business here. Any agree
ment which brings some degree of set
tlement in the Far East and permits a
reduction of armament will be well
coined enthusiastically in financial and
industrial circles.
In contrast to the skepticism and
cyniclsm so evident d few months ago
there is now a growing belief that the
conference will not adjourn without
taking positive action toward world
truce. That fact--on which there is
not a little proof at hands respon-
sibe for the general IMPROVEMENT.
A group of Great Britain's chief
bankers, manufacturers and traders
has presented a resolution to the Chan
cellor of the Exchequer urging that
negotiations be started aiming at a
reduction or cancellation of war debts
These men represent all of the most
important business interests of the
country, and their action may be re-
garded as rejecting the general view.
The Treasury has given no indica-
tion of its plans, but the resolution
is bound to carry great weight with the
government.