Evening star., 1925-04-11
FINANCIAL CRISIS
Absorbing TOPIC
Situation in France Draws
Special Attention During
, Week in Wall Street.
BY STUART p. WEST.


Special Dispatch to The Star.
NEW YORK, April 1.-THE French
financial crisis has been the principal
subject of discussion in what would
otherwise have been an unimportant
week in the markets.
Stocks on the whole have varied
little They have borne out the
analysis of a week ago, that the mar
iket was coming to rest after It's vio-
lent decline from the overdone ad-
vance of the Winter. This reaction
swept away, in a good part of the
list, two-thirds to three-quarters of
the entire gain since election day. 1t
demonstrated that the enthusia SIN
with which the business community
greeted the political results was not
warranted so far as the trade move
mont itself was concerned
Industry's Two Big Handicaps.
The thing which was not appreciated
Z the end of the first week of No
yember but which is appreciated now.
was that, however satisfactory from
conservative standpoint might have
been the outcome of the presidential
campaign it could not dispel the two
big handicaps which have stood in
The way of the industrial situation
for the last two years. The first was
the inability to reduce labor costs to
conform with increase In overhead.
The second was the inability to solve
the problem by raising prices. For
ever since the lessons inflicted upon
the business community, first In 1920,
and again in a milder way in 1928.
consumers have adopted the policy of
buying for Immediate needs and of
refusing to follow up price advances.
The steel trade is the most con-
Spicuous example where prices have
n
soing upward, as was expected at
the beginning of the year. The aver
age compiled by the Cleveland Iron
Trade Review at the midweek show
ed $S9.69 a ton, as against $40.22 the
week before and $40.53 the month
before. Even Judge Gary, in his op-
timistic references to the future
characterized the present price situa-
ton as unsatisfactory. and said that
quotations were too low to permit
many of the manufacturers realizing
a profit
But what has occurred in steel has
occurred also in other industries.
Then, too, the cotton mill owners OF
New England tried to get relief from
Washington through increased tariff
schedules and were turned down. This
does not augur we'll for the makers
OF east iron pipe and other forms of
iron and steel if they should attempt
70 obtain similar help against the
low cost German, French and Belgian
competition which Is making itself
felt more and more all the time.
In a word the business develop
ments OF the last three months have
been disappointing.
French Disclosures Amazing.
The disclosures in connection with
French finance are nothing short of
amazing. They are a surprise even
10 those who for the last three years
have believed that the truth regard
ing the French budget. the position
of the internal debt and the relations
between the government and the
Bank OF France was not being prop
erly presented to the world. The
acknowledgment that since the Sum-
mer of 1928 the books of the French
bank have been manipulated so as
10 underrate the advances to the
treasury is an extraordinary admis
sion.
Still it is no worse than the re-
peated assurances which French
statesmen and financial writer's have
made that the budget was balanced
that there was no imitation and that
the various sinking spells in the
franc were due to the malicious
speculations of unfriendly foreign
powers.
Exodus of Capital Possible.
At this writing 1t is too early to
say much bout the new financial
program and what its effects will be.
There was a big exodus of French
capital from the country in the early
Winter, and this capital has not re-
turned. Il will not come back until
the French treasury problems are
much nearer solution than they now
appear to be. There is a question
whether the flight Of capital will not
be resumed. The events of the next
few days ought 70 settle this ques-
tion one way or the other.
In the meantime two facts are clear
One is that the great extra indebt-
edness now conceded on the part of
the French government shows that
imitation in France has been going
on to a much greater extent than Is
realized. The other is that French
credit has come down in the eyes of
foreign investors. Selling of the
French bonds, both public and pri-
vate, quoted on a dollar basis, has
been the main feature of our bond
market during the last week.
With the French government per
cents selling at a discount of over 7
points from their issue price Of last
November it is rather amusing to
follow the discussion about the pos
SihiliTy