Evening star. [volume] (Washington, D.C.) 1854-1972, 1930-06-01
RELEASE OF FUNDS
EXPECTED TO HELP
OLD WORLD TRADE
New Capital Issues Planned
Following Marketing of
Preparations Bonds.
MONEY RATES CONTINUE
LOW AT CHIEF CENTERS
Little Change Noted During Week
in General Business
Conditions.
Special Dispatch to The Star.

patches to the Business Week give the
following survey of business abroad for
the week ending May 81:
Europe-The success or failure of the
financial markets between June and
5, is of small consequence to business
provided this unnecessary. untimely,
and disturbing operation is completed
at the earliest possible date. General
business conditions have not improved.
Accepting the premise that depression
awaits the tonic OF capital 1nfusionS,
the next immediate question will be
redistribution of capital after the bond
issue is cleared away and the artificial
preparatory conditions are normalized.
There are many reasons to expect un-
usual financing activity will follow Not
withstand4ng the exceptional recent de-
mands on Europe's principal money
markets, money rates have barely hard
ened and are still phenomenally low.
England indicates plenty of reserve
capital though buyers are Selective, re-
spending best to relatively high running
returns and ignoring maturity yields.
France is literally choked with excess
funds and is increasingly forced to
export. The Government, with around
two billion dollars in treasury and sink
ing fund SURPRISES, is unable to acceler-
ate amortization of the internal debt
without adding to the general plethora
and so risking imitation. 1t is logical
to expect that issue banks in Western
Europe will maintain the low bank rates,
established preparatory to the market
ing of the Young bonds, in order to
facilitate the distribution of seaboard
capital congestion over the deficiency
of inland areas. Anticipated capital
tnfuSionS may be expected to inVigorate
business, but any actual gain in weight
and volume is slower process depend
ent on world conditions.
Business Outlook.
Great Britain-There is no appre-
ciable change in the dull business out
look of recent weeks. Industry is little
more than marking time though sew
eral raw material markets are active.
Financial conditions, however, are
steadying as French Withdrawals Of de-
posts end.
Snowden, 1t Is believed, Is planning a
large conversion operation to follow the
Young bond issue. New issues during
the week totaled $46,000,000. That
plenty Of capital strength is available is
indicated by the threetold oversubscrip-
ton on the $35 1000, 900 India loan, not
withstanding peninsula unrest, but
cratic selectivity is shown in municipal
offerings, many of which are largely
left on the hands of the underwriters.
The event of the week is the an
nouncement of the $4O,00O000 merger
Of six coal, iron and steel companies
embracing the Pearson e. Knowles
group of iron and coal companies and
the Wigan Coal &c Iron Co. The Sc
curitieS Management Trust, Inc, formed
by the Bank of England last Fall to
promote industrial combinations, will
subscribe two and one-half millions to
the steel company, giving it majority
voting control in both groups. Apart
from the size of the merger, it is i'm
portant as the first effort in England to
link several united companies into one
continuous producing chain involving
also steel plant modernization.
Compared with the statement last
week by the German minister of labor
that one-flfth of the German nation Is
dependent on public support, due to in
creased unemployment, Is the shreWd
observation from one informed British
observer that present statistics show
one-sixth Of the British nation Cor
100000 persons) are recipients either
of pensions or doles. Poor relief cost
England during the year ending March
81, $500, 100000 Unemployment shows
no seasonal decline and now stands at
100000. 1t is expected to reach
100000 before Christmas, despite an
elaborate public works program which
will cost $475,000,000 and provide en-
ployment to $780, 900 men for one year.
German Trade Slow.
Germany-Business is in deep gloom.
Expectations of substantial seasonal re-
covery are definitely disappointed. In
stead, depression appears to be gaining.
Only some minor industries are report
ing improvement, while steel has
reached its lowest level since 1925. A
new financial crisis Is in prospect unless
economic conditions experience greater
improvement than they now promise.
Continued peak unemployment is esti-
mated to entail additional federal sub
sides of a minimum of $4,000 900.
This makes an aggregate new prospect
i've federal deficit of $120,000000 Bust
ness is profoundly discouraged at the
prospect Of a further increase in taxa
| ton and the possibility of the intro
duction of an emergency income SurtaX.
In this atmosphere of business I'M
healthiness. the y per cent reduction
in the bank rate and the probability of
another u per cent cut after the Young
bond issue, fails to have any stimula-
tive effect.
France Reports of slackening activ-
ity multiply, but business indicators
still fail to reflect any material de-
cline. Industrial production, notably of
electric current, COAL iron and steel are
above the average. Railway movement
bank clearances sales and tax revenues
are little changed though slightly below
boom levels of year ago. Total April
tax revenues are IL per cent below
those of last year, but are above budget
estimates. The decrease in returns is
probably due to nothing more than the
effect of cumulative tax reductions which
have been effective in the last IL
months To be considered, however, Is
the fact that domestic consumption has
absorbed the bulk of increased French
production In the last two years. This,
in turn, was the result of subnormal
consumption during the preceding
period of currency sterilization and
stringency coinciding with the period
| of industrial moderniZation and eXpan-
sion and reconstruction of devastated
areas.