Evening star. [volume] (Washington, D.C.) 1854-1972, 1930-12-21
FOREIGN BUSINESS
FEELS EFFECTS OF
COMMODITY SLUMP
Weakness in Prices of Raw
Materials Is Reflected
in Industry.
CHARACTER
OF U. S. MARKET FACTOR
Political Situation Also Influences
Adverse Tone in Euro
pean Finance.
Special Dispatch to The Star.

Special Dispatch to The Star.
NEW YORK, December 20.-Cable
dispatches to The Business Week give
the following swift survey of business
abroad for the week ending December
20:
The surface of business is more ruff
fed by current developments than in
many weeks past, but these develop
ments are largely non-European. Apart
from political outbreaks and the decla-
ration of martial law in Spain, which
is of comparatively little international
significance, and fresh rumors of an
other bankruptcy imminent in France,
the disturbance to business during the
week is primarily attributable to the
weakness of commodity and stock mar
kets in the United States and to the fear
of effects from the drop in silver on
Far Eastern purchasing power. The
reaction to cotton prices is especially
unfortunate since the textile industries
both in Great Britain and on the Con-
tinent already had evidence that only
stability of raw material prices was
necessary to stimulate demand and
permit improvement.
Money markets also are becoming
uneasy lest the instability of American
securities and banking difficulties in
Wall Street result in the withdrawal
Of American credits and balances in.
Europe. Such Withdrawals would both
accentuate the incipient tightness-al-
ready occasioned by the movement of
European funds as individual countries
mobilize their assets for year-end
settlement and balance sheet purposes
bound to result from these movements
of funds which have combined to rem
der the exchange position of sterling
difficult.
DefiatiOn Continues.
AS things now stand, Europe unques-
tionably is further advanced toward
ultimate deflation than the United
States. Among commodities, port stocks
in England of zinc, tin and rubber are
still heavy Coal stocks alone, and these
virtually only in Germany, show pom
derous excuses comparable to the con-
gestion in America of cotton, "copper"
wheat, sugar and oils, to the coffee glut
in Brazil, and to inflated stocks of jute
in India.
European security markets, too, hav-
ing begun deflation year before Wall
Street, have passed the forced liquida-
ton stage, except possibly in France,
and now are marking time at or near
the bottom awaiting the stimulus of
improvement in general conditions.
European conditions therefore face less
prospect of further local def1ation but
are dependent on developments else
where and particularly on the ability of
the United States to organize progress
sively orderly liquidation of the top
heavy accumulation of raw materials.
Unless these can be funded and re-
leased only gradually during a period
of carefully controlled production, in
ternationally controlled where neceS-
sary, general recovery appears doomed
to wait till the play of free forces of
supply and demand complete the defla-
ton cycle.
Following the break in cotton prices
and oscillations of copper European
prices, which have been showing en-
couraging steadniness in recent weeks,
gave way to a new decline as holders
let go, fearing fresh wave of def1ation,
and buyers withdrew to await develop
ments. Tin reacted sharply with cop
per, but zinc and lead suffered relative
ly minor declines. Rubber eaSed frac-
tionally after considerable period of
sustained strength. Wool conspicuous
ly resisted the downward trend. Jute,
though irregular. held recent gains. The
fall in North American corn, oats and
barley Is considered unwarranted by
the statistical position and is attributed
more to psychological than economic
causes. First reports of the area sown
to grain this Fall in Europe indicate
a tendency to reduce acreage where
there is a surplus this year. Decision
of the Canadian wheat pool to abandon
its own selling agencies in Europe and
use the customary channels is expected
to increase exportability.
Security Values Depressed.
DISCRIMINATION of commodity mar
ketS and the weakness in Wall Street
have led to depression also in security
values throughout Europe, excepting
the sharp, though probably brief, recov-
cry in Italy. Christmas currency de-
mands and year-end settlement require
mentS have frightened credit. 1t is re-
ported this week that the League of
Nations will sponsor agricultural recon-
Struction loans to Eastern European
countries similar to the previous inter-
loans to Hungary and Austria.
The operation is likely to be carried
out through the Dutch General Mort
gage Bank in cooperation with the
Swedish match trust, the B. I. S. acting
as trustee.
Lie DIuoSClS sugar COllAcACIlCC CIOSCu
this week without settling on a restric-
ton program because German delegates
would not agree to proposals acceptable
to other representatives. A provisional
agreement was signed by the other
countries and Germany is given until
January to join in the pact. A French
agricultural loan to Rumania of $24,-
600, 900, in addition to the $4,000, 900
loaned recently, is under negotiation
Jugoslavia is also negotiating with Paris
for similar amount. Hungary has Sc
cured a $2,500,000 mortgage loan from
the Chase National Bank.