Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-08-30
Crisis in England Revives Dis
CuSsion of United States
of Europe.
COALITION GOVERNMENT
TO RECEIVE FAIR TRIAL
Markets Remain Quiet Pending
Adjustment of Financial
Structure Abroad.
Special Dispatch to The Star.

Special Dispatch to The Star
NEW YORK August 29.-Radio and
cable dispatches to the Business Week
give the following survey of business for
the week ending August 20:
Europe.-while European eyes were
riveted on Britain this week. European
minds were graphing with the realities
laid bare by the fury of the storm which
last week headed directly across the
North Sea. Six months ago 1t was I'M
bslievable that a mere bank failure
In decapitated Austria could so violently
rock the European economic structure
to the very bottom. Today it stands
demonstrated that Europe is integral
and must hereafter coordinate as such.
One result Is that renewed emphasis
is being placed upon the immediate
need Of establishing q United States Of
Europe in actual fact If not IN name
As yet, none of the specialists 50
deeply absorbed In the problem OF
European restoration has offered an ac-
ceptable solution. The most that has
been accomplished has been agreement
on a period of tranquility in which
every country will have time to realize
the extent to which European politics
and finance have become interconnected
nationally and internationally. Emerg-
ency measures have been taken. Europe
as q whole has its war debt holiday,
Germany its short-term extension. Great
Britain its trf-party ministry. Long
term controls, like long-term loans, are
still to be set up.
Budget Action Expected.
There is general doubt whether Brit
aims new national government can
last beyond the time of immediate need.
since q coalition is highly incompatible
with British political feeling. Mac
Donald's announcement Is regarded as
ample insurance that the budgetary
position will be given immediate prec-
edence over all other considerations.
However, it Is felt that some time must
intervene before other measures such as
the 10 per cent tariff can be imposed.
England has good reasons for caution.
For example, her trade has already been
dropped far below pre-war levels.
LOndon.-The formation Of be tional
government Is regarded favorabiy by
business, but, despite the reassuring
statements Of Messrs. Macdonald and
Baldwin, full Judgment as to whether
the crisis Is over has been reserved pend
ing announcement Of the new cabinets
detailed program for dealing with the
country's difficulties.
Business opinion Is generally hostile
to the suggestion that the new admins
trat.on should merely adjust the budget.
then dissolve Parliament and call cleo
tons It wants the coalition to remain
at the helm until there is no further
doubt that the right cure for national
ills has been found and applied.
Markets Quiet.
Industry, finance, commodity markets
remained in a state of suspended enina-
ton during the week, pending the cul-
nlination of the crisis. Developments in
the immediate future will be largely
determined by the character Of the new
governments program, but the coming
weeks should show at least some pickup
reflecting the close of the vacation
period.
MacDonald's stand that nothing short
of drastic economies can prevent coll
lapse in sterling with q subsequent dis
location Of the economic structure suf-
ficient to precipitate social chaos by
Christmas has forced the inevitable
break with his Left Wing.
BerIin.-While the domestic credit
situation is making satisfactory progress
in the hard pull back to normal. the
sharpening of the world depression and
the general uncertainty prevent a pro-
portionate recovery in business. Indus
trial activities show further declines un-
affected bv the formal success Of the
Basel negotiations.
Despite the Reichsbank's $50 900 600
increase in foreign exchange holdings
since mid-July, the situation remains
highly artificial since the increase has
beer due chiefly to the communicating
of private holdings and the virtual
moratorium on all foreign payments ex-
cepting current commercial transactions.
Foreign exchange proceeds from exports
do not reach the ReichSbank but are
used for financing further exports and
to I'LL the vacuum created BY the previ-
Gus withdrawal Of foreign documentary
credits.
Sympathy With England.
Thus the present formally satisfactory
position with the Reichsbank's gold
cover again exceeding the 40 per cent
minimum is not the result of natural
equilibrium. Nevertheless. business wei
comes the decree readmitting forward
transactions In foreign exchange which
enable the import and export trade to
insure the exchange risk.
Paris.-French business men are
studying July foreign trade returns with
considerable uneasiness IMPORTS to-
tailed $145. 200, 900, Is per cent below the
,sulv. 1890. level. Exports amounting To
SGT 600 900 show a loss Of 81 per cent
and reach the lowest point since the
sterilization of the franc. Gauging the
future from this, business tends to be
increasingly pessimistic about Winter
prospects
Interest in Paris this week centered
on British developments. Comment
reflects sympathy with England. Despite
the huge amounts Of French capital In
vested across the Channel, no anxiety
is felt over British ability to weather
the storm.