Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-01-11
Reduction in French Bank
Rate and Tariff Truce
Aid Sentiment.
COAL TRADE HAMPERED
BY DISPUTE OVER WAGES
Conditions in Italy Giving Prom
Use of Change for
Better.
Special Dispatch TO The Star.

NEW YORK, January lO.-Cable dis
patches to the Business Week give the
following survey of business abroad for
the week ending January 10:
EurOpe.-The new year opened with
tone of optimism in many countries.
The first week has been marked by a
reduction in the French bank rate; the
announcement of a FIVE power tariff
truce between Belgium, Holland and the
Scandinavian countries; y broad rally
from DEFENDERS low prices on staple
foodstuffs and raw materials Except
copper, though the best prices, reached
on January 5, have not been fully sus-
tanned; improvement in sterling and
peseta exchange.
On the other hand, the week has been
marred by the outbreak of labor
troubles in British and German coal
mines, with the possibility that troubles
will spread to other industries, even to
the railways. The break in silver be-
low the former all-time low was par
ticularly unfortunate in view of indi-
cations Of a trade revival in the Far
East.
Encouraging Signs.
Industry generally is observing longer
than usual year-end shutdownS for in
ventory, but stronger raw material mar
ketS and placement Of some substantial
construction contracts in England are
encouraging developments. France,
where deflation only now is beginning,
continues, and probably will continue
throughout the year, to be the excep-
ton in the general picture. Year-end
forecasts of leading manufacturers,
economists and bankers express the be-
lief that the underlying world trend will
be unevenly upward. However, they
caution that sharp relapses are to be
expected and none forecast really sub
stantial gains before Autumn, and many
not until 1882.
Wage issues probably will dominate
the economic picture in coming months.
These forecasts already are exem-
plified in conflicting immediate trends.
On the one hand, reduction of the
French bank rate has been the principal
cause for immediate improvement in
sentiment and has directly occastoned
the buoyant advance on the bond mar
ket because of the feeling that cheap
money Is assured for some time to come
On the other hand, the coal stoppage
in Wales and the Communicated wage
strikes in the Ruhr are symptomatic of
far wider issues than are Immediately
involved and will probably prove only
the beginning of a difficult period of
inevitable readjustment of wages to
lower consumer price levels which are
already, or are In course Of becoming
established.
LOndOn-Though all markets began
the year quietly, but hopefully, they are
now under the shadow of the Welsh
rk<~
pages. Last-minute negotiations failed
to bring any agreement in the coal in
dustry and 100000 miners have walked
out. Renewed negotiations 80 far are
fruitlesg.
Coal Shipments Drop.
The first effect of the stoppage are
already evident in the coal shipments
from South Wales, which registered only
$4,000 tons last week, compared with
500. 600 tons in the same week last year
Lost orders already aggregate 100000
tons. Further, the Western Railroad
has been compelled to lay of 1900
men engaged In coal handling. Public
opinion is opposed to a long stoppage,
but the unions are preparing for a pro-
longed fight, since they are fortified by
loan from the Wholesale Cooperative
Society.
The stoppage in the cotton industry
involves $500 operatives in the Burnley
district, where the more looms" system
has been worked experimentally for
some time, but owners threaten to close
all mills II the strike is not ended by
January IL.
Berlin-Business in the first days of
the new year showed some slight touch
OF optimism which was reflected in the
hrmneSS OF the stock exchange and re-
action to the reduced discount rate in
Paris. Industrial and trade indicators
fail to support the better undertone ex-
cept for seasonal improvement in
leather and better sales in nitrogen
fertilizers.
Sentiment is marred by the Ruhr
wage dispute, though complete collapse
OF the Communist strike within two
days Is noted with satisfaction. The be-
lief Is general that some compromise
will be reached before the critical date
January 15-arriVeS. These facts,
added to the run1or of lower dividends
among q number of leading companies
and fresh dismissal of personnel in
the steel trust, contribute to destroy any
delicate buds Of rather conventional new
year optimism.
The world sugar pact, practically
doomed last week, has good chance of
enactment. Negotiations were renewed
by the Germans when it was learned
there was q possibility of securing for
eign financing for the huge sugar car
ryover.
Bank Rate Reduction.
Paris-The Bank of France has cut
its rediscount rate from "a per cent
to per cent the lowest in 40 years and,
with the Federal Reserve Bank, the
lowest In the world. Although the re-
duction brought a technical improve
ment in the viewpoint on international
monetary relations, it is not expected to
bring about any early or material
national or international effect.
Some criticism is voiced in France
that the reduction will only aggravate
the already existing currency and price
def1ation. The most appreciate In
ternal effect will be the tendency to
hatten out interest rates.
Christmas and New Year sales are
reported IS per cent below last year,
despite clearance sales and slashed
prices.
MiIan-Business is restrained, partly
due to the holidays, but largely to the
difficulty of apprasing the immediate
situation created by the forcible wage
price reductions. The belief is grow
ing that q change for the better can