Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-11-08
London Financial District
Does Not Expect lmmedi.
ate Tariff Action.
STABILITY IN DOMESTIC
PRICE LEVEL IS SOUGHT
Any Further Change in Monetary
Conditions Will Depend on
Foreign Events.
BY LEONARD ]. REID.

Associate Editor Of the London Economist
Special Cable Dispatch to The Star
LONDON. November AFTER six
weeks of political and economic drift
ing, the financial district hopes that the
formation of a strong new cabinet IS
lie prelude to concentrated government
study OF urgent policy and problems
1t is taken for granted that it is
Parliament'S determination to balance
the budget, aided by effeStive admins
trative action on all necessary econo-
mics. Given this condition, temporary
declines in sterling are not a matter for
serious concern or one requiring emer-
gency tariff action to check the So
called dumping.
Propaganda Discounted.
Protectionist press propaganda alleg-
ing abnormal imports is heavily dis
counted and in any case the deprecia-
ticn in sterling is a sufficient barrier
against the flood. The general impress
sion In the financial district is that
future fiscal policy will be a matter of
long elaboration by the government,
which is unlikely to impose an i'm
provised tariff. On the contrary. the
weighty influence of the best expert
banking opinion is emphasizing that
such action by Great Britain would in
tensify the already growing paralysis of
international trade.
The longer view. according to ma
lor1ty opinion in the financial district,
is that British monetary policy is de-
pendent on developments abroad. It is
agreed that it is desirable to do the ut
most to limit unsetling fluctuations in
exchange reserves the only practicable
means in pursuit of this aim is the
maintenance of maximum stability in
the British internal price level.
Premature revalorization of sterling
would be most perilous policy. since
in the first place failure to support it
at the selected figure would be disas-
trouS to British credit; in the second
place. the consensus of banking opin-
ion holds it inadvisable to tie the Brit
ish price level to gold until full assur-
anceS are given that the causes which
led to the 1891 breakdown-namely,
reparations. international debts, tariffs
and French economic nationalism-
are removed
In the meantime the maintenance
Of per cent Bank of England dis
count rate and a sitter market bill
rate reflect the intention Of the author
tiles to check absolutely the slightest
tendency toward imitation, leaving he
pound to find level adequate to cor
rect the import and export balance of
payments.
Quiet Period Indicated.
Trade centers report further prog
ress in textiles but it is uncertain how
far the bigger inquiry for coal, iron
and steel will crystalline into actual
orders. Railway traffic is slightly bet
ter and slow reduction in unemploy-
ment continues.
The reaction in gilt-edge issues was
partly proflt-taking and partly mis-
taken analogy to falling exchange.
The market was unusually narrow, with
large interests waiting to come in after
a possible further fall. The market
expects substantial activity in gold
mines as soon as South Africa leaves
the gold standard, which now appears
to be inevitable. Other mines are held
back by the uncertainty in the COM
modify outlook and the price of
sterling.
The general tendency to mark time
is expected to continue in the imme-
diate future in most sections, with a
steady hardening of tone for further
recovery, provided there is no out
standing collapse abroad.
(Copyright, 1917