Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-07-18
FOREIGN AFFAIRS
SWAY|NG MARKETS
Financial Structure of World
Influenced by Situation
in Germany.
BY JOHN L. COOLEY,

Associated freSS NLItel'
NEW YORK, July 18.--Foreign af-
fairs occupied the full attention of the
financial markets this week and prom
Use to maintain their domination pend
ing a more definite appraisal OF what
is to happen in Central Europe.
The collapse Of foreign exchange and
German bonds reflected more accurate
" than did the New York Stock Mar
ket the concern over German condi-
lions. Brokers believed stocks acted
unusually we'll, in view of the sharp
deflation in sentiment which carried
obligations Of the German government
and other borrowers to quotations that
in many instances were only so per
cent of their par value. Orderly trad
ing accompanied the declines in stocks,
and although the Reich bonds were
sold heavily, losses in other German
loans represented more a scarcity Of
bids than a rush to liquidate.
Diplomatic Intervention.
Wall Street has not believed that
Germany would be allowed to go bank
rupt, but many bankers here have
thought her road to rescue started at
Berlin rather than New York, Paris
or London. Therefore the strenuous
and thus far successful measures she
has taken to straighten out her tangle
have met with approval. The partial
banking moratorium, the supervision
over exchange transactions, the as
surance that no suspension of foreign
debt service, either public or private,
was contemplated brought quick and
favorable reactions.
Diplomacy'S Intervention opens up
important possibilities, not the least of
which appears to be the opportunity
for a frank discussion of deep-seated
Franco-Germa differences. Partici-
patton OF the United States in the con-
ferences at Paris and London strikes a
new note in poSt-VersailleS interna-
tional relations, and financial circles
here are hopeful that workable and
constructive decisions can be reached,
The German crisis, in the opinion of
observers, doubtless has had some effect
on business sentiment, at least to the
extent that the optimism generated nv
President Hoover's debt suspension plan
has been partially dissipated. Com
modify prices, which had risen for three
successive weeks, have developed re-
dictionary tendencies in the last fort
night. Steel production finds the sea
sonal bottom difficult to attain. although
experts on that industry insist the low
will be seen this month and are count
ing on some improvement in August,
Railway Earnings.
Railway earnings should increase dur
ing the Summer as the large crops are
moved. Meanwhile the financial dim
cultles OF the carriers are being
reiterated at the rate hearing in WASH
ington and the leading investors in
railway securities have thrown their
active support behind the case. Wall
Street thinks an increase will be
granted, but 1t is doubted whether the
full Is per cent can be expected.
The relative quietness of the stock
market in week Of large-scale unset
Element was attributed in some quarters
to warning said to have been given
prominent bear operators by important
| interests. This report was uncon-
f1rmed, but the fact remained that short
selling was not much of a factor II
was probable that the big bears did not
care to take an extensive position In a
market so susceptible to the rapidly
changing international outlook.
At their lows of the week stocks had
lost roughly three-quarters of the adj
vance that started on June 20. With
trade in the throes of Midsummer dull
ness, but none the less moving on q
rather even keel, brokers point out that
foreign news should hold the immediate
balance Of power.