Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-04-19
POLITICAL FACTORS
AFFECTING CREDIT
Bankers Hesitate to Make
Loans Abroad During
Periods of Unrest.

Special Dispatch to The Star.
NEW YORK, April 1s.-PoliticaI de-
velopmentS in Spain and in the Argen-
tine since Tuesday have completely up
set recent negotiations for the stabili-
zation of the currencies of both coun-
tries. The status of the 100000, 900
credit which was granted to the Bank
of Spain early this month is now held
to be uncertain in view of the change
in government. The National Bank of
Buenos Aires has withdrawn its support
from the exchange market as a sequel
to the resignation Wednesday of the
Argentine cabinet. This led to a violent
decline in the rate of Argentine ex-
change and to further losses in Argen-
tine dollar bonds.
The attitude of the new Spanish ad-
ministTation toward foreign credits is
naively expressed in dispatches quoting
the Spanish finance minister to the ef-
feet that sterilization of the peSeta does
not seem to be urgent to the govern
ment. His argument was that If the
country was well administered it can
produce a balance of trade that will
bring the exchange back TO parity. He
also took the attitude that foreign loans
subjected debtor nations Ito q sort Of
tutelage."
Credit Arranged After Inquiry.
The $60,O0o,O00 banking credit was
arranged after the Bank for Interna-
tional Settlements had investigated
conditions in Spain and had expressed
a willingness to cooperate in Stabniz-
ing the exchange Of the country. A
considerable part Of this credit was
taken in behalf of American bankers.
The Bank Of Spain is understood to
have deposited SIS 1000 900 with the
Bank for International Settlements as
supplemental to the credit. Just how
far the Bank of Spain has proceeded in
making use OF the credit to stabilize
exchange is not known, but there had
been evidence in the market that sup
port was being given to the peseta just
prior to the abdication Of King AL
fonso 1t obviously will be somewhat
embarrassing to the Bank for Tnterna-
tional Settlements to have its first i'm
portant effort at currency sterilization
in Europe meet with such a cool at
titude on the part of the new Spanish
government.
In the Argentine the provisional gov
eminent has been pursuing a policy of
stabiliZtng exchange through continu-
Gus shipment OF gold to New York and
London. These exports to New York
amounted to about $28,0e0,0 900 on the
last movement and were expected TO go
on increasing. They were a consider
able portion Of the total imports Of
$25. SOL 900 reported in the March for
eign trade figures and the largest single
item in the total gold imports for the
three months to March 81 Of over $76,-
100000. 1t now appears that the Ma
tional Bank in Buenos Aires has, at
least temporarily, taken the position
that 1t will not support exchange until
clearer political atmosphere develops
Effect of Changes.
These incidents tend to discourage
efforts being made to assist foreign
countries with American credits, either
in the form of Short-term banking
credits or in that of long-term loans
Negotiations along this line have come
up against a series of political upris-
ings Since the Fascist demonstration in
Germany last September. Just when
the international situation appears TO
be improving incidents Of the sort that
have occurred this week in Spain and
in the Argentine develop and put
stop to credit arrangements.
The March foreign trade figures show
another heavy decrease in exports and
imports, compared with the same
month last year. The value of outgoing
trade was Sl32, 100000 less than in
March, 1890, a reduction OF So per
cent Incoming trade dropped $80,-
600, 900, or about 80 per cent. For the
March quarter total trade decreased
1872, 600, 600, or over SO per cent In
the same period imports Of gold fell of
$50, 900 900 from the same quarter OF
1880. They were sufficient. however
to bring the gold holdings OF the
United States up to a new high-record
level.