Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-06-21
FOREIGN ECONOMIC
SITUATION A|DEDBY
BANK RATE RAISES
Business Conditions Continue
to Reflect Psychological
Factors, However.
ALL EUROPEAN BOURSES
ARE FIRM AT WEEK END
Continued Flight of Capital From
Germany Proves an Unset
thing Development.
Special Dispatch to The Star.

NEW YORK, June 2o.-Cable dis
patches to the Business Week give the
following swift survey of business
abroad for the week ending June 20:
EurOpe.-The three most important
European Notwithstanding, France
and Germany-on the same day, met
and defeated opposition parties on ques-
tons Of political policies. In each case,
the defeat was decisive and augurs well,
at least during the coming Summer
months, for a period of armistice on
political animosities. The long expected
fall Of the Austrian cabinet. which oc-
CURED on the same day, was of less
significance.
Throughout the week. however,
uneasy psychological conditions have
weighed heavily upon the business
situation. The almost catastrophe rate
Of the exodus from Germany of gold
foreign currencies eliminated Saturday
in forcing the Reichsbank to lift thu
rediScount rate from per cent to 7
per cent. This step was drastic, but the
gravity Of the situation seems fully to
justify so energetic measure in order
to re-establish confidence in the eff
cheney Of the German government both
at home and abroad. Despite this rise,
and the somewhat more optimistic feel
ing which Is prevailing after the week
end regarding the critical state of Ger
man politics. the Reichsbank has been
forced to continue the sale of additional
foreign bills and gold which indicates
that pressure on the Reichsbank con-
tinues. Bank rates both in Austria and
Hungary have followed Germany's lead,
but increased only l Il per cent.
CreditanstaIt Liabilities.
Prolonged negotiations over the liabil-
tiles of Creditanstalt have reached the
decisive state. Withdrawals have ceased
and foreign creditors have arrived at
definite agreement with the Austrian
finance minister not to withdraw during
the coming two years the II millions in
Creditanstalt. The new government Is
expected to ratify Immediately this
, accord.
Dominated by the better disposition
in New York. European bourses are
well sustained this week except in
Berlin where the continued capital
flight is the cause of slight panic.
After the increase in the bank rate,
however. sharp reaction set in and
stocks and bonds regained a part Of
their previous losses.
Bankers in France are paving the
way for large conversion of French
renteS and the public expects the move
TO come before July /. This CONVEX
sion will cover a total of $3.50 millions,
means a saving to the government Of
$49, 100000 annually. The French pub
lie, however, is uneasy over this opera
ton. recalling the only minor success
Of the recent Jugoslav sterilization
loan which bankers still hold in large
share. The peSstmiSm probably Is I'M
warranted, although Of late confidence
in Frances ability to override unscarred
the present world economic crisis Is
somewhat shaken. Abundant supplies
II liquid capital now earning only
negligible rates point to the success of
any safe domestic loan regardless of
foreign politics.
Accord among the international
nitrate producers has been frustrated
by patriotic interests, especially in
| France, where strict protection has
been granted manufacturers in order
to stimulate the growth of this inn
portant peace and war time industry.
LOndOn.-Britain watched its politi-
\ cal crisis come to q head and peter
out in. q more or less farcical manner
this week. and let business take its
| course, which turned out to be little
changed from last week. A few lead
ers made bull point out of the pos
/ sible fall Of the Macdonald govern
played up the large influx of gold, the
success Of the WoolWorth issue, and
the firmness in Wall Street. But, on
the whole, the business outlook is little
changed.
Inquiries for Textiles.
| Beyond the moderate activity of the
! stock market, in which oils and home
| industrialS were featured, there were
| encouraging reports Of increasing in
qutries for textiles and more improve
ment for rayon.
Metals show no confidence. The i'm
I mediate interest in tin, caused by last
weeks announcement that pool may
be formed to take over surplus stocks,
is tagging on termination of the South
Wales tinplate cartel agreement. Fixed
prices and output quotas are already
abandoned. The future Is again un-
certain.
| 1nduStrialists are manifesting interest
in the report that British automobile
production dropped on only / per cent
in 1880, and that total output surpassed
/ that of France, making Britain the
worlds second producer.
| PariS.-General conditions continue
to be monotonously uniform, and there
Is no prospect of any notable improve
I ment. Business Is slack. Sales are
becoming increasingly dificult. Pessim-
| ism is growing.
! Except that unemployment is down
another Az per cent, there is no indi-
cation that the seasonal pickup Is con-
tinuing. The May wholesale index has
dropped IA points below the April fig
ure, and retail prices are down Z points,
but sales are not holding up. Within
recent weeks the decline has spread to
almost every type Of product. indicating
that the dedation cycle Is accelerating.
Political Outlook Improved.
Politically, the outlook is slightly i'm
proved. Immediate interest Is centered
| in the success of Premier Laval In win
| ming the support of the Chamber for
i his second lineup Of cabinet officers.
Weeks Of threats that any cabinet in
GLIDING BRAND as foreign minister
would fail to win the confidence OF the
Chamber have come to nothing. The
astute old statesman is vigorously di-
recttng the country'S foreign policy in
the present trying situation The Ger
man crisis, and the sti1l-present dificul-
ties of the Creditanstalt In Vienna
demand the direction OF his long
experience.
Berlin. German business was domi-
mated by the politico-economi crisis
which has held the country in its grip
1 bit which eaSAd toward the end of the