Evening star. [volume] (Washington, D.C.) 1854-1972, 1931-10-04
Other Nations Expected to.
Join in Abandonment of F.
Currency Basis.
STERILIZATION OF POUND
HELD VITAL TO TRADE
Several Important European Stock
Exchanges Remain Closed, Await
Better Financial Conditions.

NEW YORK, october 3.-Cable and
radio dispatches to the Business Week
give the following survey OF business
abroad for the week ending October s.:
Europe-Less opportunistic optimism,
instead Of serious perturbation. marks
the second week following Englands
abandonment of the gold standard. Out
OF endless nsequenceS-varying with
each country according to its economic
structure and the intimacy of its rela-
tons to world developments-the fol-
loving current trends in the chaotic Eu-
ropean picture may be segregated:
ID AS feared, though expected soon
er, Englands action has forced other
countries to abandon gold. Sweden,
Denmark and Norway have announced
temporary suspension CT the converti-
bllity of their currencies, nominally only
until the end of November. Heavy falls
in Scandinavian exchanges followed.
Egypt has suspended gold exports. With
each new departure, pressure upon the
remaining gold standard countries has
increased. 1t is considered only a mat
ter OF time before several small Eastern
European nations succumb, and it is
gravely doubted whether GERMANY and
Italy, and even Holland. will be able to
resist. The eventual prospect is the
united States, France and South Africa
as the solitary survivors. 1t should,
however, be pointed cut that the Scan
olnavian countries are among those eco
nomlcslly most closely associated with
Great Britain, while Egypt's currency is
based on sterling These abandon
ments. therefore, have been due to spe-
clal, In addition TO general, reasons
Soviet May Suspend Payments.
The rumor has originated in Scandi-
navia that Russia, due to low world
prices for its principal exports, is about
to declare one-year suspension of paw
ments. Russian official denisls have
failed to allay the belief that there Is a
likelihood of this eventuality.
% Erratic fluctuations Of sterling
and the disruptive effect on trade has
resulted in a widespread demand that
the pound be stabilized within given
margins at the soonest possible date.
The British cabinet has not reached
any decision on what monetary policy
to pursue. but the Bank of England
board is understood to be fayoring a re-
turn to the gold standard, or to a rel
atively high gold parity Action Of
sterling during the first half of this
week tends to indicate market inter
this is denied.
80 Several important stock ex-
changes continue closed Berlin, Stock
holm and Budapest) and others are ex-
pected to close. A movement from
bonds to stocks or to cash is discern
IDLE. Dealing in futures Cthe European
counterpart of short-selling) has been
suspended nearly everywhere. both in
securities and currencies, the latter
n RI in
Gus small bankruptcies have occurred
and uneasineSs over the position of
large institutions has increased
a. A series of central banks have
raised bank rates Italy, Holland, Scan
dinavia, Greece and Bulgaria).
(5) Several upward revisions OF
tariffs have been enacted. Holland has
raised the general 8 per cent tariff to
10 per cent; Italy. with certain excep-
tons, has introduced is per cent Gus
toms surtax. Increases are motivated
partially to Offset dumping by countries
abandoning the gold standard, but pri-
marily to increase revenues against
rising government deficits, which are
universal in Europe. The increase i'll
Egyptian tariffs is intended to Offset
currency depreciation leaving gold
tariffs unchanged. Spain has adopted
a retaliatory tariff clause.
80 European exporters, hitherto in.
voicing in sterling. are seeking to re-
draw outstanding bills and insist on
drawing the new bills in dollars or
francs, or refusing deliveries. The
function of sterling as an international
medium Of exchange, constituting one
of England's principal sources of for
eign revenue, momentarily has virtually
ceased. New York and Paris may ex-
pect food Of commercial paper seek
inc anrentapno and diSpOiYnf facilities
Business Quiet.
The business picture is dull. Com
modify markets have f1uctuated with
exchange oscillations but gold values
still tend downward. except for lead,
rubber and wood Continental indus
trial activity is further restricted. Brit
ish industrial reports still reflect the
first stimulus Ct depreciation but the
instability of sterling is beginning to
exercise the opposite effect as buyers
realize today'S bargains, at falling ex-
change, may become tomorrow's losses.
Stock exchanges are somewhat steadier,
except in Paris.
LOndOn-The exchange position is
timulating British business Canada is
ordering Welsh and Scotch anthracite
instead of Pennsylvania coal. The tin
plate industry has revived. Still other
industries are preparing for boom.
The stock market insists on all deal
ingS in cash, thus checking speculation
though showing down turnover. The
public. nevertheless, is actively buying
industrials. The probs bility of an early
election has tended to check some
trades. but it seems probable now that
the government will not appeal to the
country much before the end of the
year.
Paris-French business sentiment
views the future gloomily. Stocks have
suffered In a new slide, and, for the
first time, French government securi-
ties hitherto pillars of strength, have
begun to show weakness. French banks
already are suffering from declines in
security values and mortgage equities
have unquestionably felt further losses
incurred through sterling depreciation.
Berlin-Beyond the hopeful new
Franco German agreement, the week
has been marked by expanding rerer-
cussion to the pound crisis. Notable are
the increasing difficulties which have
developed around the financing of Ger
man import and expert trade, formerly
handled largely via London. second
uncertainty results from the continued
suspension Of the stock exchange and
the fresh anxiety of exporting indus
! tries following the gold debacle in the
Scandinavian countries and the pre-
carious position Of other world cur
rencies.