Evening star. [volume] (Washington, D.C.) 1854-1972, 1934-06-10
Country Backs Debt Stand.
Retail Sales Slump
With CIearings.
ALL EUROPE AWAITS
CRISIS FOR GERMANY
France Disturbed by Decline in
Sterling and Mark-Effect
on Gold Bloc Feared.
Special Dispatch to The Star.

Special Dispatch to The Star.
NEW YORK. June s-Cables and
dispatches to Business Week give the
following survey of business abroad
for the week ending today:
LONDON-"A new wave of pessi-
mism is developing, chiefly because
of war fears and the necessity of
heavy expenditures for rearmament.
Retail sales in May dropped for the
first time since September. Provincial
bank clearihgs are lower. Stock mar
kets are palpably uneasy The country
approves the government contention
that to pay war debts would precipi-
tate Europe into economic chaos, and
Britain is unwilling to pay without
collecting from her own debtors. But
she does not regard her refusal to
pay as a default.
The Economist index of business
Notwithstanding all trade in
dicators-stood at 1901 for April,
after touching 1895 in March, and
1890 in February. In addition to
stationary rail returns, this is re-
garded as confirmation of the sus-
trade figures, that business recovery
has temporarily halted. And further
currency upsets which would reduce
Britain's export trade would be fatal
to current recovery hopes"
Three Events Studied.
PARIS-"Executive Paris focused
its attention this week on three
events:
"D The British decision to follow
the French stand on payment Of war
debts Favorable factor.
"(2) The sparring match at Ge-
neva between the French and British
delegates at the Disarmament Con-
ference, at which the French delegate
claims he received a below-the-
beltline punch from the British rep
resentative (unfavorable).
"(3) The rapid but not unexpected
break in sterling and mark ex-
changes (unfavorable).
THE break in the mark early in
the week and the simultaneous drop
of the British pound to record low
in relation to the franc, disturbed
business. While there were no d.
rect repercussion on the franc this
week, and though sterling recovered
later in the week, exchange dealers
feel that any appreciate devaluation
of the mark-now generally expected
in Europe-will inevitably entail
further lowering of the pound and
the currencies linked to it to avoid
cio1 dIJrnnir1O
lower pound would react on the cur
rencies in the gold bloc. might even
force them to abandon their long
fought stand or at least to resort to
some sort of hyper-managed currency
manipulation. Every move by the
British Exchange Equalization Fund
will be watched carefully"
Reich Crisis Nears.
BERLIN-"A crisis of major pro-
portions is approaching in Germany.
When it breaks. all Europe will be
affected Already, uncertainties con-
nected with it have unsettled business
and the foreign exchanges.
Several developments account for
growing pessimism. Germans not
only failed to extract any export
trade concessions from creditors at
the Berlin conference. but they were
confronted with the prospect of hav-
ing at least enough of their favorable
trade balances in Holland and Switz-
erland conscripted to meet in full
debt charges in those two countries.
In the face of this enforced diScrimi-
nation. Britain and France threat
ened similar moves.
only a little less annoying to in
dustry is the continued and mcreas-
ing control over raw materials i'm
ports. The government is endeavoring
to hold imports below exports. But
exports are dwindling, due to the eff
fectiveness of the boycott abroad.
while imports are tending to expand
because of the demand for raw ma
terials by industries which are steadily
expanding on domestic demand. The
government, striving to balance all
legitimate demands Of industry
against and speculative or fright
buying, now demands urgency certifi-
Gates from users of imported raw
materials.
Another crisis is the weakening
of the technical foreign exchange po-
Sition. On May 81. gold reserve at
the Reichsbank had dropped to 81
per cent cover for the country'S
currency against the old theoretical
minimum of 40 per cent, or the new
concept of IS per cent minimum).
At the same time. April foreign trade
--latest data available) showed a new
record excess of imports over ex-
ports.
Finally, there are evidences Of
a crop failure in the coming season,
tremendously important in view OF
Nal policy to make Germany more
nearly sufficient even than in
the war years.
Against these overshadowing facts
continued moderate industrial gains
carried small weight. Germans are
aware that a crisis confronts them