Evening star., 1935-01-13
BUSINESS FACES
| DIFFICULT YEAR
IN BRITISH ISLES
Foreign Trade Expansion
Ends-Larger Budget
| in Prospect.
MARKETS ARE CHEERFUL,
UNEMPLOYED DECREASE
Industries Operating at Profit,
but Unfavorable Trade Bal
ance Draws Attention.
Special Dispatch to The Star.

Special Dispatch to The Star.
NEW YORK, January l2.-Cables
and radio dispatches to Business Week
give the following survey of business
abroad for the week ending today.
LONDON-"British business faces
q difficult year. Stock markets are
cheerful now, the number Of unem-
ployed is still declining, and industrie:
are operating at profitable levels, but
the we'll informed Englishman Is aware
that foreign trade. real backbone OF
the country's economic life, has not
been expanding in the last few months
and that the unfavorable balance this
year Is likely to be even larger than
it was in 1884. This, added to the
prospect of a larger budget, Is slowly
building pessimism among the busi-
ness community.
1.-TWO developments in the last two
weeks have had slightly counterbal-
ancing effect. First was the surprise
trade agreement with Ireland by
which Britain will supply the Irish
annually with 100000 tons Of coal
In return for British purchases of
150,0 900 head Of Irish cattle In excess
of the present quota. It is8 victory
for both the British and the Irish.
THE second is the formation in
London of q German Chamber Of
Commerce. There are plenty Of busi-
ness men who think it futile to open
the chamber now in view Of the end
less chain Of restrictions on Anglo
German trade and the bad feeling
caused by the frozen debts position.
Others view the chamber as another
force making for more national trade
relations"
Paris Bonds Advance.
PARIS-"After months Of sluggish
ness, the Paris Bourse stirred this
week. Long-term government bond
prices made spectacular gains. Bank,
railway, and utility shares followed.
Funds flowed back to Paris from their
refuge in London. The franc turned
strong. Paris was generally opti-
mistic. .--..-....- - r.,
- cause for the new activity is the
shift In government policy which now
Is definitely turned toward credit in
flation. Treasury bills have been de-
clared eligible for rediscount at the
Bank Of France, thus broadening the
short-term market and making gov
ernment long term borrowing tempo
rarily unnecessary. Clement Moret,
governor of the Bank Of France since
1890 and strongly opposed to any
break from orthodox financial policies,
has been replaced by the more liberal
Jean Tannery.
Parliament, reconvened this week
following the holiday recess, is being
asked to further this policy Of credit
imitation by sanctioning the request
of the finance minister to increase
the legal limit of treasury borrowing
from 10 billion to Is billion francs
(roughly from $3.50, ,000, 900 to $l,000,-
600, ,000).
Reactions to the new policy vary.
Conservatives fear that the govern
ment will be unable to resist the
temptation to move on from credit in
fiation to actual monetary imitation.
Liberals declare that so long as there
is no domestic political crisis to un-
dermine confidence in the govern
ment, this new rediscount policy will
for the first time give France an open
market bank with the powers (and
the advantages to the money mar
ket) of the Bank of England and the
Federal Reserve System. Eventually
the cheapening Of interest rates,
which is expected to follow, should
make possible a large government
conversion to reduce the cost Of gov
ernment credit, ease the burden on
the treasury, reduce taxes on business
and individuals. At the same time,