The Indianapolis times. [volume] (Indianapolis [Ind.]) 1922-1965, 1935-08-26

Financial Markets
Begin to React
to War Scare.
by VINCENT LYONS
Times Financial Editor


FINANCIAL markets Of the
Il world. always ready TO give
service to Tumors and actual devel-
ments. have begun TO stir as a re-
suit Of the impending conflict be-
tween Italy and Ethiopia. Within
the last 10 days readiustment Of
positions along several fronts has
taken place. which would indicate
that the many interests involved
are either taking a gamble or writ
ing some insurance 1or themselves
in the event that the worst hap
pens.
Italy herself started the ball roll
ing late in July when the Bank OF
Italy divorced itself Of an obliga-
ton to maintain a 90 per cent gold
reserve against notes in circulation.
At that time officials Of the central
bank attempted to minimize the i'm
port of this action. but subsequent
developments proved it &C.
vice 70 get its house in order so
that purchases Of war materials
could be arranged.
During the week ended Aug. 10,
the latest statement available. the
Bank Of Italy reported a loss Of
S16.469 26O in gold holdings. While
this loss does not seem undUly
large. it is substantial when 1t IS
considered that the entire hoard
Of yellow metal amounts TO s4l5.-
1891 Accompanying the defec-
ton IN gold stocks was an expan-
sion in foreign balances from $685.
4l6.0OO to 362 2O5,OOO lire.
DECLINING gold and rising for
II eign balances. which probably
will be accelerated IN later state
ments, can mean two things. Either
the Bank of Italy is bolstering the
weakening position of the Ira or
it is shipping gold to pay for pur-
Chases of munitions and other
military supplies. With the Ira
falling in value sellers of goods to
Italy are Insisting that payment
be made in gold or some other for
eign currency. The second alter
native would, of course, expand the
nations foreign balances.
Cable dispatches from abroad
state that one of LondOn'S big
FIVE" banks has shut down on cred
its to Italian interests. These loans
Will not be extended when they
mature, it is limited 1t will be in
tereSting to see whether other lead
ing banking institutions adopt a
similar course.
Meanwhile, with this set of cir
cumstances in effect, the Balkan
Gang" can do a bit Of Sniping in
the foreign exchange markets. Uti-
lization rumOrs as their ammunl-
ton. as they always do. this group
of spectators appears to be in a
good position to bring about some
confusion in the market Their
hand has not been noticed up to
the present. but if they do 60 to
work they are liable to embarraSS
Premier MusSoiini's carefully con-
Ceived plans.
CECURITY markets in this
- country last week reflected the
possibility of an ItalO-E Ethiopia con-
flict. War babies" stocks of cop
per. chemical. tractors. aviation
and steel companies, were bid
up aggressively. in the New
York Stock Exchange. The cop
per stocks. long lethargic. have at
tanned new high levels for the year.
In the bond market italian obi
cations met considerable selling in
recent weeks and, as conSe-
quence, currently are around the
lowest levels of the year.
In the commodity markets lead
and copper are enjoying a certain
measure of prosperity. Abroad. the
copper situation is held extremely
bulhSh with the price OF the red
metal moving forward steadily.
Much of the demand eXerted for
copper in the last few weeks has
been from manufacturers OF war
materials. In the domestic mar
ket copper sales are running the
heaviest since the World War.
Sales on one day last week were
in excess of the volume for all OF
July.
Financial markets will continue
to mirror the developments in the
Italo-Ethiopia dispute as they oc-
cur from day to day. Some OF the
unscrupulous will, of course. at
tempt to make capital out of the
issue by using all the devices at
hand in keeping with the tradl-
tinr, that va. makes fortunes.