Evening star., 1935-09-22
WAR CRISIS RAISES
FEARS OF SETBACK
IN WORLD UPTURN
Financial Centers Uneasy
as Securities Take Pro.
nounced Plunge.
ADVERSE EFFECTS DUE
FOR BRITISH INDUSTRY
Huge Arms Spending Might De-
stroy Easy Money Policy-Gold
Nations Disturbed.
BY CLAUDE A. JAEGER,
Associated Press Financial Editor.


NEW YORK, September 2l.-The
beating of plowshares into swords has
become a new incalculable factor in
the world struggle for economic re-
covery.
Wall Street and Threadneedle
Street, at first inclined to look with
some complaisance upon the business
created for steel, copper and chemicals
by rearmament, are growing uneasy
and securities prices have taken a
pronounced plunge.
The American markets, long in
tent upon domestic recovery, are dis
turbed by foreign developments for
the first time in more than a year.
Just how American recovery might
be impaired by European conflict
developing in the Mediterranean is
not clear. But Wall Street, which
has previously shown some inclina-
ton to bull the so-called war stocks
clearly does not like the prospect as
international tension becomes sharp
British Gains Threatened. \
The probable adverse affects upon
Great Britain, which since early 1882
has been a leader in world recovery,
however, are more obvious to Wall
Street economists. BY pursuing a
balanced budget and cheap credit
policy, England has stimulated do
mestic construction. Her capital
goods industries have started to move
London has resumed her functions
as world banker England's foreign
trade has Jagged, but she has restored
her industrial production to 1929
levels.
Huge expenditure for armament
might we'll disrupt her easy money
policy. Heavy deposits of foreign
funds in London. which have helped
to make money cheap there. would
presumably be sharply drawn down.
Another run on London such as that
OF four years ago would be con-
ceivable, according to Wall Street ex-
perts. Aside from the industries
helped by the rearmament program,
British trade has already shown some
oiSAh VA 1lColtdAASys
Gold Bloc in Trouble.
On the continent, the latest and
more tense phase of the Italo-E -Ethio-
plan controversy finds what is left
of the gold bloc still in the throes of
deflation. A further slump of the
Holland guilder was checked this
week, but the French franc was un-
able to get back to a level high
enough to stem the renewed flow of
gold out of Paris. The gold bloc'S
troubles antedated the italian devel-
opments, but appear to have been ag-
gravated by them, particularly in SO
far as France is concerned.
Wall Street observers feel that the
growing more strained for some time.
The serious adverse trade balance
is worse. International banking
quarters IN Wall Street feel that the
failure of II Duce's corporate state
to achieve economic recovery is a
powerful force squirting him to seek
an expanded colonial empire. Since
the strain coincident with war prep
arations, the Ira is being maintained
only by drastic measures, such as the
communicating of private foreign in
vestments and balances, and the rigid
control of imports. Credit facilities
for Italy appear to be definitely lack
ing in the only centers where credit
could be made abundantly available
London, Paris, or New York.