FINANCE-PUBLIC & PRIVATE.
[BY OUR CITY EDITOR.]
THE FINANCIAL OUTLOOK.
[To the Editor of the SPECTATOR.] SIR,—If outward appearances on the Stock Exchange can be relied upon as an indication of the general outlook, it might be said that the financial barometer stands at " set fair." Not only does an air of cheerfulness pervade most departments of the House, but it covers such extreme sections as British Funds and the market for Rubber shares, the latter, indeed, presenting quite a buoyant appearance. The question is whether on this occasion the financial barometer represented by tendencies on the Stock Exchange can be relied upon or whether it is a case of special considerations having to be allowed for. In certain respects I think there are reasons for caution, but before referring to them it can at once be admitted that one influence affecting most markets is entirely favourable to holders, namely, the sound technical position of most markets. Selling orders are con- spicuous by their absence, while supplies of stocks are scarce in most directions.
Not for the first time, however, we find that in the absence of any disposition to sell on the part of real holders, holiday conditions are wholly favourable to price movements. First and foremost there is the absence of fresh issues of capital competing. with existing securities. In the second place, we live In days when the mere absence of daily discussions in Parliament is regarded as a Bull factor. In the third place, the absence on prolonged holidays of leading financiers and professional operators means that even if the buying movement may be somewhat -overdone, there is little disposition on the, part of speculative operators to disturb their holiday arrangements by challenging the stability or otherwise of markets. When, moreover, as in the present bpliday season, we have an event like the London Pact to stimulate optimism, it is not altogether surprising that cheerfulness should pre- dominate. The real test to markets will come a little later with the return of the financial magnates from holidays, the reassembling of Parliament, and the revival of fresh capital issues, among which, be it remembered, is likely to be included in the near future the big German Loan.
I am far from suggesting, however, that these develop- ments must necessarily be of a character disturbing to the Stock Exchange ; the very reverse may happen. It may be a case of fresh buyers finding difficulty. in acquiring stocks and of the present revival in Industrials and Rubber shares developing into pronounced activity with a further rise in prices. Not the least interesting feature of recent weeks has been a marked revival in shipping freights, and although such revival may possibly be based quite as much on expectations of trade improve- ment on the Continent as at home, it must, for the moment, be regarded as an encouraging feature. That there is urgent need for a revival in our own export trade, however, is clear not merely from the figures of unemployment, but from the growth in our adverse visible trade balance, which for the first eight months of the current year amounted to £189,247,000, being an increase in the adverse balance as compared with the same period of the previous year of £66,000,000 and of £81,000,000 when compared with 1922. Even after making all allowance for invisible exports the position is a serious one.
Nor must it be forgotten that during the next few months both political and financial developments seem likely to be of an important character. It remains to be seen whether conflict over such matters as the Russian Treaty, the Irish Boundaries, or Unemployment is likely to produce a real domestic political crisis in the autumn, resulting in a General Election, but the possibility is already apparent, and if apprehensions in that direction increase we may easily get a considerable check to Stock Exchange activity. Finally, I think it is suggestive of the undercurrent of uneasiness which exists with regard to industrial con- ditions in the country that at a moment when most markets on the Stock Exchange are presenting a fairly cheerful appearance, English Railway stocks are drooping, and that, notwithstanding recent satisfactory dividend announcements and some excellent traffic returns. It is well known, however, that, more than any other depart- ment of the House, English Railways are sensitive to industrial conditions and to any symptoms of Labour unrest. So far as railways themselves are concerned there have not been wanting indications of some fresh wages demands, and inasmuch as the long-suffering travel- ling public is already hit by high fares and inefficient services, and the trader is oppressed by high railway freights, it is recognized that with any increase in railway overhead charges it might go.hard with net, revenues. In other words, there can be little question that while there are many points in the situation which call for anxiety, the greatest problem of all with which we are confrcinted is that which is concerned with the industrial state of the country and the relations between Capital and Labour. In this connexion_ considerable interest was taken in City circles in the article which appeared in last week's Spectator by " A Working Man." With some of his views financial opinion in the City is not, of course, in accord, but in so far as he is pleading-for the rank and file of Labour having the fullest opportunities for sharing in industrial prosperity, the City. is entirely with him. In fact, he goes to the very root of the whole problem, namely, the supreme necessity for getting Labour enthusiastic with regard to- the industrial prosperity of the country as a whole. Of course, it is recognized that such enthusiasm cannot possibly be stimulated unless there is the fullest measure of opportunity and of reward, but in the diagnosis of the position by " A Working Man " and the situation as it is understood by the ordinary individual there is this great diverge-lice of view. The Spectator's correspondent speaks as though the whole trouble lay with the employer in not affording equal opportunity of advancement, while in the City the view is held that the greatest difficulty is with the Trade Unions themselves which, by an encouragement of a ea' canny policy, or, at all events, of a policy of restriction of output, cramp that proper spirit of rivalry in the matter of output and efficiency which should exist between the workers as it exists between competing Capitalists. Not that the possibility of shortcomings amongst the employers in the direction indicated by " A Working Man ' is not recognized, but it is felt that whatever may have been the shortcomings in that direction in the past, the tendency to-day is for the cramping movement to conic from the Trade Unions rather than from the Capitalists.—I am, Sir, Yours faithfully,
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