Finance

Another Year of Progress

Before passing in review some of the main features of 1E035, I once again offer the reminder that the article is written before the close of November, and the final happenings of the year have still to be recorded. It may also be well to recognise very clearly the different pictures presented by a record of local developments and those Affecting the world as a whole, and the Continent of Europe in particular.

CONDITIONS HERE AND IN THE STATES.

So far as local developments are concerned, there are :wo countries which can look back upon 1935 with a !onsiderable amount of satisfaction, namely, Great Britain Ind the United States. As regards the latter country, it IiftS been a case of the continued outpouring of money by the U.S. Treasury having stimulated, as it was bound to spending power and increased activity in the leadinc, industries of the country, while the world conditions which have brought about a further addition during the year to America's gold supplies of over £100,000,000 have still further added to the base of credit in the United States, so that at the end of the year we have such a mass of gold and credits in America as to have already occasioned the commencement of what looks very much like a new and gigantic boom in Wall Street. Whether these conditions will actually minister to real confidence and prosperity in the United States during the coming year remains to be seen, but for the moment the increased industrial activity and the decrease in unemployment in the United States must be regarded as among the good features of the year, so far, at all events, as that country itself is concerned.

DOMESTIC CONDITIONS BETTER.

When we come to consider the conditions in our own country, there can be no question that the year's develop- ments have been favourable in character. Moreover, while it is true we have had a continuance of cheap money, the improvement has not to be attributed, as it has in the United States, to the mere outpourings of money from the Exchequer, with .a consequent Budget deficit and a great piling up of the ;National Debt. On the contrary, the balanced Budgets in this country have been one of the factors inspiring confidence and • bringing about what may. be described as a natural and sound improvement in industrial conditions. At almost- every point there is evidence at the close of the year of the increase in this country in industrial activity. Production of iron and steel has been equal to sonic of the best years of British trade ; retail sales in shops and stores have shown a vast increase over the preceding year ; spending power as expressed in banking deposits shows that there has been a rise in these deposits during the present year of some- thing like £65,000,000. Similarly, this same reflection of increased spending power has been seen in the expan- sion in the Active Note Circulation of the Bank of England, which at the present moment shows an increase of about £22,000,000, as compared with tt year ago, and only last month bankers' depoSits stood a t the record total of over £2,000,000,000.

OUR FOREIGN TRADE.

The figures of Foreign Trade • have also been of a satisfactory character. throughout the year, and for the • first 10 months of the year the Value of our Imports showed an increase of £7,000,000 and Exports of 127,470,000. As a consequence. of this great increase in Exports, the visible adverse trade &dance for the first 10 months of the year was only i215,51.1,000 as compared with £235,862,000 for the corresponding period of last year. Morebver, although international trade as a whole has remained dull throughout the year, Britain has held first place in this matter of increased Exports.

SOME ENCOURAGING FIGURES.

Evidence of increased activity of business in this country is also furnished by the traffic receipts of English railways. A year ago there was a most striking increase in the gross receipts of the four trunk lines when compared with the previous year, but these figures haVe been surpassed by the results for the current year, the aggregate receipts, of these four railways for the first 45 weeks of the year showing an increase of over £1,100,000. The figures of the bankers' clearingS have also greatly increased, while the total amount of new capittil flotations in this country during the first 10 months of the 'year amounted to just over £159,000,000 as compared with £124,000,000 for the same period in last year. And if we turn to the figures of Unemployment it is good to record that whereas in September, 1932, the number of unemployed was as high as 2,925,000, the figure at the end of September last had been reduced to 1,953,000.

SECURITY MOVEMENTS.

So persistent has been the advance in market values of public securities during the past few years that it Was scarcely, to be expected that the pace could be maintained during the year which is now closing. During • I934 the list of 865 representative securities selected :b'S, the Bankers' Magazine showed an appreciation in (Confinued on page xiv.)

Finance.

(Contin.nerl from page 886.) market values of something like £800,000,000. That upwar6 movement continued during the commencement of the present year, but there was subsequently a set- back, due to external influences in the shape of disturbed political conditions in Europe, while a fall in the spring of the year was occasioned by excessive speculations and a su bseq tient breakdown in certain commodities. More- oVer. towards the end of the year the Abyssinian crisis and the prospect of a General Election occasioned a retrograde movement in prices, but so great was the effect produced by the result of the General Election that it looks as if the next monthly valuation of the Bankers' Magazine would show that on the whole the upward movement in stocks which was such a feature of last year has been fairly well maintained. The importance of this :firmness of public securities is considerable, for although the rise in market quotations of securities may be said, in a sense, to express paper profits, rising markets mean that those holding the securities have a greater sense of well-being and both the power and willingness of the spender is increased.

THE SILVER JUBILEE.

Before referring to some of the less favourable events of the year as expressed in international conditions, mention must be made of the general stimulus to trade given by the Silver Jubilee celebrations. It was something more, however, than a stimulus to trade which was given by the celebration of the twenty-fifth anniversary. of the reign of King George the Fifth. The occasion was characterised by such a manifestation of loyalty to the Throne throughout the Empire from the highest to the lowest in the land as to give not only a feeling of well-being and security to the people of the Empire, but also to create a favourable impression throughout the world. And, indeed, apart from all questions of party politics, the :,.ame might he said of the result of the recent General Election, the result of which was to show that the people approved the policy of the past four years and recognised that sound Government and sound finance had played its part in the improved economic conditions. Nor must omission be •made of the fact that the improvement in economic conditions at home has also been expressed in other. parts of the Empire, and notably in South Africa, where the prosperity of the gold-mining industry has ministered to improved economic conditions in the country generally, and in Australia, where the re-election of a sound Government has helped to consolidate the improvement in the economic condition which has been in progress during the past four years.

LESS 'FAVOURABLE FACTORS.

Perhaps, however, one of the most noteworthy features of the year has been the resistance shown here to the influence which might be expected to have been exerted by the disturbed conditions in Europe and the Far East. It is unnecessary to set out in detail here the hopes which since the Armistice of 1918 have been centred upon the League of Nations as a new force making for the settlement of international, disputes along the lines of arbitration, and so—it was hoped--7preventing the outbreak of war. During recent years, however, the League has suffered severe blows through the resignation of Japan and Germany from its membership, and it is immediately following upon those blows that the severe testing has come during the current year in the action to be taken in the matter of hostilities between Italy and Abyssinia. That the League should have failed to prevent the outbreak of hostilities in Abyssinia must be regarded as among the tragedies of the year, relieved only by the determination of the remaining members of the League, led by Great Britain and France, to uphold its authority by the application of Sanctions to Italy, which has been declared to have defaulted on the Covenant of the League for the preservation of Peace. At the moment of writing these Sanctions have only just been applied, and, not unnaturally, With the result that feeling in Italy is embittered against the League, and apparently is especially embittered against Great Britain. Nor must the disturbed situation in the Far East be left out of consideration, in which connexion it is, perhaps, not irrelevant to remember again that neither Germany nor Japan is a member of the League of Nations. And, speaking of Germany, it is difficult to know 'what to say with regard' to the developments of the past year. On the one hand, it is good to know that formal relations between Germany and ourselves are perfectly friendly, not the least interesting feature of the year being the agreement between Germany and this country cuttecrning naval matters. On the other hand, internal developments in the Dictator-ridden countries unfor- tunately seem to be of a character lessening the sense of intimate intercourse between the peoples of this country And of those countries. Indeed, it could scarcely be otherwise, for while we are still disposed to cultivate the freest intercourse to.,,,,the accompaniment of perfectly free speech, the latter condition • is becoming more and more restricted in the Dictator-ridden countries, and especially in Germany. THE WIDE VIEW.

I suppose that. if I .were writing this article, for the Christ mas number of one of the °American journals I should not be disposed to give very much prominence to. a survey of conditions outside my own country. Not only extreme nationalism, but it might almost be said extreme isolationism, is a feature of the American's survey of the future. The belief seems to be held there that America can be prosperous. for an indefinite period even if the rest of the world is .suffering. That is not the view taken by Great Britain, partly, perhaps, 1)3.7 reason of her proximity to the disturbed 'conditions of Europe. Quite apart, however, from political con- siderations, it is a generally accepted truth in this country 1 hat world settlement and world, prosperity are essential. for sound prosperity and settlement, at home. I feel botind, therefore, to close this very imperfect review of cOralitions airing the year, ,far .as,it...has gone at (coAtinucci on page xvi.)