Finance

The Investment Outlook

Ix taking any short view of the investment outlook I Should feel bound to regard the prospects as moderately favourable for a further rise in high-class investment ; securities. The Budget is not only out of the way but it has been well received and, in particular, it has had a good effect upon Government and kindred stocks by reason of its allusion to the prospect of further conversion schemes which, of course, in turn could only materialize , if very cheap money were to continue. Moreover, during the last few weeks the technical position of markets has 1:cen strengthened through the liquidation of weak specu- lative positions and even the large lines of new issues of ; capital of the Trustee type which had to be taken up by Underwriters because the terms were too onerous for the investor are being gradually absorbed so that the way will soon be clear for fresh capital flotations. It is probable. too, that the King's Jubilee Celebrations will stimulate : spending power and will.create a general atmosphere of cheerfulness and optimism. • RESTRAINING INFLUENCES.

But while taking this cheerful view -of the immediate outlook, I cannot help thinking that there are factors in he situation which may exert a restraining influence later and prevent the rise in stocks assuming very large proportions.

In the first place the slump in gilt-edged stocks which occurred some two months ago will not, be quickly for- gotten, and as some of the Government. stocks once again touch the ,high7watermark of last January it would not be surprising to see a good deal of profit taking, though I admit that it may then be a case of an overflow of activity. into other departments of the Stock Exchange. • .

A SOMBRE BACKGROUND.

In the second place, however. I find it impossible to ignore the fact that to the agreeable conditions I have mentioned there is all the time a 'somewhat sombre background. Speculatori taking the short view may be satisfied by a confident feeling that war is out of the question so far as the near future is concerned, and may also have a comfortable feeling that while chaos in the foreign exchanges may be a hindrance to trade, these difficulties will somehow be overcome without any serious catastrophe. It may be so, but I confess it is rather difficult to reconcile extreme optimism with the present state of the international political outlook. while to an extent which is not realized I believe that the chaotic exchanges and world trade depression, with consequent unemployment, are factors directly ministering to the political unrest.

With all respect to those who are endeavouring by Pacts and other means to lessen the &minces of war, I cannot help thinking that the real road not only to peace but to real amity amongst the nations is to be found in the replacement of the present spirit of extreme economic nationalism by one of international co-operation.

A COMMON BOND.

It might surely be thought that many nations, including this country, Germany and the United States, have a common bond in the supreme problem of the unem- ployed. President Roosevelt may seek to relieve the situation by huge Government outlays (thereby piling up fresh burdens for the taxpayer) and Great Britain may seek relief along the lines of " new deals," but each and every nation must know quite well that relief on sound and permanent lines is only to be found in a real revival of international trade and that such revival in its turn can only be obtained by united co-operation in securing sounder conditions in the international cur- rencies and in removing as far as possible all tariff barriers and other restrictions upon the free exchange of goods and services.

POSITION OF AMERICA.

In this matter a heavy responsibility rests upon the Governments of all countries to bring about this inter- national co-operation, but especially does the responsi- bility rest ;heavily upon the United States of America, and for the following reasons. In the first place ''she is the leading creditor nation, and until she is willing to recognize that fact by taking goods and services from the debtor countries instead of gold, the chaos in the exchanges and the restrictions upon world trade must continue. In the second place, however, the problem of unemployment is more pressing in the United States than in any other country, and not only will it never be solved by the spirit of economic nationalism which at present dominates that. country, but the situation in time will become Worse, to the detriment of world con- ditions as a whole.

THE War TO PEACE.

I cannot help thinking, therefore, that while the statesmen of the various nations may well continue their efforts in the direction of political plans for securing the peace of the world; each country might well appoint delegates to an International Committee otbankers and business men, having for .its object the investigation or the problem of unemployment.. For, after making. all allowance'. for the 'different forms of ; the problem in,. different countries, there can be little doubt that the (Continued on page 713.)

Finance

(Continued front page 712.) general findings and recommendations of such a Committee would be in the direction of international' co-operation in dealing with those factors responsible for present conditions. Moreover, if the central problem of unem- ployment was placed first and last in the agenda of such a Committee it is hard" to think that the movement would not be backed by the majority of electors in all countries.

AN APOLOGY FOR DIGRESSION.

I am very conscious of the fact that from what by its title purported to be an article upon the investment Outlook I may seem to have drifted into politics, and got very far away from the main theme. The drift, however, I must with all apologies confess, has been intentional ; for whatever may be secured in the way of short profits snatched from market fluctuations in stocks or from the erratic fluctuations in gold and the exchanges, the very term of " investment ' seems to be almost inconsistent with the present state of world unrest. I have already referred to the effect of the unrest upon world trade through its stimulating the spirit of economic nationalism, but there can be little doubt that this same unrest and uncertainty, weakening as it does general confidence, acts as a deterrent to free spending and also to that spirit of individual enterprise which in past years has alWays, sooner or later, brought about fresh trade activities and has opened up new opportunities of employment.

ARTHUR W. KIDDY.