visible balance" against London. Necessary purchase by Manchester spinners of our cotton, at a price 30 to 40 per cent over that of a year ago, was turning the "visible balance." In the face of this sufficiently perplexing situation the British premier, without having lost control of Parliament and without having had his essential policies blocked by legislation-in other words, without any of the traditional parliamentary reasons for such action-all at once dissolved the House and ordered a general election. THE mixture of perplexity and consternation and British Politics caused in financial circles by this sudden move undoubtedly accentuated the weakness of exchange. Had the premier managed to appeal to the country on his policy toward France, the constituency which London Sterling calls "the City" might possibly have applauded. But Continental policy was in no respect involved. That subject was, indeed, deliberately avoided; probably from suspicion that the British electorate might show itself irritated by the futile "Curzon note" of August, which declared the occupation of the Ruhr illegal, even though previous British ministries had in principle indorsed such occupation, and even though nothing could possibly be effected by such a declaration except to give false hopes to Germany. Instead of submitting to the voters any cleancut issue of that kind, the Baldwin ministry staked its fortunes on reversion to a protectivetariff policy. This eccentric political adventure had a hand in the break in sterling to $4.26; for it instantly drove financial markets into bewildered fright over a possible victory for the Labor Party and consequent introduction of a "levy on capital" into the British taxation system. As might have been expected in such emotional circumstances, the decline in the sterling market was overdone. The exchange market had become honeycombed with reckless speculation for the fall. A little calm thought convinced the market that the Labor Party and its ultra-radical programme were hardly the immediate menace that the markets had imagined. WHEN this moderately reassuring second thought was followed by a temporary compromise of the differences at Paris, the market turned abruptly. Sterling recovered in a week from $4.26 to $4.40; rates on the Continental markets recovered with it. But the recovery left some unpleasant memories behind (Financial Situation, continued on page 58) Established 1899 A Manual of Ohio Securities As a part of our service in the underwriting and distribution of securities of Ohio and Middle West corporations, we publish each year a comprehensive Manual covering more than two hundred and fifty such companies, giving balance sheets, earnings statements, range of market prices of securities, etc. We shall be glad to send a copy of this Manual on request. OTIS & CO. CLEVELAND. New York Detroit Denver Cincinnati Columbus Toledo Akron Colorado Springs Members New York, Cleveland, Detroit and Chicago Stock Exchanges it. The recourse to protective-tariff policies had, in fact, followed immediately another awkward incident, in which the of the British talk of a loose-tongued junior in Blunders the ministry started all England talking for a fortnight of a possible Ministry programme of "inflation."" What the promoters of this suggestion meant by it was never clear, and the government, after unfortunate delay, repudiated it. Nevertheless, it gave a handle to the professed opponents of "deflation," whose arguments against gradual returns of the British currency to parity with gold were now put forth again. These arguments were, indeed, vague and formless. It was difficult to understand what they meant by the government's "policy of deflation." Sometimes they seemed to have in mind the year's gradual reduction of the paper currency, which was a purely automatic sequel to inactive trade; sometimes the more rapid decrease in bank deposits, which resulted from the small requirements of credit by the merchants. and war. It has paralleled in both respects the episode of our own financial history in which, fifty years ago, politicians, "new school" economists, and sometimes even bankers fought against any policy looking to ultimate resumption of specie payments. In England now, as in our own country then, it is an inevitable chapter of experience in the transition period from war inflation to sound peace-time finance. In the end, it is pretty safe to say that the British people will settle the question for themselves and settle it rightly. But the spectacle of a ministry which was trying happy-thought experiments and was not sure of itself did not stimulate outside confidence; the incidents in British politics undoubtedly helped along the decline of sterling. These political incidents have turned our retrospect of 1923 aside from the purely economic problems and achievement of the year. Yet it is very rarely that, in the last century or so of history, political and economic influences have been so inextricably interlaced as they have been on this occasion. Perhaps no par allel in that regard can be found without going back to the period, five years after the ending 7%-a 7%-a tireless Ally Napoleonic wars, when it must been equally difficult to say, regarding the day's political and economic unsettlement, which was cause and which was effect. We shall find the same difficulty in surveying the past year's history of continental Europe as in our glance at England; yet with a certain difference. NOTHING has more perplexed one school of economic critics than the fact that, when they had seemed to prove that France was threatened with the most formidable consequences of mistaken foreign politics and mis The Rest of Europe in 1923 taken public finance, it was next discovered that the country was steadily recovering, judged by the ordinary tests of trade and industry. Measured not in the present inflated values but in actual tonnage, the export trade of France this year has exceeded not only 1922 but 1913. Prices being more than treble prewar figures, and even 1913 having been marked by excess of imports over exports, it would naturally be expected that the import surplus now would far exceed in value that of the pre-war year. But, as a matter of fact, the surplus, up to the latest date reported, is practically the same in 1923 as in 1913. Monthly production of steel in France reached 446,000 tons this autumn; it was 290,000 in February, and averaged only 373,000 per month in 1922. Railway earnings in France have increased steadily during 1923, and that this is not a consequence merely of higher rates is proved by the fact that "loadings," on which we lay such stress in the United States, reached a daily average of 49,000 cars in 1923, as against 44,000 in 1922 and 37,000 in 1921; the increase since last May having been continuous. The picture certainly contrasts in a curious way with the fall of the franc this year from 738 cents in January to 54 in November, a decline of 30 per cent; the later price being below any quotation reached even in 1920, a year in which the pound sterling itself fell to $3.18. This depreciation of the franc may have resulted primarily from distrust of the immense public indebtedness heaped up for reconstruction; much more than a hundred billion francs will have been spent on the devastated provinces before the work is completed. It may have resulted primarily from dislike of existing relations with England or Germany. We shall have to wait for the future to determine. But the story of France, in the matter of purely economic recovery during 1923, is not (Financial Situation, continued on page 60) to help you get ahead ONE bond will not make you rich, but a fixed habit of saving-investing some part of your salary at 7% will. It is progressively doing it for men who probably make much less than you do. Our literature tells how purpose, ADAIR REALTY & TRUST Co. ADAIR PROTECTED First Mortgage BONDS on Real Estate exceptional. The somewhat prevalent idea that trade and industry in Europe as a whole has gone to wreck since the French seized Essen-that, as the case was lately put in a public address by a so-called "expert," Europe's economic conditions are now worse than at any time since the armistice-is based either on indiscriminate inference from exchange rates, or else on confusion of politics with industry, or else on the assumption that Germany's situation must be typical of Europe. Whatever its basis, the idea is singularly incor already far on the way to complete economic rehabilitation, as might have been expected from a state which cut loose as long ago as February, 1919, from the old war inflation; called in the paper currency for stamping; reduced it 50 per cent, and absolutely closed the frontier during forty-eight hours while this work was going on, in order to exclude the paper currency of surrounding states. This year in Czechoslovakia has been a period of increasing activity in production and manufacture, of a balanced budget, and of an export surplus in foreign trade. The story of Austria's recovery is more recent and therefore more familiar; but it is surely a consideration which ought to count in a retrospect of 1923 that this Central European state, which a year ago had hardly emerged from what the world then considered political and economic death, should in the twelve past months have achieved such results in financial reconstruction that its paper currency has maintained an unchanged value for a year, its budget has been so far reformed as to promise a surplus in 1925 after providing for all charges on its reconstruction loan, and that, with the consequent revival of confidence, thrift, and industry, hidden savings are rushing back into Austrian bank deposits, Austrian capital which went to other countries after 1918 is returning, foreign investment funds are coming along with it, and Vienna is already visibly resuming its old-time office as the banking centre for southeastern Europe. と Germany remains, the riddle finance and the economic derelict to which every one points who despairs of the economic future. A country which has inflated its paper currency within a year from 14 tril Problem at the Year-End lion marks to 19 quintillions, which Germany's now has in circulation more than ten times as much as Russia had issued in her maximum inflation and a thousand million times as much as the French revolutionary assignats, must be recognized as presenting the outstanding economic picture of 1923, and perhaps the most formidable landmark of ruinous finance in all economic history. The coming year, possibly the next few months, will determine whether Germany can save herself through the half-way expedient of a new irredeemable paper currency circulating side by side with the old one, or will be driven to outright repudiation. If the plan succeeds of replacing a hopelessly depreciated currency with another not so badly depreciated, it will be the first instance of the kind in financial history. But it is possible at all events to say that the past year has witnessed, for the first time since the war, honest recognition of the problem by official Berlin and an honest effort to grapple with it; also that its attempt to deal intelligibly with its depreciated currency is in line with the policy which nearly every other European government has pursued with a very large measure of success during 1923 and which is likely to produce some notable results in Europe's financial reconstruction during 1924 and 1925. ¶ Progressive Men of Affairs favorably known that it will be relatively easy to raise capital when expansion becomes essential. Publicity to men and women of affairs as represented by the clientele of Scribner's Magazine will contribute toward this end. CHARLES SCRIBNER'S SONS Publishers of "Scribner's Magazine" |