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The Financial SituationTHE general effects of the current superfluity ofmoney have recently been showing a markedtendency to spread from the bond market, whereyields have become exceedingly low, to those sectionsof the stock lists where good dividend records areon display. The business community has receivedword from Washington that holding company legis-lation now pending will be less disastrous than hadbeen expected, with the result that the securitiesof the public utility companies have improved rathernoticeably in the recent past. The wholly un-paralleled and inexplicable silver policy of the FederalGovernment has caused some excitement and a gooddeal of speculative demandfor shares that are inone way or another ex-pected to benefit fromhigher silver prices.As a consequence of theseand perhaps one or twoother factors, that part ofthe financial communitydirectly active in the se-curities markets has con-tinued to grow more cheer-ful despite the fact thatcurrent indexes do not sug-gest anything in the natureof a marked recovery inbusiness or in profits.

Still Blocking Progress

Here and there a revivalof the oft-heard predictionthat we are now on thethreshold of another"boom" of large dimen-sions is in evidence. Weventure the opinion, how-ever, that those who takethe trouble to study thecurrent situation carefullyare still about as skepticalas they have long been,and that they are as cer-tain in their own minds asever that the New Deal,so far from having laid agroundwork for a sound revival of business, is to-daystanding as squarely in the path of progress as ithas ever done since the day of its inauguration.How far the Senate can be bludgeoned into takingorders from the White House is still an open ques-tion despite the fact that the House appears tohave come to heel handsomely.The Upper Chamber has already sent the iniquitous

work relief measure to the statute book, and informalpolls of the Senate are said to indicate that proposalsto renew the National Industrial Recovery Act nowcommand a majority there. It is evident from thedispatches of the past few days that members of theSenate, with a few exceptions such as SenatorGlass, have very little interest in learning what thereal meaning of the proposed Banking Act of 1935is and what its effects would unquestionably be.There is to date little or no evidence as to what

the attitude of the Senate will be when it is calledupon to consider the so-called social insurance bill,which, contrary to the apparent impression in manyquarters, is to be regarded as one of the most dan-gerous and destructive proposals of the RooseveltAdministration. As far as surface appearances canbe trusted, a compromise bonus plan is acceptableto the Administration and the Senate. With respectto all these issues the real question seems to be notwhat individual members think of this, that andthe other issue, but whether they feel that theymust once more bend a humble knee before theoccupant of the White House.

Truth Unheeded"Whatever achievements may be credited to

the NRA, the consequences of its actions aresuch as to raise grave misgivings."Working at high speed under a statute

that gave little guidance, and without clearstandards of its own, it enacted into law ahuge mass of rules and regulations arrived atby a process of bargaining among conflictinginterests."Out of this process came codes, one sub-

stantive effect of which is quite generally toallocate to private groups important powerswhich may be used to the disadvantage of thepublic. The willingness of such groups toco-operate with the Government is veryclosely allied to the presence in codes of theprovisions granting such powers."These are passages quoted in the daily press

from the lengthy report recently compiled bythe Brookings Institution at Washington re-garding the NRA experiment. The re-port in question is a careful, dispassionatestudy and analysis of the subject in hand,one not given to extreme statements if wemay judge from press accounts.Yet, despite such cold facts as are here pre-

sented, it is reported from Washington thatthe Senate, according to private polls takenof members, is distinctly in the mood to passproposed legislation designed to prolong thelife of this monstrous organization at thebehest of the President.What is most disheartening about this sit-

uation is the fact, evident not only withrespect to this bill but in connection withseveral other measures, such as the proposedBanking Act of 1935, that the practical ques-tion at issue is not the considered opinionof members of Congress as to the advisabilityof the legislation in question, but merelywhether or not the President wants it andwhether he is in a position to disciplinethose who do not do his bidding. go

What Will the Senate Do?

Apparently some weeksmust yet elapse before itwill be possible to be certainjust how valiantly the Sen-ate will struggle for the bestinterests of the country,but all things taken intoconsideration it seems safeto conclude that Congressto-day shows less inclina-tion to stand against theexcesses and the follies ofthe New Deal than it didseveral weeks ago. Cer-tainly, a greater probabil-ity of success by the Ad-ministration in its effortsto saddle the country witha revolutionary bankingmeasure against which allhistory cries out in dismay,an elaborate and exceed-ingly expensive social se-curity law, and a continua-tion of the dismal NationalRecovery Administrationexperiment can hardly beconsidered by any thought-ful man as improving theoutlook for a sound andlasting revival of business.Of course those who be-

lieve that tinkering withthe currency and with credit is a cure-all for everykind of economic ill are again to be heard saying,as they have said since the days of John Law andthe Mississippi Bubble, that monetary and creditmanipulation will produce recovery. Within thepast few days the continued rise in silver prices,caused by an alliance between world speculatorsand the Federal Treasury, coupled with the actionof the Treasury in again raising the price itwill pay for domestically produced new silver, hasobservably stimulated hope of inflationary fever insome quarters. Informed business men of soberjudgment can, however, hardly be expected to takesuch ideas seriously. Of course it may be taken forgranted that the very existence of monumentalexcess reserves will continue to cause disequilibriaand trouble throughout the whole business struc-ture as they have been doing for the past year or

Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

2750 Financial Chronicle April 27 1935two. It is entirely possible that they will at onetime or another give rise to the type of price dis-turbance that so cursed Europe in the post-warperiod. It is even conceivable that, as some fore-casters are insisting, we are now on the verge of sucha catastrophic experience. It must be said, however,that when one surveys the current situation dis-passionately, little evidence is found to suggest thatthese factors are now producing either violent pricemovements or sharp increases in business activity.

Bases for Recovery

THERE is no good reason to doubt the statementof informed persons, now frequently heard, thatscience has during the past few years of the depres-sion been busily and on the whole successfully en-gaged in making discoveries and in perfecting proc-esses which, given an adequate opportunity, couldenormously serve business generally. It is probablytrue, as often asserted, that plant facilities of sev-eral industries have through these and other causesbecome largely obsolete, and that in consequence thecapital goods making industries have a very largepotential "back-log" of work awaiting them. Theremay be a substantial amount of truth in current re-ports that in a number of cases the lean years of thedepression have led business managers to neglectupkeep and replacements in such a fashion that fur-ther stimulation will thus be provided importantbranches of industry as soon as revival is underway. All this has of course been true for a good whilepast. The trouble is that our public policies havebeen such that business men do not think it prudentor wise to proceed as they normally would otherwise.That such is indeed the case is evident from the factthat despite the ease with which new issues for re-funding purposes are now sold, little new capital isbeing sought.The stumbling blocks in the path of progress are,

let it be carefully observed, not only the hazardsinvolved in proposals for the future, but also themeasures already adopted and the policies now beingpursued both in Washington and in many of theStates. Where can we find any clear indication of achange in direction of these programs and policies?Certainly they are hard to discern in Washington orin the State capitals. The works relief law recentlycarried to the national statute book bears witnessto nothing of the sort. On the contrary it is satu-rated with the same old philosophy of inducing eco-nomic improvement by expending inflationary fundsin worthless, or at best very doubtful, projects.There is, in our view, some disposition in certainquarters to make entirely too much of this law as afactor of stimulation. In the first place, availableevidence gives us the impression that the FederalGovernment is wholly unprepared to proceedpromptly and vigorously with the expenditure of thefunds in question upon projects that could by anystretch of the imagination be considered economi-cally justified, although conceivably this judgmentmay be modified by what the President has to sayin his radio address tomorrow evening. If works re-lief in the current sense should prove impracticablefor this reason, we should probably proceed alongmuch the path in giving relief that we have beenfollowing.

Outlays Already EnormousIn any event, let it not be forgotten that for the

past two years the Federal Government has been dis-

bursing huge quantities of money without doingmore at best, so far as business stimulation is con-cerned, than to maintain a moderate and rather vari-able volume of activity in those branches of businessmore closely related to consumers' wants. Let no onebe deceived by the glib statements of new-fangledeconomists that there is some magic power in the ex-penditure of relief moneys for the purpose of havingwork done without regard for the economic utilityof what is thus created. Funds so expended maypass through a few more hands in the process of dis-tribution, but the economic welfare resulting is notone whit greater. Indeed in the long run this methodof procedure may be much more destructive to eco-nomic welfare than those now in vogue, since nat-ural resources are wasted in large amounts and sinceeconomic maladjustments are likely to be morenumerous and troublesome.Among the measures now threatening in Wash-

ington, the social security bill, the proposed BankingAct of 1935, and the proposal to renew the NIRA areprobably the most important, although before Con-gress is done with the matter the so-called com-promise bonus measure may assume the nature of areal menace. The social insurance proposals nowpending have, ever since they came into being, beenerroneously considered by the business communityat large merely as costly "social legislation." Thefact is, however, that these proposals in the lastanalysis must be considered pieces of proposed fi-nancial legislation if their full import is to begrasped.This is perhaps particularly true of those sections

of the measure having to do with old age annuities.Under these, the actuaries estimate the ultimate re-serve to be accumulated and maintained at about$32,000,000,000 in the measure as it now stands, ascompared with around $15,000,000,000 under theoriginal draft of the bill. The figures assume suchastronomical proportions that it is difficult to grasptheir significance. The reserve in question is ex-pected to reach full .proportions in about 35 years,and must throughout be invested in Governmentbonds except for such relatively small amounts asare needed in cash. Think what all this means.The community is to be taxed at the rate of some$1,000,000,000 a year or slightly less for the nextthirty-five years, or at a rate sufficient to retire thewhole enormous national debt and leave some tospare, and yet at the end of that period our debt willnot have diminished at all! A Government bureau,under such a plan, would then hold all the nationaldebt but in its turn would be obligated to pay cer-tain favored citizens the equivalent of the amountof the existing debt and more. What an admirableplan for so confusing the public mind that the hugewar and New Deal public debt will seem to vanishinto thin air!

Far Reaching ImplicationsBut consider some of the implications of such a

program. The popular impression seems to be that,through such a procedure, the community will havebeen obliged to become more thrifty and to lay asidemeans for providing for the aged. But will it? Cer-tainly no such conclusion follows automatically.Since the funds collected by taxation for the pur-pose in hand are to be invested in Government bonds,that is, paid out to holders of Government obliga-tions, the ultimate disposition of the funds is left


Volume 140 Financialentirely in the hands of those who own Governmentobligations at the time the investments of the fundare made. The owners of Government obligationsat the present time are preponderantly the commer-cial banks. What will they do with the funds thusplaced at their disposal? Of course, in these cases,what occurs in the somewhat complicated processalready described is that deposits are canceled,thus greatly increasing the excess reserves of thebanks unless of course these latter replace the assetsthat are thus taken from them. Conceivably at leastthen a very substantial part of the funds collectedin taxes for this purpose will in an economic sensebe left uninvestedwith a powerful deflationaryeffect.

An Assurance of Thrift?If the proceeds of these taxes are actually invested

dollar for dollar as they are collected and paid overto holders of Government securities, there is still noassurance that the country as a whole is in any realsense laying by the means for meeting the needs ofthe aged. This in the last analysis would occur onlyif the community is induced by this means to becomemore frugal than it otherwise would be, consumingless and investing more in enterprises that canreally be counted upon to produce the goods requiredfor the care of the aged at the time such care isdemanded. But what assurance have we, what as-surance could there be, that anything of this naturewill actually take place? The taxpayers, who in thelast analysis are the people at large, may make theircontributions at the expense of their usual savings,that is to say, they may buy fewer securities, carrysmaller savings accounts and less life insurance, tothe full amount that they are required to contributeto the scheme in question. Again, the funds cominginto the hands of the owners of Government obliga-tions quite conceivably might find their way intoenterprises designed to extend consumer credit.With the tendency, so evident in this country in re-cent years, to live from hand to mouth or worse, de-pending upon loans to aid in providing us with con-sumers' goods at the same time that we go throughthe motions of saving, it places considerable strainupon credulity to suppose that any such schemeas is here proposed would in any way inculcatethrift. If by all this complex machinery we do notincrease national savings and improve our judgmentin the utilization of savings, then whatever may besurface appearances, the old-age pensions plans ofthe day are nothing better than a snare and a delu-sion, pretending to accomplish that which they willnot and cannot in the very nature of the case per-form.

More Practical QuestionsBut there are other and more immediate practical

aspects of this matter. The program as at presentoutlined would steadily take Government obligationsoff the market during the coming years. Now thebanks, rightly or wrongly, have enormous amountsof funds invested in these obligations. So have in-surance companies, savings banks and many men oflarge means, as well as numerous corporations withspare funds. All these will evidently be obliged tofind other investment media. Then of course the taxinvolved is a very serious one. It cannot fail to addvery materially to the cost of production just at atime when all the economic considerations are call-ing loudly for reduced costs. If, as seems almost in.

Chronicle 2751evitable, manufacturers and others shift these taxeseither in the form of reduced wages or higher prices,how will they find a market for their goods? Theproblems and the hazards of this whole enterprisehave not, we are afraid, begun to be realized by thebusiness community, especially the financial com-munity, which as a whole has been remarkablycomplacent about it. The Senate presumably willbefore very long begin to give attention to themeasure in question. It has been much more dis-posed to inquire into the meaning of bills sent to itfrom the White House than has been the case withthe House. The business men of this country, bothlarge and small, simply must not permit the Senateto proceed without making both clear and emphaticwhat is involved.Not for a moment must they permit themselves to

be intimidated or deceived by the cry of PostmasterGeneral Farley that "big business" is opposing theNew Deal for selfish reasons, always with the hiddendesire to oppress or otherwise do injury to "the peo-ple." This is of course an old, old cry of the politi-cian, one which seems to have gained in effective-ness in the past few years. It is perhaps the moreeffective at the moment as a result of the fact thatthe Administration has developed 60 many instru-ments for the punishment of those who oppose itin any way. But too much is at stake now to permitany such considerations to enter for a moment. Afterall, the people themselves, once they are willing toexercise their power, are quite able to control thesituation regardless of all such factors.

Studying the Textile Industry

THE President's cabinet committee, recently ap-pointed to make a study of the cotton textileindustry, can without doubt find much wholesomefood for thought if it cares to pursue its inquirywith an open mind. This committee is said to beparticularly interested in the excellence of plantequipment now being utilized and in the question ofexport markets. It will find obsolete plant equip-ment without doubt. What industry that has foryears been a victim of economic paralysis is withoutsuch equipment? But if the intention is, as inti-mated, that of suggesting plans for enabling theindustry to rehabilitate itself with borrowed money,the quicker the whole matter is buried in the archivesof Washington, at least until such time as the in-dustry is able to earn a respectable living, the bet-ter. As to export markets, how could they be ex-pected to provide an outlet for our goods when weare not willing to permit foreigners to pay for themin the only coin at their disposal, namely goods? Itis with regret that it must be observed that the cot-ton textile industry is traditionally the leader, orone of them, in every effort to increase the heightof our tariff walls.

Federal Reserve Bank Statement

ACONTINUED and sharp increase in the reservedeposits of member banks is reflected in thecurrent condition statement of the twelve FederalReserve banks, combined. No less than $218,106,000was added in the week to April 24 to the reservedeposits of the member institutions, lifting theaggregate to $4,719,309,000, as against the previoushigh record of $4,645,000,000, recorded two monthsago. Excess reserves over requirements again areclose to the high record of nearly $2,300,000,000


2752 Financial Chronicle April 27 1935attained in February, but probably a little below theactual high, since the deposits of the member banksthemselves have increased and require larger reserves.Among the various factors contributing to the cur-rent increase are deposits of $47,418,000 gold certifi-cates with the Federal Reserve by the Treasury, adecline of currency in circulation and further heavyuse by the Treasury of its deposits with the FederalReserve institutions. Nor is there any indicationthat the upward tendency in idle funds will come to ahalt in the near future. On the contrary, gold stillis flowing to this country from Europe in largeamounts, and in the early summer excess reserveswill be swelled sharply by the Treasury's redemptionof 2% Consols and Panama Canal bonds, whichbear the circu'ation privilege. National banks al-ready have deposited large amounts of legal tenderwith the Treasury to discharge their liability on theircurrency notes, and to the degree that such pre-liminary arrangements have been made, excessreserves are likely to be increased further when theredemption of the circulation bonds occurs. Thereis nothing comforting in these trends, as the ever-increasing aggregate of idle funds constitutes a realdanger to stability and confidence.Record totals are virtually a weekly matter in the

aggregate of gold certificates held by the FederalReserve banks, and the current statement is noexception to this rule. Such gold certificate holdingsmounted to $5,730,275,000 on April 24, from $5,682,-857,000 on April 17, even though the monetary goldstocks of the country increased only $29,000,000.Together with a large return of cash, this increaselifted the total reserves to $5,997,868,000 from $5,-927,943,000. On the liability side, Federal Reservenotes in actual circulation dropped to $3,145,805,000from $3,178,871,000 the recession being normal atthis time owing to the return flow of currency with-drawn for the holidays. Member bank deposits, asalready noted, increased to $4,719,309,000 on April24 from $4,501,203,000 on April 17. "Other de-posits" also increased, but a sharp decline took placein Treasury deposits on general account and the totaldeposits were advanced to $5,064,252,000 from$4,977,537,000. These changes resulted in an in-crease of the ratio of total reserves to deposit andnote liabilities combined to 73.1% from 72.7%.In other respects only nominal changes are to benoted in the current statement. Discounts by theSystem moved up to $6,824,000 on April 24 from$6,661,000 on April 17, while industrial advancesshowed tl:e small gain of $43,000 to $26,206,000.Open market bill holdings fell $606,000 to $4,696,000,and United States Government security holdingswere off $621,000 to $2,430,232,000.

The New York Stock Market

WELL sustained activity marked the trading onthe securities markets in New York, thisweek, partly because of heavy speculative activityin so-called silver stocks and partly because sounddividend paying equities were increasingly in requestby investors. The speculative operations over-shadowed the investment turnover, as they werestimulated by sharp and persistent advances in themarket quotations for silver metal. The worldprice for this commodity early in the week attainedthe figure of 71.11 cents an ounce set by the UnitedStates Treasury for American production, and late

on Wednesday the Treasury increased its figure to77.57 cents by means of a reduction in the seignioragefrom 45% to 40% of the $1.29 an ounce apparentlyfixed as the goal. The world quotation sweptrapidly to and above the figure set by the Treasury.and all this, of course, was accompanied by rapidlyincreasing speculation in stocks that have an interestin silver. Such shares were advanced 2, 3 and 4points daily, but other sections of the stock marketshowed relatively little change, although the generaltone was firm. An upset in the grain marketscaused some hesitation, but here also recovery tookplace late this week and most of the losses wereregained.The activity in the share market already was pro-

nounced last Saturday, when approximately 880,000shares were traded on the New York Stock Exchange,with prices higher in almost all groups of issues.Movements on Monday were irregular, but mostissues advanced in active trading. The turnoverwas considerably in excess of 1,000,000 shares andindeed the higher level of trading was sustained allweek. Steel shares formed a group that failed tojoin in the general advance on Monday. In Tues-day's trading commodity stocks were sharply higher,under the leadership of silver and sugar shares. Rail-road and utility stocks were modestly better, whilesteel shares drifted lower and motor issues declinedmore sharply because labor difficulties appeared insome of the prominent centers. On Wednesday acollapse of grain prices caused some liquidation ofstocks, but most groups proved resistant and losseswere not great. Metal stocks and utility sharesmoved upward against the general trend. Themarket was faced on Thursday by the overnightTreasury announcement of an increased price fordomestic silver, and stocks in the metal group soaredin consequence. Sharp fluctuations in wheat pricesfailed to dampen speculative enthusiasm and almostall stocks improved. This session was the mostactive of the week. Conditions yesterday were notmuch changed, metal stocks again moving higheron a large volume of trading, while other issues wereless active and slightly uncertain in price trend.In the listed bond market attention was centered

on the obligations of the United States Treasury,which moved upward very slowly, even though avast conversion offering was announced Monday,applicable to $1,933,000,000 First Liberty Bonds.High grade corporate securities were well sustained.while speculative bonds shared to some degree inthe enthusiasm engendered by the silver priceadvances. Foreign dollar bonds were irregular inquiet dealings. Although fluctuations in the grainmarkets were large in all sessions, closings yesterdaywere close to figures prevalent a week earlier and themovements did not retard stock movements ortrading to any pronounced degree. In the foreignexchange markets, gold currencies were firm againstthe dollar and there was less apprehension of furtherdefections from the gold bloc. Sterling drifted lower,as did the currencies allied with the British unit.The silver currencies of the Far East naturallyadvanced along with the price of the metal, butthere was much uneasiness regarding the effects ofthe developments on China, which already wassuffering an embarrassing drain of its silver resources.Although steel-making activities increased this week,stocks of the steel companies were not benefitted.


Volume 140 Financial Chronicle 2753The American Iron & Steel Institute estimated steel-making for the week ending to-day at 44.6% ofcapacity, against 44.0% last week. Production ofelectric energy for the week to April 20 was 1,701,-945,000 kilowatt hours, against 1,725,352,000 inthe preceding week, the Edison Electric Institutereports. Carloadings of revenue freight totaled610,905 cars in the week ended April_20,,accordingto the American Railway Association, or 23,220cars more than in the preceding week.As indicating the course of the commodity mar-

kets, the May option for wheat in Chicago closedyesterday at 1001/4c. as against 100c. the close onThursday of last week. May corn at Chicago closedyesterday at 891/8c. as against 901/8c. the close onThursday of last week. May oats at Chicago closedyesterday at 50%c. as against 49%c. the close onThursday of last week.The spot price for cotton here in New York closed

yesterday at 12.25c. as against 11.90c. the close onThursday of last week. The spot price for rubberyesterday was 11.75c. as against 11.68c. the closeon Thursday of last week. Domestic copper closedyesterday at 9c., the same as on Thursday of lastweek.In London the price of bar silver was 361/4

penceper ounce as against 30 15/16 pence per ounce onThursday of last week, and spot silver in New Yorkrose to a new high level and closed yesterday at 81c.as against 67%c. on Thursday of last week. In thematter of the foreign exchanges, cable transfers onLondon closed yesterday at $4.81% as against$4.85% the close on Friday of last week, and cabletransfers on Paris closed yesterday at 6.62c. asagainst 6.59c. the close on Friday of last week.Favorable dividend actions during the week in-cluded the Diamond Match Co., which declaredextra dividends of 20c. a share on the common andthe preferred stocks, in addition to the regular quar-terly disbursement of 25c. a share on the commonshares, all payable June 1 next; three months ago acommon dividend of 75c. a share was declared, andit was announced that the regular quarterly rateof 25c. a share would be resumed at this time. Onthe New York Stock Exchange 251 stocks touchednew high levels for the year and 26 stocks touchednew low levels. On the New York Curb Exchange186 stocks touched new high levels, and 25 stockstouched new low levels. Call loans on the NewYork Stock Exchange closed yesterday at 1/4%, thesame as on Thursday of last week.On the New York Stock Exchange the sales at

the half-day session on Saturday last were 880,820shares; on Monday they were 1,380,295 shares; onTuesday, 1,226,780 shares; on Wednesday, 1,279,370shares; on Thursday, 1,693,070 shares, and on Fri-day, 1,522,120 shares. On the New York Curb Ex-change the sales last Saturday were 127,735 shares;on Monday, 206,190 shares; on Tuesday, 250,630shares; on Wednesday, 247,725 shares; on Thursday,352,245 shares, and on Friday, 328,055 shares.Trading volume on Monday reached the second

highest peak of the year, and with the advance inthe Government's purchasing price for newly-minedsilver, the value of equities were further stimulatedthereby, rising several points. This was particu-larly true of the metal stocks. At the closing ses-sion on Friday, while irregularity prevailed, stocksin many instances ended the day substantially

higher than at the close on Thursday a week ago.General Electric closed yesterday at 24% against241/8 on Thursday of last week; Consolidated Gasof N. Y. at 23 against 211/4; Columbia Gas & Elec.at 6% against 6%; Public Service of N. J. at 27%against 26%; J. I. Case Threshing Machine at 56%against 53%; International Harvester at 40 against38; Sears, Roebuck & Co. at 367/8 against 36%;Montgomery Ward & Co. at 243/4 against 24%; Wool-worth at 581/2 against 57; American Tel. & Tel. at113 against 1071/8, and American Can at 1223/4against 120%.

Allied Chemical & Dye closed yesterday at 145against 143 on Thursday of last week; E. I. du Pontde Nemours at 971/8 against 97%; National CashRegister A at 15 against 151/4; International Nickelat 27% against 265/8; National Dairy Products at141/8 against 14%; Texas Gulf Sulphur at 315/against 317/8; National Biscuit at 231/4 against 253/8;Continental Can at 73% against 73; Eastman Kodakat 144 against 133; Standard Brands at 14 against15%; Westinghouse Elec. & Mfg. at 43 against 383/8;Columbian Carbon at 79 against 77; Lorillard at20% against 20%; United States Industrial Alcoholat 42% against 40; Canada Dry at 10 against 91/4bid; Schenley Distillers at 23% against 24%, andNational Distillers at 25 against 27%.The steel stocks closed higher as compared with

a week ago. United States Steel closed yesterdayat 323/4 against 31% on Thursday of last week;Bethlehem Steel at 261/2 against 25%; Republic

Steel at 12% against 11%, and Youngstown Sheet &Tube at 161/4 against 157/8. In the motor group,Auburn Auto closed yesterday at 201/2 against 191/4on Thursday of last week; General Motors at 30%against 30; Chrysler at 377/8 against 36%, andHupp Motors at 13/4 against 11/8. In the rubbergroup, Goodyear Tire & Rubber closed yesterday at18% against 19 on Thursday of last week; B. F.Goodrich at 83/4 against 9, and United States Rubberat 121/4 against 12%. The railroad shares also showgains for the week. Pennsylvania RR. closed yester-day at 21% against 20 on Thursday of last week;Atchison Topeka & Santa Fe at 42% against 38%;New York Central at 17% against 15%; UnionPacific at 92% against 90; Southern Pacific at 163/8against 14%; Southern Railway at 11% against101/8, and Northern Pacific at 17 against 15%.Among the oil stocks, Standard Oil of N. J. closedyesterday at 421/4

against 403/4 on Thursday of lastweek; Shell Union Oil at 7% against 67/8, and At-lantic Refining at 24% against 23%. In the coppergroup, Anaconda Copper closed yesterday at 13%against 11% on Thursday of last week; KennecottCopper at 181/4

against 171/8; American Smelting &Refining at 43% against 37%, and Phelps Dodge at18 against 161/4.

European Stock Markets

TRADING on stock exchanges in the leading Eu-ropean financial centers reflected mild uncer-tainty this week, but the turnover was small and themovements had no great significance. All Europeanmarkets were closed until Tuesday, in observance ofthe Easter holidays, and dealings were resumed un-der conditions closely resembling those of the pre-ceding week. Firm tendencies were reported on theLondon Stock Exchange, despite the slow trading,but the Continental markets were uncertain. More


2754 Financial Chronicle April 27 1935confidence was felt at Paris regarding the ability ofthe gold bloc to surmount current difficulties, aspressure against the Swiss franc and the guilder hasrelaxed, but the gold drain from France, Hollandand Switzerland continues and the future monetarytrend remains unpredictable. This is especially truein view of the plebiscite to be held in Switzerlandnext June on economic policies. Nor is the Europeanmonetary uncertainty diminished by the furthersharp increase in the price of silver on world mar-kets, occasioned by the American decision to in-crease the figure at which new domestic silver willbe absorbed by the Treasury. The armaments situa-tion in Europe remains both a favorable and an un-favorable influence on the securities markets there.The political complications and implications are de-cidedly unfavorable, but the armaments race hasdrawn many unemployed into the factories and stim-ulated numerous industries. With the exception ofincreased armaments activities, no changes in Euro-pean trade and industrial conditions are reported.On the London Stock Exchange very little busi-

ness was done, Tuesday, when trading was resumedafter the extended holidays. British funds were infair demand, and the advances in this section wereattributed to satisfaction with the new budget.Stocks of companies engaged in silver mining or thathave an interest in that metal were marked higheras a result of a rapid advance in the quotation forthe metal. No achanges of any significance appearedin industrial stocks or home railway issues, but theinternational group was firm on favorable week-endreports from New York. In Wednesday's tradingfurther advances were recorded in British funds,while industrial stocks were firm. The so-called sil-ver group attracted further attention as the price ofthe metal continued its upswing. Internationalsecurities of all kinds reflected better buying, withAnglo-American trading favorites in the lead. Thetone on Thursday was again cheerful, notwithstand-ing very modest trading. British funds were markedslightly higher, and modest inquiry for industrialissues sufficed to increase the quotations in this sec-tion as well. Silver mining stocks continued theirimprovement and some gains also appeared in goldshares. International securities were quiet and un-changed. Activity increased at London yesterday,and trends were favorable in all groups. Silverstocks were in best demand.The Paris Bourse was irregular when business

was resumed, Tuesday, after the protracted holidaysuspension. Rentes were offered liberally and losseswere recorded in these issues, but French equitieswere firm, with a few issues showing large gains.The trading was confined largely to professionaloperators. The tone improved on Wednesday, withrentes higher on a rather general demand. Strengthin guilders and Swiss francs contributed much tothe better sentiment. French industrial and utilitystocks showed comfortable gains, but the interna-tional section reflected liquidation. In a very quietsession on Thursday, small losses were the rule onthe Bourse. Rentes declined fractionally, and theshare market also lost ground, with the exception ofa small group of industrial issues. Changes weresmall in a quiet session at Paris yesterday. Mostissues drifted lower.An irregular tendency marked the dealings on the

Berlin Boerse, in the first session of the week, onTuesday. The international political situation -con-

tinned to overshadow the securities market in Ger-many, owing to the sharp protest by Berlin againstthe League censure of German rearmament activi-ties. Price changes were small and in both direc-tions. In Wednesday's trading more losses thangains were recorded, with the turnover very small.Bank shares composed the only group that showeddistinct firmness, all other sections dropping frac-tionally in the idle market. Conditions were un-changed on Thursday, small offerings being suffi-cient to depress quotations. Heavy industrial stocksshowed losses up to 3 points, while recessions else-where were of more modest proportions, althoughquite general. The Boerse was steady yesterday,but very little business was done.

German Debt Discrimination

TO ITS. previous protests against the unfavor-able treatment being meted out by Germanauthorities to American holders of German dollarbonds the State Department at Washington addedanother, on April 19, with specific reference to thefailure of the German Government to meet the in-terest payment in dollars on the Dawes loan, or 7%external issue of 1924. The Bank for InternationalSettlements made known, early last week, that theGerman Government had failed to meet the require-ments of the bond contract and it was indicated atthe same time that the Basle institution had pro-tested this failure on its own account. The couponon the Dawes bonds payable April 15 was met onlyby payment of registered marks, which can be util-ized for such stipulated purposes as the defrayingof travel expenses in Germany and investment invarious ways within the Reich. There is a marketin New York for such registered marks, but hardlymore than half the nominal value can be realized,and the American holders of this international loanthus find themselves in a position that contrastspoorly with that of the British, French, or otherEuropean holders of the tranches floated in suchcountries. Clearing arrangements made by all theEuropean -countries concerned with the Reich haveenforced the full payment of coupons on the GermanGovernment's external loans in the stipulated cou-pons, notwithstanding the moratorium decree issuedby Berlin last June. In addition to the discrimina-tion exercised by the German Government againstAmerican investors and in favor of European in-vestors in the bonds of that Government, it is note-worthy that German banking and exchange authori-ties are discriminating in much the same way againstAmerican holders of German municipal and cor-poration loans.In the note now sent by the State Department to

the German Government, regret is expressed overthe announcement that the coupons on the Dawesloan which do not fall under the provisions of spe-cial agreements or clearing arrangements wherebyholders may receive full payment in their respectivecurrencies, will be served only by an offer of pay-ment in registered marks. "In effect, this means,"the note continued, "that holders other than Ameri-can holders will receive full payment and thatAmerican holders will be tendered payment in reichs-marks utilizable only for restricted purposes andconvertible into dollars only at a considerable dis-count from the face value of the coupons. Theamount necessary to assure full service of this directobligation of the German Government bearing speci-


Volume 140 Financial Chronicle 2755fic guarantees of priority of transfer into foreigncurrencies and of non-discriminatory treatment isslightly in excess of $2,000,000. The loan was floatedunder unusual auspices of international co-opera-tion and the American subscriptions were an essen-tial contribution to the re-establishment of Germancurrency and finances in 1924. The solemn faith andcredit of Germany were voluntarily pledged by theGerman Government that payments on the bondswould be met, and met without discrimination for oragainst any holder." It was noted in Washingtondispatches that Germany did nothing about a simi-lar protest which the State Department made lastyear and that she probably will do nothing on thisoccasion as well. The aide memoire was deliveredfor the record, it was said, so as to be prepared forthe time when adjustments presumably will bemade.

ChileaniDebt Negotiations

AJOINT announcement by the Chilean SpecialFinancial Commission and the Foreign Bond-holders Protective Council, Inc., made public yes-terday, indicates that no agreement was reached inthe protracted negotiations regarding the Chileanproposal to resume payments in a very modest wayon the external direct and guaranteed debts of theChilean Government. This is as it should be, for theChilean aims already were embodied in legislativeenactments which not only ran counter to all ac-cepted principles of debt adjustments, but alsowould have made difficult any upward revision ofthe terms hereafter. Due appreciation was expressedby the Council of the Chilean Government's initia-tive in opening the debt negotiations, but it wasadded that modification was suggested at certainpoints in the program. The Chilean Commission soonwill return to Chile and further consideration ofthe matter was held possible. "The Council, in viewof the laudable concern manifested by Chile in thematter of meeting her obligations to her creditors,believes that the better understanding resultingfrom the present exchange of views will facilitatein the near future an arrangement which is fairboth to Chile and to the American bondholders,"the statement concludes. The Chilean proposal,which now obviously has been rejected, called forutilization of certain nitrate revenues and certaincopper taxes of the Government in meeting all ex-ternal obligations. It has been estimated that theentire revenues would have sufficed for annual in-terest payments of less than 1/2% at the presenttime, since the Chileans proposed to use half thefunds thus made available in the repurchase of theirbonds at the current default levels. A Chilean groupwhich conferred with representatives of Europeanholders of Chilean obligations is understood to havefound the proposals unacceptable there, as well.

South American' Trade and Debts

SOUTH AMERICAN countries have tended in re-cent years to adopt the expedient of paying ontheir external loans only to the extent that foreignexchange is made available through exportation oftheir own products, and there is every indicationthat this trend will continue. The Argentine Gov-ernment is the only one in South America still ef-fecting full payments on external bond issues. OnApril 13, however, a decree was issued which obvi-ously is aimed to reduce imports from the UnitedStates in order to ease the exchange problem. The

decree provides that valuations for import duty pur-poses will be 20% higher than on products for whichpayment is arranged in the so-called free exchangemarket rather than through Government permitsand exchange arrangements. Although this decreeis general, it will bear most heavily upon importsfrom the United States, and a protest against itsapplication was made at Buenos Aires, Monday, byRaymond E. Cox, American Charge d'Affaires. Inany event, Mr. Cox suggested, the decree should notbe made applicable for at least sixty days, since itaffects goods already shipped or ordered. There islittle doubt that Argentina will continue to serviceher external loans, but there seems also to be littledoubt that further trade restrictions will be ef-fected -until and unless the exchange situation im-proves.In all other South American countries continu-

ally greater emphasis is placed on the need forlarger purchases of their products abroad, if credi-tor nations like the United States and Great Britainare to receive service on the loans they advancedin the past. "South American governments areunanimously dedicated to the proposition that NorthAmericans must spend more money in SouthAmerica if they expect to collect anything on theirSouth American bonds," the correspondent of theNew York "Times" in Buenos Aires remarked in adispatch of April 19. Since lending operations haltedin the United States, South Americans have had nosources of revenue with which to pay interest ex-cept the proceeds from the sale of their own prod-ucts, it is noted. The British wrote into the Anglo-Argentine trade treaty the principle that proceedsfrom sales to one country should not be used for for-eign debt payments to other countries, and thatprinciple, in one form or another, is said to have beenadopted since by practically all South Americancountries in their exchange-control operations.Uruguay, the "Times" correspondent states, recentlyadopted a drastic regulation under which only 75%of the proceeds of Uruguay's sales to the UnitedStates are to be spent in the United States, includingdebt payments. The 25% margin probably will beheld in reserve for bargaining in connection withnew trade agreements, it is suggested.

European Armaments

EUROPE'S diplomatic atmosphere has been rela-tively calm this week, despite further unpleas-antries regarding the German rearmament an-nouncement of March 16 and the League resolutionof April 17, in which Germany was accused of hav-ing failed in the duty incumbent on all members ofthe international community to respect their con-tractual obligations. A sharp protest against theGeneva resolution was made by the German Govern-ment last Saturday, but it produced no new disturb-ance. There are, in deed, some indications of at-tempts to improve matters, now that all the diplo-matic amenities have been observed. It is reportedthat Germany will be invited by the British Govern-ment to attend another informal gathering in Lon-don on naval armaments. Equally significant isthe difficulty being experienced in the formulationof the much-vaunted treaty of mutual assistancebetween France and Russia. Armaments activi-ties, on the other hand, continue at a feverishpitch and the situation is anything but reassuringfor that reason. Germany is described in many re-


2756 Financial Chronicle April 27 1935ports as rushing land and air armaments with al-most unexampled speed and thoroughness. Francecalled to the colors this week the 1914 class of con-scripts to the number of 120,000, without releasingthe class due for retirement at this time. BritishMinisters busily defended, in talks to their constitu-ents, their recent decision to increase all branchesof the defense services. Italy started, last Satur-day, what was described as the "biggest annual re-cruiting of aviators ever held in the world." TheAustrian Vice-Chancellor, Prince Ernst von Star-hemberg, conferred at Rome, late last week, withPremier Mussolini, and the discussion was said toconcern the Austrian desire to rearm.The German Government's note rejecting the

League resolution of censure was a brief but em-phatic document, in which the strongest objectionswere expressed to the 13 nations represented on theLeague Council setting themselves up as judges ofGermany. "The German Government sees in theresolution of the Council of the League of Nationsan attempt at new discriminations against Ger-many and consequently rejects it in the most reso-lute manner," the note said. "It reserves to itselfthe right to make known soon the attitude it willadopt on the various questions dealt with in theresolution." Whether any further objections tothe Geneva resolution will be aired publicly by theGerman Government or reserved for private diplo-matic conversations is a matter of conjecture atpresent. The formal protest was lodged with thediplomatic representatives of the governments con-cerned in Berlin, and only brief acknowledgmentshave been made by such governments.

Signatures to the proposed Franco-Soviet alli-ance were to be attached in Paris last Saturday,but this event was suddenly postponed after themost elaborate preparations. Maxim Litvinoff, theSoviet Foreign Commissar, was scheduled to makea triumphal entry into Paris, but he returned fromGeneva to Moscow instead. French authorities de-clared that "nothing vital" was holding up conclu-sion of the accord, but press correspondents in Parissuggest that the French Government now is farfrom anxious to conclude an agreement requiringimmediate assistance in the event of hostilities withany third Power. Foreign Minister Pierre Lavalis said to have requested modification of the pro-posed treaty so that it will not conflict with or gobeyond France's existing engagements. It appearsalso that there has been some modification of theplans for an extensive Danubian conference at Rome,as well as a delay in the conference from late inMay to early June. Only the question of Austrianindependence will be considered at the Rome meet-ing, it is now reported. Officials of the British Gov-ernment, meanwhile, are taking advantage of thepresence of Dominions Premiers in London for theRoyal Jubilee celebrations to discuss with thesedignitaries the attitude London should take towardrecent European developments. Hints are said tohave been given that London might denounce theLocarno treaty unless the Dominions agree to aidGreat Britain in its enforcement, if the occasionshould arise.

Bulgarian Cabinet

SWIFT changes were made in the BulgarianCabinet over the last week-end, under circum-stances that indicate almost complete control of

the situation in that country by King Boris. Amilitary clique long has been the dominant politi-cal force in Bulgaria, and Cabinet changes in recentyears meant very little. It is quite possible, how-ever, that a new situation now will emerge, for KingBoris took advantage of a split in the militaryranks and installed a Cabinet that is composed prin-cipally of civilians, who doubtless will be moreamenable to his own wishes than were the mili-tarists. The entire affair bears the stamp of apalace revolution, as the country remained quietand many Bulgarians probably were ignorant ofthe whole proceedings. This latest active interven-tion by King Boris in the political intrigues of hiecountry was heralded by the sudden arrests of twoformer Premiers, Kimon Gueorgieff and AlexanderTsankoff, together with four other prominent poli-ticians, late last week. All were interned on a smallisland in the Black Sea for the time being, and astatement was issued explaining the arrests as dueto forbidden political activity.

Several members of the Cabinet promptly re-signed, and Premier Petko Zlateff decided to handthe resignations of all Ministers to the King, whopromptly accepted them. Ignoring the two militaryfactions, Boris called last Saturday upon AndreTocheff, diplomat and historian, to form a newregime, and the civilian Premier announced his listof Ministers on Sunday. It includes only one mem-ber of the former Cabinet, and the group is expectedto aid the King in executing his plans for a newConstitution and "normalization" of the country.A group of army officers was arrested last Monday,ostensibly because they were planning a coup d'Etat,but announcement was made the same day that thetwo former Premiers would be released from con-finement. The personnel of the new Cabinet is asfollows:PremierAndre Tocheff.Foreign AffairsGeorge Itiossevanoff.InteriorGeneral Rachko Atasanoff.EducationGeneral Todor Radef. f.FinanceMarco Raikof I.JusticeAnguel Karageosoff.WarGeneral Tzaneff.National EconomyStoitcho Mochanoff.Public WorksNicholae Yotoff.

Chaco War

SOME of the most severe fighting in the three-yearconflict between Bolivia and Paraguay overthe boundaries of the Gran Chaco area currentlyis in progress on a 120-mile front, deep in nominallyBolivian territory. Efforts by the League of Na-tions and by American neutral States to mediatein this dispute have been unceasing and invariablyfruitless. The League Assembly has been convokedto meet May 20 in order to consider the questionof "the further application of the covenant" in re-gard to the Chaco war. But nothing is expected todevelop from such deliberations, as no secret ismade of the League's desire to transfer the problemback to American neutral countries and thus avoida further loss in the already diminished prestige ofthe Geneva organization. Argentina and Chile tookthe initiative early this month in further effortsto end the conflict. The two countries extendedinvitations to the United States, Peru and Brazilto join them in such endeavors, and acceptancesquickly were announced at Washington and Lima,but there still is some question whether Brazil willjoin this international effort at mediation. TheParaguayans, meantime, consolidated the vast ter-


Volume 140 Financial Chronicle 2757

ritorial gains they made in the fighting of recentmonths, and on April 16 they were able to announcecapture of the important Bolivian town of Char-agua. But the Bolivians quickly launched an exten-sive counter-attack and forced the Paraguayans torelinquish their hold on Charagua on April 23. Thebattle continues, with each side claiming that theother suffered large losses in dead and wounded,although figures on their own losses are not stated.After making due allowance for exaggeration, it isevident that this sanguine and useless war is drain-ing both countries of men and resources.

Earthquakes in Formosa and Persia

SEVERE and devastating earthquakes occurredthis week in the Japanese Island of Formosaand in remote areas of Persia. The temblors causedmuch loss of life, but not much property damage,as the areas afflicted are almost entirely agricul-tural. The disaster in Formosa occurred on Mon-day, when several brief but severe shocks destroyedthousands of native houses in the Provinces ofTaichu and Shinehiku. The wrecked houses werebuilt moztly of compressed mud, and they will beeasy to replace. The loss of life, however, is an-other matter, for reports of the Japanese OverseasDepartment indicate that more than 3,000 personsperished in the earthquakes, while additional thou-sands were injured. Lack of communications anda water shortage hampered the work of relief, whichthe Japanese authorities immediately organized andpursued with the greatest zeal. Britiai authori-ties offered to send warships with supplies to thestricken area, but the Japanese officials suggesteda delay until it could be determined whether suchaid were needed. In Iran, as Persia now is called,earthquakes of long duration were reported in dis-patches of Tuesday from Teheran. The northernpart of the country was said to have experiencedsevere temblors for a period of 10 days, during whichapproximately 600 people were killed. Here, also,lack of communications prevented accurate knowl-edge of the extent of the disaster.

Discount Rates of Foreign Central Banks

THERE have been no changes during the week inthe discount rate of any of the foreign centralbanks. Present rates at the leading centers areshown in the table which follows:

DISCOUNT RATES OF FOREIGN CENTRAL BANKS

Country

Austria....BelgiumBulgariaCanada__Chile Colombia ..Czechoslo-

vakia......Danzig. _ _Denmark _EnglandEstonia _ _Finland_ _._FranceGermany _ _Greece . _ _Holland

Rate inEffect497.26

DateEstablished

Pre-oleosRate

CountryRate inEllettApr 26

DateEstablished

Pre-MousRage

4 Feb. 23 1935 44 Hungary-- 414 Oct. 17 1932 524 Aug 28 1934 3 India. 34 Feb. 16 1934 47 Jan 3 1934 8 Ireland_ _ __ 3 June 30 1932 3%24 Mar. 1 1 1933 -- Italy 3% Mar 25 1935 44 Jan. 24 1935 4% Japan 3.65 July 3 1933 34 July 18 1933 5 Java 3% Oct. 31 1934 4

Jugoslavia. 5 Feb. 1 1935 6%34 Jan. 25 1933 44 Lithuania__ 6 Jan. 2 1934 74 Sept. 21 1934 3 Norway . _ 3% May 23 1933 42% Nov 29 1933 3 Poland _ 5 oct. 25 1933 62 June 30 1932 2% l'ortugal___ 5 Dec. 13 1934 5%5 Sept. 25 1934 5% Rumania . _ 4% Dec. 7 1934 64 Dec. 4 1934 4% South Africa 4 Feb. 21 1933 524 May 31 1934 3 Spain. 8 Oct. 22 1932 6%4 Sept 30 1932 5 Sweden._ _ _ 24 Dec. 1 1933 37 Oct 13 1933 7% Switzerland 2 Jan 22 1931 234414 Anr A Mc 214

Foreign Money RatesI N LONDON open market discounts for short bills

on Friday were 9-16% as against 9-16% onThursday of last week, and 9-16@N% for three-months' bills as against 9-16@N% on Thursday oflast week. Money on call in London on Friday was1A%. At Paris the open market rate was raisedon April 20 from 23/8% to 23.i% and in Switzerland

the rate was raised on April 22 from 2% to 23/2%but was lowered again on April 25 to 2%.

Bank of England Statement

THE statement for the week ended April 24 showsa gain of 21,927 in bullion, which raises thetotal to 193,066,785 as compared with 192,091,009a year ago. However, as this was attended by anexpansion of 733,000 in circulation, reserves fell off711,000. Public deposits declined 1,523,000 andotter deposits 1,953,612. The latter consists ofbankers' accounts, which decreased 2,158,608, andother accounts, which increased 204,996. Thereserve ratio rose slightly to 41.19% from 40.71%a week ago; last year it was 50.34%. Loans onGovernment securities fell of 2,255,000 and thoseon other securities 484,180. Of the latter amount,103,195 was from discounts and advances and380,985 from securities. No change was made inthe 2% discount rate. Below are the figures withcomparisons for five years:

BANK OF ENGLAND'S COMPARATIVE STATEMENT

L,April 241935

AprU 251934

AprU 261933

April 271932

April 291931

E i Circulation 393,182,000 373,703,629 371,934.552 352.814.389 349.814,884Public deposits 7,624.000 15.829.211 10.782.030 23,351,318 17.678.342Other deposits 137,733,613 136,461.504 138,041.048 93,567,044 85,953,083Bankers' accounts_ 98,135,805 99,505,115 100,936,137 58,284.080 48,923,885Other accounts 39,597,805 36,956,389 37,104,911 35.282.964 37,029,198

Govt. securities 87,732,044 75,694,209 68,531,127 62,620,906 31,088,684Other securities 15,440,459 15,903,054 23,082,981 28.352,776 32,844,901

Disci. St advances_ 5,819.84 5,281,998 11.631.385 11,534,796 7,198,173Securities 9,620,60! 10,621.058 11,451,596 16,817.080 25,646,728

Reserve notes At coin 59,884,000 78,387,380 74,923.799 43,662,282 57,412.522Coin and bullion 193,066,781 192,091,009 186,858.351121,476.671 147.227,386Proportion of reserveto liabilities 41.19% 51.47% 50.34% 37.34% 55.39%

Bank rate 20 2% 2% 3% 3%

Bank of France Statement

THE Bank of France statement for the weekended April 19 shows another decrease in goldholdings, the current loss being 361,115,748 francs.Gold now aggregates 81,023,533,766 francs, in com-parison with 75,130,558,289 francs last year and80,834,642,742 francs the previous year. An in-crease appears in credit balances abroad of 3,000,000francs, in French commercial bills discounted of162,000,000 francs and in creditor current accountsof 40,000,000 francs. Notes in circulation record acontraction of 432,000,000 francs, bringing the totalof notes outstanding down to 82,385,934,680 francs.Circulation a year ago was 80,996,524,100 francsand the year before 83,780,203,815 francs. TheBank's ratio is now at 80.19%, compared with77.77% the corresponding period a year ago and77.69% two years ago. A decrease is registered inadvances against securities of 32,000,000 francs.Below we furnish a comparison of the various itemsfor three years:

BANK OF FRANCE'S COMPARATIVE STATEMENT

%I Changesfor Week April 19 1935 April 20 1934 April 21 1933

Francs Francs Francs FrancsGold holdings 361,115,748 51,023,533,766 75,130.558,289 80,834,642,742Credit bals. abroad_a French co-nmercial

bills discounted_

+3,000,000

+162,000,000

12,671,645

4,085,095,584

12,515,032

5,120.801.283

2.426,031,935

3,188,607.678b Bills bought abr'd No change 1,092,294,141 1,052,280,273 1,455,016.164Adv. against secure_ 32,000,000 3,151,246,914 3.033,004,978 2,675,610,645Note circulation 432,000,000 82,385,934,680 80,996,524,100 83,780,203.815Credit current accts. +40,000,000 18,658,257,418 15,605,746,752 20,266,990,823Propor'n of gold onhand to sight liab _ 0.04' 80.19% 77.77% 77A9%

a Includes bills purchased in France. b Includes bills discounted abroad.

Bank of Germany Statement

THE Bank of Germany in its statement for thethird quarter of April shows another increasein gold and bullion, this time of 119,000 marks.The total of gold is now 81,132,000 marks, whichcompares with 219,292,000 marks last year and


2758 Financial Chronicle April 27 1935407,075,000 marks the previous year. Reserve inforeign currency, bills of exchange and checks andinvestments record decreases of 2,000 marks, 23,-733,000 marks, and 3,985,000 marks, respectively.Notes in circulation show a contraction of 64,252,000marks, bringing the total of the item down to 3,-424,070,000 marks. Last year circulation stood at3,307,669,000 marks and the previous year at3,278,239,000 marks. The proportion of gold andforeign currency to note circulation is now 2.49%,in comparison with 6.8% a year ago and 15.6%two years ago. An increase appears in silver andother coin of 25,150,000 marks, in notes on otherGerman banks of 2,451,000 marks, in advances of459,000 marks, in other assets of 21,480,000 marks,n other daily maturing obligations of 77,767,000marks, and other liabilities of 8,424,000 marks. Acomparison of the different items for the threeyears appears below:

REICHSBANK'S COMPARATIVE STATEMENT

Changesfor Week Apra 23 1935 Apra 23 1934 Apra 22 1933

Assets Reichsmarks Retchsmarks Reichsmarks RetchsmarksGold and bullion +119,000 81,132,000 219,292,000 407.075.000Of which depos. abroad No change 21,818,000 27.788.000 18,967.000Reserve in foreign curt% 2,000 4,318,000 5.848.000 104.891,000Bills of exch. and checks 23,733,000 3,570,302,000 2,798.579.000 2.876,827.000Silver and other coin... +25,150,000 176,315,000 306.077,000 300.615.000Notes on othm Ger. bks. +2,451.000 14,824,000 15.278.000 14,539,000Advances +459,000 40,684,000 71,284.000 68.911.000Investments 3,985.000 717,419,000 651.355.000 317.930.000Other assets +21,480,000 632,073,000 514.529.000 345.906.000

LiabilitiesNotes in circulation 64,252,000 3,424,070,000 3.307.669.000 3.278,239.000Other daily matUr.oblig +77,767.000 976,083,000 508,945.000 372,083,000Other liabilities +8,424,000 215,732,000 142.831.000 163,231,000Propor. of gold & forn

rurr. to note elreulAt +0.05q, 2.49% 8.8% 15.6%

New York Money Market

REDUCTIONS effected last week in the NewYork money market were maintained all ofthis week, and the market has again settled intoits accustomed lethargy. The only difference isthat rates for all classes of accommodation noware somewhat lower, no increase in the inquirybeing occasioned by the reduced rates. Call loansprevailed on the New York Stock Exchange at 1/4%,and there are no outside market quotations, as itwould be absurd to shade that purely nominal re-turn. Time loans for all maturities range from 1/4to %%, while charges on commercial paper andbankers' bills were continued at the levels fixed lastweek. The Treasury sold on Monday an issue of$50,000,000 discount bills due in 273 days, andawards were made at an average discount of 0.169%.

New York Money Rates

DEALING in detail with call loan rates on theStock Exchange from day to day, Yi of 1%remained the ruling quotation all through the weekfor both new loans and renewals.No transactions have been reported in-the time

money market this week. Rates are WI% on allmaturities up to six months. Trading in the marketfor prime commercial paper has continued fairlyactive this week. The demand has kept up fairlywell and moderate supplies of paper have beenavailable throughout the week. Rates are VI% forextra choice names running from four to six monthsand 1% for names less known.

Bankers' Acceptances

DEALINGS in prime bankers' acceptances havebeen extremely quiet this week. Only a fewbills have been offered and the buying interest hasbeen entirely lacking. Quotations of the AmericanAcceptance Council for bills up to and including

90 days are 3-16% bid and 3/% asked; for fourmonths, Yi% bid and 3-16% asked; for five and sixmonths, /% bid and 5-16% asked. The bill buyingrate of the New York Reserve Bank is M% for billsrunning from 1 to 90 days, 34% for 91-to 120-daybills, and 1% for 121- to 180-day bills. The FederalReserve banks' holdings of acceptances decreasedfrom $5,302,000 to $4,696,000. Their holdings ofacceptances for foreign correspondents also decreasedfrom $40,000 to $27,000. Open market rates foracceptances are nominal in so far as the dealers areconcerned, as they continue to fix their own rates.The nominal rates for open market acceptances areas follows:

SPOT DELIVERY180 Dam 150 Daft

120 DaysBid Asked Bid Asked Aid Asked

Prime eligible Ms Ns Ns90 Daps 60 Days

Bid Asked Bid AskedPrime eligible bills14 'is 34 Ns

FOR DELIVERY WITHIN THIRTY DAYSEligible member banks Eligible non-member banks

30 Dispirit Asked114 34

H% bit)H% bid

Discount Rates of the Federal Reserve Banks

THERE have been no changes this week in therediscount rates of the Federal Reserve banks.The following is the schedule of rates now in effectfor the various classes of paper at the differentReserve banks:

DISCOUNT RATES OF FEDERAL RESERVE BANES

Federal Reserve BankRate fisEffect onApr.26

DateEstablished

PrertmisRate

Boston New York Philadelphia Cleveland Richmond Atlanta Chicago Bt. Louts Minneapolis Kansas City Dallas San Francisco

2

22

222234

Feb. 8 1934Feb. 2 1934Jan. 17 1935Feb. 3 1934Jan. 111035Jan. 14 1935Jan. 19 1935Jan. 3 1935Jan. 8 1935Dec. 21 1934Jan. 8 1985Feb. 16 1934

2

234

2%

2%

3

234

Course of Sterling Exchange

STERLING exchange with relation to the dollarand the French franc presents no new aspects ofimportance from last week. The market has beenexceptionally dull owing to the Easter holidays.London and Paris and most of the Continental mar-kets were closed on Saturday last and on Monday, sothat rates for these two days as quoted in New Yorkwere purely nominal. Tuesday was the first fullmarket day. The range for sterling this week hasbeen between $4.805/ and $4.85, compared with arange of between $4.843/ and $4.8534 last week.The range for cable transfers has been between$4.8034 and $4.853/ compared with a range of be-tween $4.845A and $4.86 a week ago.The following tables give the mean London check

rate on Paris from day to day, the London open mar-ket gold price and the price paid for gold by theUnited States:

MEAN LONDON CHECK RATE ON PARISSaturday, April 20 73.625 I Wednesday, April 24 73.363Monday, April 22 Holiday I Thursday, April 25__

_____73.200Tuesday, April 23 73.544 I Friday, April 26 72.946LONDON OPEN MARKET GOLD PRICE

Saturday, April 20 Holiday Wednesday, April 24___143s. 8;id.Monday, April 22 Holiday Thursday, April 25_....144s. 5d.Tuesday, April 23__143s. 6d. I Frlday,l April 26144s. 934d.PRICE PAID FOR GOLD BY UNITED STATES (FEDERAL

RESERVE BANK)Saturday, April 20 $35.00 Wednesday, April 24 935.00Monday, April 22 35.00 I Thursday, April 25 35.00Tuesday, April 23 35.00 I Friday, April 20 35.00

The general undertone of firmness in sterling ex-change, especially with respect to Continental coun-tries, is of course largely due to the disturbing char-


Volume 140 Financial Chronicle 2759acter of the political developments on the Continent.In terms of the dollar sterling is not quite so firm ascompared with its relation to the Continentals.Ninety-day sterling has been ruling for some weeksat a slight discount in terms of the dollar, due partlyto the fact that the foreign exchange market regardsthe United States dollar as undervalued. GreatBritain continues to import raw materials apparentlyat an accelerated rate and the balance of commoditypayments continues against London. A certainundertone of ease also results from the fact that thereis a slight but noticeable movement of Europeanfunds to the New York market, as the opportunityfor the profitable employment of funds on the Con-tinent is not particularly encouraging in view of theuneasiness felt concerning international affairs. Thesefactors favoring the dollar offset to a considerableextent an undoubted flow of funds from many centersto the London market.The great abundance of money in London and the

confidence generally reposed in sterling continue tobe reflected in the London open market money rates,which continue virtually unchanged from last week.Two-months' bills are 9-16% and three-months' billsare 9-16% to %%. Four-months' bills areagainst 54% to 11-16%, and six-months' bills are4% to 11-16%, against 54% to 34%.A significant development in the foreign exchange

situation is the sharp advance in the world price forsilver, which resulted on Wednesday night in theissuance of a Presidential proclamation raising theUnited States Treasury's price for newly mineddomestic silver to 77.57 cents an ounce, after theprice of the metal had soared that day above theofficial price of 71.11 cents fixed on April 10 to7154 cents in New York, the highest price recordedsince Sept. 22 1925, and to 32 13-16d. per ounce inLondon, which was the highest level in that marketsince Oct. 30 1925. The latest increase in the pricewas foreshadowed on Tuesday by the quotations inNew York and London, which were 697% centsand 32 8d., respectively. The same method ofeffecting the advance in the official price of silverwas adopted as in the two previous increases madeon April 10, two weeks before the current advance,and on Dec. 21 1933, namely by a reduction in theseigniorage charged at the mint. When the pricewas fixed at 64.64 cents on Dec. 21 1933, it was setby placing the seigniorage at 50%. On April 10,after the world price had mounted to 64% centsthe President by proclamation reduced the siegniorageto 45%, making the price to the domestic producer71.11 cents. The proclamation of April 24 furtherreduces the seigniorage charge to 40%, making theprice to producers 77.57 cents.On Thursday silver leaped to 77 cents in New

York and 343/8d. in London, and on Friday the worldprice went to 81 cents and 363d., but no further ad-vance in the official United States buying price wasannounced. It is thought that the Treasury may curbthe speculative advance in the metal by basing itsprice on deliveries at the mints for sale. It couldthereby avoid making any advance in the price forthree weeks, the length of time required for metalnow being produced to reach the mints.Purchases of domestically mined silver since the

passage of the Silver Purchase Act on June 19 1934,constitute less than 10% of the silver purchased other-wise. Between June 19 1934 and March 29 1935

purchases of newly mined domestic silver totaled24,400,000 ounces, while in the same period 111,-900,000 ounces were acquired by nationalization and254,900,000 ounces were acquired by other silverpurchases. The total acquired by the Treasury inthe period is 391,200,000 ounces. Except for thehigh of $1.373/2 reached in 1919 after a steady ad-vance from 77% cents an ounce in 1916, the currentprice of 77.57 cents is the highest in about 50 years.In 1921 the high for silver was 735% and in 1932 itslow was 243. It is understood that the UnitedStates Treasury has not bought foreign silver inquantity in the world market since the price crossed60 cents about three weeks ago. The sharp rise inthe past three weeks is attributed entirely to specu-lation.The world monetary situation is certain to be

gravely affected by the rapid advance in silver.In Mexico, particularly, concern is felt lest the valueof the silver in the peso should materially exceedthe current monetary value of the coin, which is27.90 cents. When silver is worth no more than72 cents an ounce, the intrinsic value of the silvercontent of the Mexican peso is equal to its currentmonetary value. If the value of the silver contentshould rise considerably above its monetary value,bankers fear that melting of the coin might be re-sorted to on a large scale, with the result that Mexico'smost important medium of circulation would beseriously diminished.The rapid advance in the price of silver is being

studied by American, British, and Oriental observersbecause of the long-range effects implicit in therise. Owing to the fixed relation between the poundand the rupee, the bullion value of the rupee risesas sterling depreciates, and experience has shownthat a rise in the gold price of the silver content ofthe rupee, which is 165 grains of fine silver, beyondone-half, or at most two-thirds of the sterling valueof the rupee, upsets sterling-rupee exchange. Inorder to prevent a collapse in this exchange, GreatBritain and the Indian Government may have re-course to any of three methods. One is to raise thesterling price of the rupee and another is to reducethe quantity of fine silver in the rupee. Both thesedevices have been found unworkable. The onlyremaining alternative is to raise the gold value ofthe pound sterling. From the standpoint of someobservers, the predicament in which Great Britainis placed by the necessity of maintaining the stabilityof sterling-rupee exchange in face of the advancinggold price of silver, offers a way to end the currencywar which is now retarding economic recovery. Inthe opinion of these observers, the President's de-cision to pay the prevailing world price for silverwill force up the gold price of the metal and willcompel Great Britain to raise the gold value of thepound. With the danger of further depreciation insterling thereby eliminated, one of the chief obstaclesto international currency stablization should beremoved. If stabilization should indeed be justaround the corner, as these observers seem to feel,it must, of course, remain beyond attainment untilthe United States defines its own position clearly.Owing to the interruption in markets consequent

upon Eastertide observances, the volume of gold onoffer in the London open market has diminished inthe past ten days. In reality there is no sign of de-crease in the influx of gold. Most of the gold taken


2760 Financial Chronicle April 27 1935

in the London open market since 1931 has been foraccount of private hoarders. Nevertheless largequantities have been taken by central banks and inthe last year much has gone for American account.It is interesting to note that the London banks andsafe deposit vault operators are now charging at therate of 290 a year for the safeguarding of 400 ouncesweight. This price is understood to be twice thatcharged a year ago and nearly five times as much asprevailed two years ago. In connection with theaccumulation of the precious metal in London Mr.John Martin, retiring President of the TransvaalChamber of Commerce, at the recent annual meetingin Johannesburg threw new light on the hoardingcomplex which has now become more widespread thanever before in the Occidental world. He said that itwas customary to speak of all gold holdings outsidethose of the central banks as "hoarded." If by thisphrase it was intended to suggest that all these hold-ings were due to nervousness or the desire for specula-tive profit based on a possible rise in the value of gold,he thought this conclusion was misleading. He said:"These holdings are largely in the hands of greattrading and manufacturing concerns which have wide-spread international connections and correspondinginternational obligations. They would doubtless pre-fer to hold their balances in the form of bank depositsor interest-earning securities until the time came whenthe balances had to be used for the purpose for whichthey were accumulated; but they found it expedientto forego such small earnings as these in order to holdthe balances in a form in which they were readilyavailable without loss of value in any part of theworld, whatever might happen to particular inter-national currencies."

All the gold available in the London open marketthis week was taken for unknown destinations, under-stood to be for account of private hoarders. OnTuesday there was so taken 393,000, on Wednesday434,000, on Thursday 673,000 and on Friday477,000. The Bank of England statement for theweek ended April 25 shows an increase in gold hold-ings of 21,927. Total gold holdings now stand at193,066,785, which compares with 192,091,009 ayear ago and with the minimum of 150,000,000recommended by the Cunliffe Committee.At the Port of New York the gold movement for

the week ended April 24, as reported by the FederalReserve Bank of New York, consisted of importsof $24,210,000, of which $24,192,000 came fromHolland and $18,000 from Guatemala. There wereno gold exports. There was a decrease of $332,000in gold earmarked for foreign account. In tabularform the gold movement at the Port of New Yorkfor the week ended April 24, as reported by theFederal Reserve Bank of New York, was as follows:GOLD MOVEMENT AT NEW YORK, APRIL 18APRIL 24, INCL.

Imports Exports$24,192,000 from Holland

18,000 from Guatemala None

$24,210,000 totalNet Change in Gold Earmarked for Foreign Account

Decrease: 8332,000

The figures given above are for the week endedWednesday. On Thursday $838,200 was receivedfrom Canada and $554,100 from Holland. Therewere no exports of the metal or change in gold heldearmarked for foreign account. On Friday $838,600of gold was received from Canada. There were noexports of the metal or change in gold held earmarkedfor foreign account.

Canadian exchange continues at a slight discountin terms of the United States dollar. On Saturdaylast and Monday Montreal funds were at a discountof 74.6% to %%, on Tuesday at 7-16% to 13-32%on Wednesday at %%, on Thursday at 9-16%, andon Friday at 11-16% to %%.

Referring to day-to-day rates, sterling exchange onSaturday last was nominally quoted as the Londonmarket was closed. Bankers' sight was$4.85; cable transfers were $4.84%@$4.85%. OnMonday the London market was still closed for theEaster holiday. In New York the range was $4.8434@$4.85 for bankers' sight bills and $4.847/3@$4.853/ for cable transfers. On Tuesday sterlingwas steady. Bankers' sight was $4.84%@$4.85;cable transfers were $4.84%@$4.853/8. On Wednes-day the pound showed a slight degree of ease. Therange was $4.833'@$4.83% for bankers' sight and$4.83%@$4.84 for cable transfers. On Thursdaysterling declined. Bankers' sight was $4.82%@$4.8334 and cable transfers were $4.833/s@$4.833/2.On Friday sterling was steady, the range was $4.805/@$4.81% for bankers' sight and $4.80%@$4.81%for cable transfers. Closing quotations on Fridaywere $4.814 for demand and $4.81% for cabletraneers. Commercial sight bills finished at $4.813%69-day bills at $4.80%; 90-day bills at $4

.803'.;documents for payment (60 days) at $4.80%, andseven-day grain bills at $4.813/s. Cotton and grainpayment closed at $4.81%.

Continental and Other Foreign Exchange

EXCHANGE on the Continental countries showsno new developments. French francs display atendency to sag, largely because of an outwardmovement of Continental funds through Paris toLondon, induced mainly by the uncertainty of ttepolitical situation. The outward flow of funds toLondon is reflected in the recent losses of gold by theBank of France.The Bank of France statement for the week ended

April 19 shows a loss in gold holdings of 361,115,748francs. Total gold holdings now stand at 81,023,-533,766 francs, which compares with 75,130,558,289francs a year ago and with 28,935,000,000 francswhen the unit was stabilized in June 1928. Theratio stands at the high point of 80.19%, comparedwith 77.77% a year ago, and with legal requirementof 35%.The Belgian unit has been ruling at a slight prem-

ium in comparison with other gold bloc c_urrencies,due to the general belief prevailing in the foreignexchange market that the Belgian devaluation did notproceed far enough and that the currency, like theUnited States dollar, is undervalued. The return ofcapital to Belgium which began when the unit wasdevalued continues but at a slower rate. It is esti-mated that approximately 3,500,000,000 belgas havebeen repatriated, exclusive of losses incurred in theflight-of-capital movement. The report of the Bankof Italy is interpreted by the London "Economist's"Turin correspondent as proving that the annual sur-plus of savings was invested to the extent of sixbillion lire in foreign countries between 1927 and1934. The total annual savings of Italians are esti-mated at 10 billion lire, which compares with 20 bil-lion lire paid in taxes. The Italian Government isendeavoring to hold lire investments in foreign coun-tries to the lowest possible level, while recognizing


Volume 140 Financial Chronicle 2761that it is not advisable or practicable that such in-vestments be entirely eliminated.The following table shows the relation of the leading

European currencies still on gold to the UnitedStates dollar:

Old Dollar New Dollar RangeParity Parity This Week

France (franc) 3.92 6.63 6.59Belgium (belga) 13.90 16.95 16.92Italy (lira) 5.26 8.91 8.23Switzerland (franc) 19.30 32.67 32.33Holland (guilder) 40.20 68.06 67.45 to

to 6.62wto 17.00to 8.28to 32.5267.76

The London check rate on Paris closed on Fridayat 72.81, against 73.59 on Thursday of last week.In New York sight bills on the French center finishedon Friday at 6.62, against 6.583A on Friday of lastweek; cable transfers at 6.6234, against 6.59, and com-mercial sight bills at 6.59%, against 6.563/2. Antwerpbelgas finished at 16.98 for bankers' sight bills andat 16.99 for cable transfers, against 16.911A and16.923/2. Final quotations for Berlin marks were40.39 for bankers' sight bills and 40.40 for cabletransfers, in comparison with 40.27 and 40.28.Italian lire closed at 8.27 for bankers' sight billsand at 8.28 for cable transfers, against 8.27 and 8.28.Austrian schillings closed at 18.89, against 18.82;exchange on Czechoslovakia at 4.191A, gainst 4.183;on Bucharest at 1.013%, against 1.01; on Polandat 18.94, against 18.86, and on Finland at 2.13,against 2.14. Greek exchange closed at 0.94 forbankers' sight bills and at 0.94 for cable transfers,against 0.93 and 0.933/2.

EXCHANGE on the countries neutral during thewar follows the trends apparent during the pastweeks. The Scandinavian currencies move, of course,in strict relation with sterling exchange, to whichthey are commercially allied. There is a growinguneasiness in regard to the Swiss franc, which sincethe devaluation of the belga is viewed as the weakestlink in the gold bloc. The fall in Swiss exports hasbeen exceptionally heavy. Since 1929 exports toGreat Britain have declined from 288,000,000 Swissfrancs to 83,000,000 francs, and exports to the UnitedStates have dropped from 207,000,000 francs to47,000,000 francs. Swiss banks have suffered throughtheir investments in mortgages and in foreign coun-tries, such as Germany, which are subject to transfermoratoria.There is nothing especially new in the guilder situa-

tion. The forces advocating devaluation seem to bemaking no headway in Holland. The average Hol-lander gives careful thought to his monetary problemsand the conviction seems to be general that devalua-tion offers no permanent escape from the crushingburden of deflation. In Holland the consensus ofopinion seems to be that it can not be long beforeprices in Great Britain and the United States willadvance to a point where the process of Dutch defla-tion will be neutralized.

Bankers' sight on Amsterdam finished on Fridayat 67.74, against 67.48 on Friday of last week; cabletransfers at 67.75, against 67.49, and commercialsight bills at 67.72, against 67.46. Swiss francsclosed at 32.50 for checks and at 32.51 for cabletransfers, against 32.33 and 32.34. Copenhagenchecks finished at 21.50 and cable transfers at 21.51,against 21.66 and 21.67. Checks on Sweden closedat 24.83 and cable transfers at 24.84, against 24.99and 25.00; while checks on Norway finished at 24.20and cable transfers at 24.21, against 24.37 and 24.38.Spanish pesetas closed at 13.71 for bankers' sight

bills and at 13.72 for cable transfers, against 13.653/2and 13.663/2.

EXCHANGE on the South American countriescontinues for the most part to move in sym-pathy with sterling. Under the recently adoptedrevision of Argentina's banking system, in whicha central bank is to be controlled jointly by th.e.Government and by member banks, a legal mini-mum of 25% gold is provided, but in relation to theproposed maximum price for gold to be fixed by theArgentine Congress the bank will have at the outseta gold cover of 103% on its notes and 70% againstall sight obligations. The central bank is authorizedto lend the Government up to only 10% of theaverage cash revenues. The bank will receive all thegold stocks constituting the assets of the ConversionHouse and a Mobilization Institute will take over andliquidate the frozen assets of various private banks.Member banks will keep two-thirds of their reserveswith the central bank, including clearing housebalances. They will hold 8% cash balances againsttime deposits and 16% against demand deposits.The gold acquired from the Conversion House willbe revalued to a maximum limit of 15 pesos to thepound sterling, a ratio which corresponds roughlyto the rate on Government export drafts. The"gold profit" from revaluation will be about 500,-000,000 pesos, of which 10,000,000 pesos will beused by the Govermnet to subscribe to shares of thecentral bank, and 200,000,000 pesos to repay theGovernment debt to the Bank of The Nation, thusenabling that bank to transfer the clearing houseand Government balances to the central bank. Theremaining 290,000,000 pesos will be used to buildthe capital and reserves of the Mobilization Institute.It is expected that these measures will result in aTreasury surplus for 1935, but stabilization of thepeso is not contemplated until the principal creditorand trading nations arrive at an agreement onmonetary policy.

Argentine paper pesos closed on Friday, officialquotations, at 32.09 for bankers' sight bills, against3234 on Friday of last week; cable transfers at 3234,against 323/2. The unofficial or free market closewas 25.40@253/2, against [email protected]. Brazilianmilreis, official rates, are 8.04 for bankers' sight billsand 8% for cable transfers, against 8.09 and 834.The unofficial or free market close was 578, against6%. Chilean exchange is nominally quoted on thenew basis at 5.20, against 5.20. Peru is nominalat 23%, against 23%.

EXCHANGE on the Far Eastern countries isprofoundly affected by the current advancein the price of world silver, which is discussed indetail in the resume of sterling exchange. Japaneseyen fluctuate with sterling, in accordance with thefixed policy of the Bank of Japan. Hong Kongdollars rose from 52.75 cents on Saturday last to54.25 cents on Tuesday and to 58.50 cents onThursday. In the same periodiShanghai dollarsadvanced only from 39.70 cents to 40.37 on Tuesdayand to 40.75 on Thursday, reflecting the indirectsuspension of the silver standard which the ChineseGovernment is effecting with the aid of foreign banksin Shanghai in an effort to avoid the extreme de-flation consequent upon too rapid a rise in theexchange. Specie payments arelbeing avoided by


2762 Financial Chronicle April 27 1935changing the form of bank drafts drawn on Shanghaiand other Chinese centers so that payment may bemade in currency of the Republic of China

cfc_19350427.pdf

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