EUROPE'S DOWNWARD INTEREST.

Evening Post, Volume CXII, Issue 2, 2 July 1926, Page 9

EUROPE'S DOWNWARD INTEREST.

According to an article by Dr. Henry A. B. Chandler, Economist of the New York National Bank of Commerce, published in the June issue of the "Commerce Monthly," it is only lately that the interest rates on the Continent of Europe begin to Rive some indication of the future trend of finance. Where currencies are unstable, interest rates a.re liable to reflect not so much the .relation between the demand and supply of capital as the uncertainty concerning the value of the currency. It is only when stabilisation1 has begun to be, that interest rates begin to reflect the money and capital situation. Therefore the downward trend of interest in parts of Europe is significant of improvement. Where in Eupops has there been sufficient stabilisation to «ive the interest rates a downward trend and agtrue index value? Dr. Chandler replies: "For purposes of determining what may be farmed the trend of European rates it is necessary to classify countries according to the position which the currency has attained with resnect to stability and to future parity. In three countries, namely, France, Italy, and Belgium, the currencies have not been placed in a fixed relation with gold, nor has a definite narity been decided upon. In two other countries, namely, Norway and Denmark, the currencies have been approaching parity, hut as yet final stabilisation has not been attained. In seven countries cither the. currency has returned to ths old parity, or the new parity has been finally determined, and the currency has been stabilised at tliis parity. * These are Holland, Switzerland. Sweden, Germany. Finland, Austria, and Itungary. In Czecho-Slo-vakla the currency is also stabilised. "The trend of money rates in the first group cannot he looked upon as indicative of the normal trend of rates, because important fac-. tors incident to the instability of the currency in these countries, or to efforts to attain or maintain stability, exercise pronounced influence. Again, in the case of the two countries in the second croup, namely, Denmark and Norway, the problem is complicated by -diustments incident to the aporeciation of these currencies. In Denmark, however, the trend of the hank rate has recently been downward, ani in Norway, up to the rise in the bank rate in January, the recent trend had been downward. In the nations comnrising the third group, however, we find conditions which permit of generalisation* as to the trend of money rates as controlled more or less by commercial considerations.

"Tn nracticailv all of the countries ennrnernted above, with the exception of the three in the first group, a definite downward/^rend of money rates has occurred during the "period discussed."