Stratford Evening Post With which is Incorporated “THE EGMONT SETTLER” Established 1890. FRIDAY, MARCH 20, 1931. INSIGHT OF CAPITAL

Stratford Evening Post, Volume I, Issue 86, 20 March 1931, Page 4

Stratford Evening Post With which is Incorporated “THE EGMONT SETTLER” Established 1890. FRIDAY, MARCH 20, 1931. INSIGHT OF CAPITAL

CAPITAL is very sensitive, it is promptly affected by depressing factors, and an quickly responds to favourable conditions. It may be said

to give expression to its sentiments mainly through the Stock Exchange, and therefore the London and New York Stock Exchanges, but particularly the former, may be taken as the barometers of capital. It is idle to suppose that capital is not influenced by political events; indeed, politics are now so closely interwoven with economics that it would be a grave blunder not to give due weight to political consideration. Last week the London Stock Exchange showed some buoyancy; which was due to a number of favourable incidents. There is on doubt that the Franco-Italian naval agreement relaxed a certain strain, at all events it reduced expenditure on naval armaments, and means a saving to the treasuries of the nations concerned. But above and beyond this has been the 'settlement of the Indian trouble and the lifting of the boycott on British goods. This will have a direct and immediate beneficial effect on British trade, and we will benefit indirectly by the settlement. The cotton industry of Lancashire has been under a cloud for many months; the industrialists of that centre have rationalised, reduced wages, improved machinery, and some have compromised, and now there is a prospect of industrial activity. The mill-hands of Lancashire are consumers of butter and cheese and meat, and they need woollen clothing. ' With steady work and regular wages, they will help to consume more of these products, some of which, no doubt, will be of Now Zealand origin. These influences are political in their nature, but there is also a favourable economic factor, for it is now shown that for the first time since July, 1929, the “Economist’s” index number of commodity prices at the end of February shows an upward movement, and the “Economist” remarks: “Though the percentage of increase is only one-third of 1 per cent., it is at least satisfactory that the prolonged downward sweep appears to be momentarily arrested.” The rise in commodity prices is very minute, but it is a rise, and capital has not hesitated to seize upon it as a good omen of the immediate future. Commodity prices have been on the bottom for months, and now seem to be moving upwards. Not ail commodities are so affected, but many are, among them being wool, and the price at the' London sales that opened on Tuesday must have caused a wave of optimism to surge over sheepowners. Capital through the Stock Exchanges has shown appreciation of these favourable movements and prices of stocks and shares ascended. New York has had its spectacular flutter, but has since steadied down to normal business. The Stock Exchanges of Australia and New Zealand have responded in a minor degree. it is hard to discern the reason for the sudden upward trend in bank shares, for the economic conditions of Australia are still in a haze, while the New Zealand circumstances call for much hard work ami delermina-

(ion. Capital, apparently, sues through (he haze, and it, is apparent that it is taking a long-term view, which discloses the silver lining.