FINANCE AND COMMERCE IN 1924.

THE economic recovery which began in 1923 became much more marked in 1924. Indeed, the progress made was surprising in its ramifications, and tends to show that invention, which has speeded up virtually all forms of economic activity, may wipe out the scars of war much sooner than after the Napoleonic wars. There are certain similarities in the conditions which followed the close of Bonaparte's career and those after the great European war. Debt, as now, had been multiplied ten times; inflation, as now, had reduced the value of the currency; severe depression and distress, as now, followed the post-war "boom," rendering it necessary to institute a system of "doles," succeeded, because of its abuses, by subsidies on wages, which led to other abuses resulting in the final abandonment of all exceptional unemployment relief. Abnormal unemployment lasted, however, about twenty-five years, the "hungry forties" marking the beginning of the more or less permanent improvement which continued, with slight interruptions, until the catastrophe of 1914. It is doubtful whether, but for the introduction of machinery into industry, twenty-five years would have sufficed to get rid of the distress which followed Napoleon's defeat. In 1924, six years after the termination of hostilities with Germany, we find that Great Britain's economic position has greatly improved, thanks to new inventions of various kinds-notably the internal combustion engine, wireless telegraphy and telephony, electrical development, more intense specialisation and division of labour and mass electrical production. This speeding-up of economic processes seems likely to shorten the period of convalescence, after the European conflagration, by possibly several years. At any rate that seemed the prospect at the beginning of 1925. At the end of 1924 the figures of unemployment had been reduced to 1,100,000 approximately, as against a maximum of about 2,500,000 at one time in 1921. There are many tests by which to measure the economic improvement in 1924. A further advance occurred in English commodity prices, amounting to 6 per cent., following a rise of 6 per cent. in 1923. Our overseas trade expanded by about 12 per cent., so that it follows that the real increase in overseas trade was substantial. Short-time working was further reduced, especially in the cotton industry and in the shipyards. Unemployment was reduced materially, the decrease on the year being about 127,000. As this followed upon a decrease of 350,000 in 1923, obviously there was a considerable increase in national production at the end of 1924 as compared with the figures at the end of 1922. We reproduce below as usual The Times index number of commodity prices since January, 1924, based upon the price of sixty

commodities, with the percentage change month by month, together with the number in April, 1920 (when the highest point was touched), and at the close of the years 1921, 1922, and 1923 :

The prices of the commodities included in the calculations are shown in the next table (p. 73), comparison being made with the quotations at the close of the preceding year.

The year was a notable one in banking, for the last of the bad debts which the great depression of 1920-21 left were written off during the year. Commercial failures were fewer; the total number in the United Kingdom was 7,984, against 8,146 in 1923. That trade was more active is apparent from the analyses of industrial profits made by The Economist. In the first quarter of 1924 419 companies reported net profits of 40,382,9017., an increase of 3,227,8531., or 8.7 per cent.; in the second quarter 466 companies showed profits of 51,292,9447., an increase of 1,498,5271., or 3 per cent.; in the third quarter 214 companies reported profits of 18,069,800l., an increase of 402,7401., or 2-3 per cent.; and in the fourth quarter 312 companies reported profits of 29,616,6281., an increase of 3,473,7291., or 13.3 per cent. Thus the total profits of 1411 companies declared in the year 1924 were 139,362,2737., an increase of 8,602,8491., or 6.6 per cent. Of the total profits of 139,362,273l., the sum of 83,162,065 or 59.7 per cent. was distributed in ordinary dividends and 27,148,6177. or 19.5 per cent. in preference dividends, as compared with 73,047,2521. and 24,869,581l. respectively in 1923 (for 1351 companies whose profits were 122,584,0647.). The total profits were equal to 10:3 per cent. on the total ordinary and preference capital combined, against 9.8 per cent. in 1923 and 7 per cent. in 1922.

In the realm of national finance the year was remarkable for the introduction of the first Labour Budget. It did not differ very much from the Budgets of the other parties, except that it gave unblushing expression to the Labour Party's commitments. Mr. Philip Snowden, as Chancellor of the Exchequer, retained the new sinking fund as introduced in 1923 by Mr. Baldwin. In accordance with that plan, he allotted a

sum of 45,000,000l. (an increase of 5,000,000l.) for the redemption of debt, in addition to the old sinking fund (i.e., the surplus of revenue over expenditure). The Budget year ended March 31, 1924, closed with a surplus of 48,329,000l. after allowing for the definite allocation in the expenditure of 40,000,000l. for redemption of debt. This total of 88,729,000l. applied to repayment of debt compared with a surplus used for the same purpose in 1922-23 of 101,516,000l. Revenue amounted to 837,169,000l., or 18,669,000l. more than the estimate, but a decrease of 76,843,000l. on 1922-23, while expenditure fell short of the estimate by 40,959,000l., and was 23,656,000l. less than in 1922-23. Customs in 1923-24 yielded 119,958,000l. (a decrease of 3,085,000l.); excise, 147,970,000l. (a decrease of 9,305,000l.); motor vehicle duties, 14,691,000l. (an increase of 2,370,000l.); estate duties, 57,800,000l. (an increase of 929,000l.); stamps, 21,570,000l. (a decrease of 652,000l.); land tax, house duty, and mineral right duty, 2,760,000l. (a decrease of 220,000l.); income tax and super tax, 329,971,000l. (a decrease of 49,074,000l.); excess profits duty, nil. (a decrease of 2,004,000l.); Corporation profits tax, 23,340,000l. (an increase of 4,363,000l.). The total receipts from taxation were 718,060,000l. (a decrease of 56,678,000l.). Receipts from the Post Office, telegraphs, and telephones were 52,800,000l. (a decrease of 400,0001.); Crown lands yielded 920,000l. (or 20,000!. more); interest on sundry loans, 12,606,900l. (an increase of 2,590,6451.); ordinary miscellaneous receipts produced 15,980,9501. (a decrease of 8,159,6411.); and special receipts, 51,017,6067. (a decrease of 14,216,1721.) As this mainly consists of surplus war stores and assets it is a constantly diminishing item, and must disappear altogether in the next year or two. As regards expenditure, interest on the National Debt absorbed 307,308,7481. (against 302,237,000l.), and sinking funds, 40,000,000l. (against 21,753,000l.). The consolidated fund service required in all 383,040,2117. (against 353,496,000l.); supply services took 405,800,000l. (against 459,000,000l.-a decrease of 53,200,0001.). Savings on the Army, Navy, and Air Forces amounted to 5,200,000l.; on the Civil Services to 47,460,000l.; and on the revenue departments to 540,000l.

The Budget for 1924-25 provided several interesting features. Revenue was estimated at 794,050,000l. (against 818,500,000l.), of which 685,550,000l. was tax revenue and 108,500,000l. non-tax revenue. The National Debt services were estimated to require 350,000,6047., 45,000,0001. being required for redemption of debt. Expenditure was put at 790,026,000l., leaving a surplus of 4,024,000l. subject to supplementary estimates. The Corporation profits tax was repealed as from June 30, 1924, after which date no profits earned subsequently were subject to it. The inhabited house duty was repealed for the year of assessment 1924-25. Telephone local calls were reduced from 1d. to 1d. and from 24d. to 2d. for distances between 5 and 7 miles. Remissions of customs taxation on tea, cocoa, coffee, chicory, sugar, raisins, figs and plums, table waters, and herb beer, and of the new import duties (McKenna duties) involved a total loss of 25,700,000l. (27,123,000l. in a full year), Reductions of Excise duties, affecting chicory, coffee substitutes, sugar, etc., table waters, and entertainments cost 4,100,000l. (4,820,0007. in a full year), while the abolition of the Corporation profits duty (12,500,000%) and the inhabited house duty (2,000,000l.) were estimated to cost

14,500,000l. in a full year, against 3,750,000l. in 1924-25-Corporation profits tax (2,000,000l.) and inhabited house duty (1,750,0001.). Modifications of Post Office charges were estimated to cost 1,000,000l. in a full year and 500,000l. in 1924-25. The total cost of the remissions in 1924-25 was estimated at 34,050,000l. and in a full year 47,943,0001.

The National Debt on March 31, 1924, was put at 7,680,623,000l., a decrease of 91,772,000l. on the year. The floating debt on December 31 last was 845,825,000l., a decrease of 14,626,500l. on the year, the figures being as follows:

Two important conversion operations were carried out during the year. In the early spring the Treasury invited holders of 200,000,000l. of 5 per cent. War Loan to exchange their stock for 4 per cent. Conversion Loan, maturing in 1940-44, at the price of just under 97. Holders of 150,000,001. accepted the offer, the chief attraction of which was that it ensured to the holder a yield of fully 4 per cent. for a minimum period of sixteen years, whereas the 5 per cent. War Loan gives a yield of 5 per cent. until 1929 certain and for such further period as may be necessary before the Government can refund the whole of the loan on a lower interest basis. In the autumn the Government offered holders of 134,000,000l. of 53 per cent. Exchequer Bonds maturing on February 1, 1925, an option to convert into either 4 per cent. Conversion Loan at about 97 or into 4 per cent. Treasury Bonds at par, maturing in two to nine years at the option either of borrower or lender. Holders of 81,000,000l. converted, and the balance of 53,000,000l. was subsequently provided for by an issue at the beginning of 1925 of 3 per cent. Conversion Loan by tender, at a minimum price of 771. 10s. The average price obtained was 777. 10s. 1158d. The question of lightening the debt burden by lowering the rate of interest through conversion will for some years remain the chief problem of Treasury finance.

The report of the London Bankers' Clearing House for 1924 revealed a notable and substantial expansion in the turnover of money, due to the revival of trade and financial activity, particularly in the short-loan market. The turnover for the year was 39,532,864,000l. This was a "record," being 513,961,000l. (or 1.3 per cent.) above the previous highest figure of 39,018,903,000l., in 1920. As compared with 1923, there was an increase of 2,905,272,000l. (equal to 7.9 per cent.). The figures are subjoined :