IT was the turn of the business year. The cloud of pessimism which had overhung the international finance markets since the outbreak of the Balkan wars in 1912 seemed about to disappear.
The half-yearly settlements had passed over smoothly in the chief money centers of Europe. The Bank of England and all the great central banks on the Continent were in strong credit condition. Some of these banks had accumulated reserves beyond anything hitherto known. In fact, the accumulations of gold were becoming so great as to indicate that a great revival in trade might be expected. Deposits in the banks of the United Kingdom were heavier than at any time in their history, amounting to about £1,150 million, an increase in the fifteen years since the beginning of the Boer War of over £300 million.
The open market rate of discount in London had averaged in the previous six months £2 10s per cent.; lower than for any year since 1908, when the average rate for the year was £2 5s 7d per cent.; and with that exception lower than at any period since 1898. This condition was in great contrast to that which had characterized the money markets in 1912 and 1913 when the discount rates had been high--averaging £3 11s 6d per cent. in the former year, and £4 6s 10d per cent. in the latter year. These high rates in large part had been due to the heavy demands made upon the capital of the world for the expenses of the Balkan wars and the dislocation of trade through Southern Europe because of these wars and for the subsequent rehabilitation of the war-torn territory.