Evening star. [volume] (Washington, D.C.) 1854-1972, 1915-08-31
FIFTH DAILY BREAK
INBOUND STERLING
New York Bankers Now Re-
gard Foreign Exchange
Situation as Desperate.
CANCELLATION OF ORDERS
FOR GOODS MAY FOLLOW
Puts Heavy Burden on British Buy
ers, Who Already Have Paid
Top Prices.

NEW. YORK, August 81
Foreign exchange rates reached
their most serious stage today
with an overnight break Of 21z
cents in sterling, the Englisl,
pound selling in this market at
Sd. .581z, close to the mark where
curtailment Of big foreign orders
to the United States woald fol-
low, in the opinion of bankers
here.
Nothing like the violent break in quo
| tations had ever been recorded in foreign
exchange markets here before. The low
level reached today was 11s cents below
the mark set weeks ago by fnanciers as
the so-called irreducible minimum, which,
when reached, would cause British buy
ers to seek other markets in which to
place their orders for such imports as
could be obtained elsewhere than in
America
Foodstuffs, manufactured goods and
| many other products-in fact, almost
everything except actual munitions of
war-were embraced within this category.
Decentralization In the foreign exchange
markets was succeeded by almost cha otic
conditions as the result of the break
Dealings in foreign exchange were virtu-
ally at standstill. Rates varying as
much as cent were quoted by different
houses, but these rates in almost every
case were purely nominal. and there was
no business worthy the name done in Eng
lfsh money here today.
The big break means that English
buyers. in addition to the top of the
market prices already paid by them in
this country for American products,
are called upon to pay a premium Of
2s1s cents on every pounds worth of
purchases, or more than per cent
With London carrying this onerous
burden - something new to British
bankers. as English money has for
generations been the worlds standard
of international finance-the question
discussed in banking circles here to-
day was, How long will England con-
tinue to buy here such articles as she
is not compelled TOT
Only Great World Market.
There is no other world market of
importance open. it, was pointed out
but more rigid economy at home in all
imported articles, and purchases by
Great Britain from such European neu-
trails as had wares to sell, it was
thought. would undoubtedly follow if ex-
change rates should go lower. This
would result in lessening to an extent
which cannot now be estimated the
amount of goods which American SELL
ers are sending abroad, now the great
est In volume In the history of the coun-
try.
Not an American contract has yet
been Cancelled. it was said, but the
heavy premium which British buyers
must pay gives every indication, in the
opinion of local bankers. that cancel
lations will follow unless rates are
rectif1ed soon. and that there will be a
decided slump in new orders. What this
would mean to American industries could
not be estimated.
The new low record of 4.5s 12 was the
fifth low record established in five con-
secutive business days. Since last
Thursday the pound sterling has drop
ped from 4.64. or ~ cents, nearly one
half OF which was registered when the
market opened today. Last nights
close of 4.61 was the lowest value ever
placed. at that time, on the pound in
this country. Even at that, some quo
tations were made below that figure,
going as low as 4.60h.
The situation today was regarded as
almost desperate. Within hour
after the opening of the market the
rate went lower still, reaching 4.5S. 1t
then rebounded and touched 4.59. In
ternational bankers here, looking anx-
iously across the Atlantic for relief,
saw nothing more than they did yester
day-that British and French bankers
were preparing to remedy the situa-
ton.
The time for preparing to remedy the
situation, in the opinion of bankers
here. is nearing it's end. and the time
for doing something to strengthen the
market has arrived. Relief should not
be longer delayed. in the belief Of lead
ing bankers here. Why nothing has
been done it was believed, was be-
cause Great Britain had not fully
awakened to the seriousness of the Sit
uation.
To Unload U. S. Securities.
1t was also thought possible that
British bankers permitted rates to
reach their present low level because
they would afford a strong induce
securities to sell their holdings and
thus reap the benefit Of per cent
increase in values. These securities.
collateral for the esta tablshment of d
foreign credit loan here.
Foreign selling in the stock market
was heavy yesterday. and this was an
other indication that holders abroad
realized the situation and were taking
the profit thus afforded them.
With sterling's break today francs
also were deprecated to within | cent
of their previous low record of 60J.
Lires were quoted at 6.52 yesterdays
close, cents better than the lowest
rates reached. and reichsmarks went
to sOA. one-eighth of cent above
| their lowest and one-eighth of cent