New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1915-08-16
Heavy Fall in Exchange
Threatens to Affect
Trade Adversely.
BIG BRITISH CREDIT
is BEING DISCUSSED
Allies Likely to Put Cotton on
Contraband List - Bright
Promise for Grain.

With the purchasing power VI Vho
British pound sterling, as expressed IN
American dollars, decreased by 1872
cents from the normal and the market
for bills on London, and on Paris as
well, practically demoralized, the Tor
eign exchange situation has taken
place in the first rank among the con-
siderations that determine the lmme-
diate future of finance and commerce
in the United States and. it may be
said. Of the security markets. Approx
matelv two-ffths of the decline in ster-
ling checks occurred in the week just
ended. And neither on Saturday, any
more than any other day, was there
ANYTHING to show that the downward
movement was at its end. Not even the
extraordinary importation Of S1s,5oO'-
900 of gold from England in the middle
of the week, nor the knowledge that
ACCOMMODATING il was large conslgn-
ment of American bonds destined 70
serve as collateral for advances 20
Great Britain, was of avail to stay the
decline; nor yet the well substantated
reports that credit. variously stated
AT slOO,OO0,0O0 10 $500, 100000 and
more. was about TO be opened here to
meet the bills Of the Allies for war
supplies.
Decline Must Be Checked.
Plainly the downward movement IN
exchange cannot be suffered to continue
indefinitely Immense as are the sums
Great Britain and her Allies have
raised for the prosecution OF the war
and large as are their gold resources,
thew cannot be expected to 60 on for
ever in the course they are pursuing.
Gold supplies are not limitless, nor are
thew entirely available for export TO
this country. The war must come TO
an end some time. When II is, over
rev capital must be raised by al the
belligerents for rehabilitating their IN
dustries. =,
Great Britain, the clearing house OF
the worlds commerce N times OF peace
and destined again to hold that proud
title. least Of all the nations can AFFORD
to impair her credit standing by going
on a paper basis. Yet that is one OF
the contingencies she must reckon with
if she continues to send her gold here.
Fortunately. not only for Great Brit
ain, but for this country, that posi-
bility is vet remote. Besides gold as
means of settling her debts here, she
has American securities. They are, II
ANYTHING, more acceptable to our bank
ers than the precious metal, of which
the supply in this country is already
inordinate. Much more OF 1t would
surely precipitate an imitation in the
prices of goods and labor here, which
is even now foreshadowed in the lniia-
ton of security prices. And IN the end
it would be disastrous. SO long as the
war continued imitation might be eX-
pected to increase. When it was con-
cluded and the nations began again
their competition for foreign markets
we should be under a handicap that
would take years of economy and THRIFT
to overcome.
Problem Is Partly Ours.
But meanwhile, if the decline in ex-
change were to continue, there would
be a falling off in all our exports, ex-
cept in munitions and materials OF like
character that the Allies could not buy
elsewhere and could not produce them
selves. And in the course of time there
would likely occur so great stlmula-
ton Of their own production OF war
supplies as to make them increasingly
Independent of our markets. Primarily
it is for the Allies to be troubled about
the decreased purchasing power OF their
funds in this country, because most OF
their contracts with American manu-
facturers are made payable In dollars;
but if there is anything in the idea
that the prosperity OF merchant de-
ponds on the prosperity of his Gus
toners, it is our concern, too, TO see
that the pound, the franc and the Ira
lose no more of their value in exchange
for goods than can reasonably be pre-
vented
Apart from the developments in the
international money market, the United
States is confronted now with another
matter of great Importance. In Great
Britain, which is acting for all the
Allies in matters concerning the block
ade Of the Teutonic countries, there is
a violent agitation going on whose end
is to have cotton made contraband Of
war. Not only is the demand wide
spread among the British people, who
believe that Germany's ammunition
production would be crippled if cotton
were prevented from reaching her, but
the government itself is giving the
matter serious consideration. Only
Friday the Under Secretary of State
for Foreign Affairs was quoted as say
ing: "The Allies must by all lawful
means prevent cotton reaching their
enemies. 1t may be considered neces-
sary to make cotton contraband." A
significant statement, at the least The
memory Of what happened in the South
last year to the planters and TO all
those dependent on their purchasing
power, as well as to the railroads, is
too fresh in mind to permit that posi-
bility to be passed by lightly.
Switch to Railroad Shares.
In recent weeks the changes in the
war situation have had relatively little
direct influence on the security markets.
With the sales of American stocks and
bonds much diminished after the pay
ment of the initial subscription to the
British loan, the speculative community
has looked upon the war more as the
provider of business for American in
dustrial corporations than as menace
to its own interests. II was only nat
ural, then, that il should have been
troubled by the prospects OF an early
peace that seemed TO be opening at the
beginning Of last week. The rumor that
the King of Denmark had been asked
TO sound the Allies on the part of Ger
many, like the later report that the
Pope was preparing again to exert his
influence with the warning nations, had
the effect, for the time, of discouraging
new commitments in the war issues and
aof inducing profit taking on outstand-
ing contracts. There was at the same
time evident a disposition on the part
of important speculative interests TO
transfer their market operations TO the
standard issues, the railroads and the
seasoned industrials.
For the change the time was SEEM
ingly ripe. Stocks of known and un-
known merit had been rushed up indis-
as in the London rubber
boom of few years ago. Those of
little intrinsic value were beginning
70 ,hnr, sirns Of the strain their back