The Twin Falls times. [volume] (Twin Falls, Idaho) 1905-1916, 1915-08-24
YANKEE SHREWDNESS HOLDS THE
MONEY CONTROL OF WORLD

/! New York, Aug. 1.-THE American |
dollar ruled the financial world with |
an iron grip. Pounds sterling. francs.
lires, virtually all foreign exchanges
went down to new depths In a tor
rent of bills that poured into the OK
change markets from American niai.u-
facturers, seeking pay for the big
war contracts of munitions and other
supplies purchased here by the war
ring nations Of Europe.
Coincident with the startling de-
cline in exchange rates came the as
sertion from an unimpeachable source
that every contract made by the
American manufacturers for supplies
sent abroad called for payment in
American dollars, and not English
pounds sterling, which have heretofore
been the standard of finance the world
lover. The immense losses, therefore,
due to the decline in foreign exchange
rates will be borne, to the last penny
by the foreign buyers, and will not be
sustained by the American manufac-
turer-a situation exactly the opposite
of what had heretofore been the pop
ular belief.
The maximum depreciation today in
pounds sterling was "a per cent be-
low normal; in francs, 10 per cent be-
low normal in Italian lires, rs per
cent. In the money markets today the
pound sold for only $4.64; 6.O2 francs
equaled a dollar and dollar pur-
chased GAS Tires. These were the quo
tations while rates were at the lowest
ebb during the early afternoon, In
the last hour of the business day the
presence of j. P. Morgan for the first
time since the attack on his life six
weeks ago and an informal confer
ence of bankers to consider the eX
change situation sent rates upward.
Sterling closed at 4.67k, one half
point higher than it opened and
, point which established a new low
record at the time. Francs gained
/ three points over the low record sell
ing at 500 at the close, and lires
redounded point closing at CAT.
What to do to remedy the situation
engaged the attention of bankers with
international connections at their in
) formal conference late today. 1t was
: decided to do nothing chiefly because
5 the remedy lay across the ocean with
the foreign buyers They and not
t 4the American dealers, it was clearly
Established, were the sufferers, and
) theirs, it was the consensus of opin-
: ion, should be the task of setting
the money markets to rights.
! How this would be done was the
4 object of keen consideration and some
!, speculation. 1t was generally believed
r that the present abnormala situa-
: ton would not be permitted to con-
tinue long. The obvious remedy SEEM
: ed to be to sell the American securities
, held abroad and when this cOntin-
g gency was studied the situation seemed
: to be pregnant with unique possibiii-
ties. A great many millions of Amer
! lean securities, payable of course in
: dollars when due, are held abroad,
e chiefly high-class railroad bonds and
: preferred stock of a selected list list of
American industrials Should these
n securities be sold at the present ex-
o change rates in foreign markets they
d would fetch far more than the pur-
5 thasers paid for them, due entirely to
the depression of exchange.
I. Thus, a $4,000 American bond sold
d in Paris at par Wednesday, on &C
S count of the prevailing exchange rate
k bringing approximately 600G0 francs.
t When purchased at par a year ago II
cost the purchaser approximately
r SIS, 500 francs. The net profit would
e be about $50 francs, or about 10 pei
n cent, the percentage of depression in
o francs in American exchange mar
g kets. In London the profit would be
s approximately "a per cent and in
Rome the profits would approximate
: % per cent
e With the prospective profits as an
$ inducement, it was believed that hold
It ers abroad would be willing to sell
= and that foreign buyers of American
goods would have little difficulty il
n procuring large amount of American
st securities abroad as collateral for {
y temporary loan in this. country, which
"a would tend to correct exchange rates
81 The establishment here of bis
lie foreign credit, estimated conserva
lively at 5O0,OOO,O00, was thought t.
ia be absolutely necessary if exchange
~ rates were to be restored to anything
4 like normal figures.
", Measured in dollars and cents, i
b. was learned that the amount of wal
lie contracts, on which full or nearly full
III payments would be due on or befor,
October / next, approximates $500,
IS 100000 to $5O0,0O0,0O0 This is il
rs addition to the huge total of NOR,
er than $1,O00,000,000 owed by Europe
I'd to the United States at the close 0
t. The fiscal year June 80 1t vas als'
p learned i, ON ~ euthori ,'r { sourc,
in that the prospective profits on SOM
of these contracts had been great,
Id exaggerated; that only normal profit
1T would accrue in big majority o
a cases. and that in some instances
ut there might be no profits at all.
in This it was said, was due to tn
rs rigid surveillance exercised by inspec
40 tors of Great Britain and her allie
We over all deliveries. Goods contracte
in for it is said, and where they di
10. not come up to this standard wer
r. rejected by inspectors, entailing pre-
to portionate loss upon the manufac
b. facturers.
ng An optimistic feature of the foreig
C. exchange situation was the genera
y belief that large shipment of gol
to was on the way to New York frol