The sun. [volume] (New York [N.Y.]) 1833-1916, 1915-06-17
Discounting the Pound Sterling.

Less than a year of the war has
brought startling reversals reckoned
in the accounts of the money chang
ers. At the outbreak of the war
Americans detained In London had to
cash their dollars at about 80 cents
for British forms Of currency. To-
day the pound sterling has a value
here about ten cents below its normal
parity with the dollar. The dis
count is only a little over two per
cent. 1t might be even greater con
eiaering the vast depreciation Of
other foreign coinages in u market,
but as the war goes on ii Is u dis
count which Is hound to grow, as our
dollar becomes more and more valu-
able for the new purposes which 1t
is serving as II medium for settling
debts at the new centre of internal
tiOnal finance and the new ommer
cial clearing house of the world, New
York.
1t is impossible now for anybody,
however expert. whether trained con
Cmist or trained banker, to ana
1--WE all the factors and forces which
are operating to change the interna-
tional standard of value from the
pound sterling to our dollar. II Is
also impossible to determine the pres
ent or final significance Of the fall in
sterling exchange.
Roughly We know only that the
International exchanges supply evil
dences of the enormous dislocation OF
ordinary finance and commerce which
the war has caused. We know that
foreign exchange eyinces the strain OF
paying for the n~ecessaries Of war and
the necessaries of life which only the
United States can supply with suffi-
Gent rapidity to meet the require
ments of various countries, belllgeI-
ent and neutral. We cannot, how
ever. fail to ask what all this means
for the ability Of the nations which
war is weakening financially to deal
with the situation when reimbursement
to a peace basis has to be accom-
plished and meanwhile To finance dur
Eng the war the needs which must
be supplied by our markets.
So far as regards the post bellum
disposition Of the mammoth burden
Of war debts which are piling up,
nothing hut vague guesses and du-
bious conjectures Is possible ut this
Atooa Vrhara ara tnn manu- tnEnnNxn
quantities, such as the length Of the
war, It's outcome and the condition
of the belligerent countries when the
war ends, which can only he ascer-
taiped In the course of vents. OF
much more practical concern to our
selves Is the question Of the ability Of
the principal debtors whom we are
acquiring TO continue to make pay
ment for the goods and commodities,
including war materials, that are
swelling our export trade balances tn
fantastic totals. Nor Is there 81
much practical difficulty in the way
of an answer to this question.
On the whole 1t Is safe To say tina,
the diminished buying power OF
foreign money here is not some
thing for us to worry about ut pres
ent. Particularly is this true of the
depreciation of the pound sterling.
At whatever costs TO themselves the
countries which are our customers IN
the foreign commerce which we ART
doing must maintain their credit with
us. We may he sure that Great
Britain. on whom the task of financ
Ing the wal for herself ana her al
lies has deVOlNrd and on whom 5,
many other countries depend, will ey
hnust every resource 10 prevent thu
pound sterling from losing too mucl
of its buying power here.
There is no finance which under
stands $ a well rs does the Rrltisl
finance the art of making n little golf
60 n long way In the transactions o
Iurcign exchange, While there Is
limit To the amount of gold which /
or will he available for British use II
efccting settlements mt New York
reliance may be placed on the con
petenL use OF that gold to the limi
according TO the best traditions of tn
British banker. Automatically, ais,
the discount on the pound sterlln
tends to provide certain cOrrcctives
through the stimulation Of exports o
whatever British citizens have to SCI
which "" may care to buy.
We are quite willing, for cxampl,
70 buy back our securities hel
abroad, the hulk of these holding
pe'ng In British hands, and to pa
tor Them with the funds which al