The Topeka state journal. [volume] (Topeka, Kansas) 1892-1980, 1915-08-31

New York. Aug. 31.-Foreign eX-
change rates reached their most Sc
rious stage today with an overnight
break of . II cents in sterling, the Eng
lish pound selling in this market at
4.5S1s. close to the mark where cur
tailment of big foreign orders to the
United States would follow, in the
opinion of bankers here.
Nothing like the violent break in
quotations had ever been recorded in
foreign exchange markets here before.
The low level reached today was one
and one-haif cent below the mark seS
weeks ago by financiers as the So
called irreducible minimum which,
when reached, would cause British
buyers to seek other markets in which
to place their orders for such i'm
ports as could be obtained elsewhere
than in America.
Foodstuffs. manufactured goods anG
many other products. in fact almost
every thing except actual munitions of
war. were embraced within this cate
CORY.
Chaotic Conditions Result
Decentralization in the foreign eX-
change markets was succeeded by al
most chaotic conditions as the result
of the break. Dealings in foreign eX-
change were virtually at a standstill
Rates varying as much a cent were
rates in almost every case were purely
nominal and there was no business
worthy the name done in English
money today.
The bid break means that English
buyers, in addition to the top of the
market prices already paid by them III
this country for American products,
are called upon to Fay a premium of
2S1s cents on every pounds worth of
purchases or more than five 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 Great Brit
ain continue to buy here such supplies
a. she is not compelled to buy in the
United States?
England to Trade Elsewhere.
With the only world market of i'm
portance open here. business in all
imported articles and purchases by
Great Britain from such European
thought would undoubtedly follow, if
exchange rates should go lower. This
would result in lessening to extent
which can not now be estimated the
amount of goods which American
sellers are sending abroad. now the
greatest in volume in the history OF
the country. Not an American con-
tract has been cancelled as vet. it was
said. but the heavy premium which
British buyers must pay gives every
indication. in the opinion of local /
bankers, that cancellations will follow
unless rates are rectified very soon,
and that there will be a decided slump
in new orders.
What this would mean to American
industries could not be foreseen. The
new low record of 4.5S15 was the fifth
low record established in five con-
SecutiVe business days
Since last Thursday the pound ster-
ling has dropped from 4.64, or five
and one-half cents. nearly one-half Of
which was registered when the mar
ket opened today
Successor of New Low Records
Last nights close of 461 was the
lowest value ever placed at that time /
on the pound in this country.
The situation today was REGARDED
as almost desperate. International
bankers here, looking anXiously across
the Atlantic for relief, saw more than /
they did yesterda y-that British and /
French bankers were preparing to
remedy he situation.
1T was thought possible that British |
bankers permitted rates to reach their !
present low level because this would {
afford a strong inducemeEt 20 British
holders of American securities to sell /!
and thus reap the benefits of a five
per cent increase in values. These Sc
curities, it is understood, are to he
made the collateral for the eSta bliSh-
mont of a foreign credit loan here.
With sterling's break today, francs
also we're deprecated to within one |
cent of their previous lew record of
sos. Lires were quoted at 6.52, yes !
terday's close, four cents better than I
the lowest rates reached. and reichs- /
marks went to 80 IA, oEe-eighth of
a cent above their lowest, and one (
eighth of a cent below their closing