The herald and news. [volume] (Newberry S.C.) 1903-1937, 1915-08-20
AMERICAN DOLLAR
RULES The WORLD
CONES TO TOP IN INTERNATIONAL
FINANCE.
Demand For Payment For Supplies
Brings Foreign Exchange
Down.

-
dollar ruled the financial world today
with an iron grip. Foreign exchange
went down to new depths in torrent
of bills t2at poured in the exchange
markets from American manufactur-
ers seeking pay for big war contracts.
Coincidently with the startling de-
cline in exchange rates came the as
sertion from an unimpeachable source
that every contract for supplies sent
abroad called for payment in Amerf
can dollars and not pounds sterling,
which heretofore have been tie stand
ard of finance the world over. The i'm
mense losses, therefore, due to the de-
cline in foreign exchange rates, will
be borne, to the last penny, by foreign
buyers-a situation exactly tie oppo-
site of what had heretofore been the
popular belief.
The Greatest Losses
The maximum depreciation today in
pounds sterling was 3-4 per cent be-
low normal; in francs 10 per cent be-
low normal; in Italian lires 25 per
cent. In the money markets today
the pound sold for only $4.64; 602
francs equaled a dollar, and dollar
purchased 6.4S lires. These were the
quotations while rates were at the
lowest.
In the last hour of business the pres
ence in Wall street of j. P. Morgan
for the first time since the attack on
his life six weeks ago and an informal
conference of bankers to confer On the
exchange situation sent rates upward.
Sterling closed at 4.67 1-2, one-half
point higher than it opened and point
and a half under Saturdays close,
which established a new record.
Francs gained three points over the
low record, selling at 5.99 at the close,
and lires rebounded point, closing
at 6.4Y.
Bankers with international connec-
tions considered remedy at an in
formal conference late today. 1t was
decided to do nothing, chiefly because
the remedy Law with the foreign buy
ers. They were the sufferers and
theirs, it was the consensus of opin-
ion, should be the task of setting the
money markets to rights
A Hard Task.
How this would be done was the
Object of keen consideration and some
speculation. It generally was believed
that the present abnormal situation
would not be permitted to continue
long. The obvious remedy seemed to
be to sell American securities held
abroad and wtaen this contingency was
studied the situation seemed to be
pregnant with unique possibilities.
A great many millions of American
securities, payable in dollars, are held
abroad, chiefly high class railroad
bonds and preferred stock of select
ed list of American industrials Should
these securities be sold, at the pres
ens exchange rates in foreign markets
Hsey would fetch far more than the
purchasers paid for them, due entirely
to the depression of exchange.
Thus a $1,000 American bond. sold
in Paris at par would, en- account OF
prevailing exchange rate, bring ap-
proximately 5000 francs. When pur-
chased at par year ago it cost the
purchaser approximately $3.50 francs.
THE net profit would be about $50
francs, or about 10 per cent, the per-
centage of depression in francs in
American exchange markets. In Lon
don the profit would be approximately
4 3-4 per cent, and in Rome the profit
would approximate % per cent. Es-
tablishment mere of a big foreign
credit, estimated conservatively at
$500, 100000, was thought to be obso-
3utely necessary if exchange rates
were to be restored to anything like
normal.
Surprise to Americans.
Tire assertion that dollars and not
pounds sterling had been the financial
standard on which all contracts for
war supplies had been accepted in this
country came as a distinct surprise.
aside from marking the temporary
passing of Londen's control OF the
worlds treasure chests, it relieved
anxiety on the part of investors in So
called war specialties in the stock