Burlington weekly free press. [volume] (Burlington, Vt.) 1866-1928, 1915-08-19
Pounds Sterling, Francs Lires,
Etc, Go Down to New Depths
Because American War Con-
tractors Want Pay.
FOREIGN EXCHANGE OECL| YES
Assertion Is Made That Every
Contract Made by American
War Supply Manufacturers
Calls for Payment in Dollars
and Not Pounds.

New York. Aug 1.-THE American dol
lar ruled the financial world to-day with
an iron grip. Pounds sterling, francs.
Tires. virtually all foreign exchange, went
down to new depths in a torrent Of bills
that poured into the exchange markets
from American manufacturers seeking
pay for the big war contracts of mum.
tons and other supplies purchased here
by the warning nations of Europe.
Coincident with the startling decline in
exchange rates came the assertion from an
unimpea enable source that every contract
made by the American manufacturers for
supplies sent abroad called for paymen,
in American dollars and not English
pounds sterling which have heretofore
been the standard of finance the world
over. The immense losses. therefore, due
to the decline in foreign exchange rates
will be borne to the last penny. by tho
foreign buyers and will not be sustained
by the American manufac turers-a situa-
ton exactly the opposite Of what had
heretofore been the popular belief.
The maximum depreciation to-day in
pounds sterling was A., pc" cent be-
low normal; in francs ~ per cent; in
Italian Tires % per cent. In the mon
ey markets to-day the pound sold for
but si.64: 500 francs equalled a dol
lar; and a dollar purchased CAS- lives.
These were the quotations while rates
are at the lowest ebb during the early
afternoon. In the last hour of tho
business day the presence in Wall
street of j. +. Morgan for the first
{ time since the attack on his life six
weeks ago and an informal conference
Of bankers to consider the situation
; sent rates upward on a rebound.
Sterling closed at 467ia. one-half
point higher than it opened and point
and half under SATURDAYS close
which established a new low record
at the time. Francs gained three
points over the low record, selling a.
500 at the close and 1Ires reboundci
point closing al 6.41.
| What 10 do to remedy the situation en-
gagged the attention Of bankers with IN
ternational connections AT their informal
| conference late to-day. II vas decided to
| do nothing, chiefly because the remedy
lay across the ocean with the foreign
! buyers They and not the American sell
ers. it vas clearly established. were the
, sufferers. and theirs it was the concensus
| of opinion, should be the task of setting
| the money markets to rights.
How this would be done however, was
/ the object of keen consideration and some
| speculation. 1t was generally 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
when this contingency VAS studied the
situation seemed to h. pregnant with
unique possibilities
| 4 great many millions IF American Sc
curities payable OF course in dollars
when due, are held abroad. chiefly high
I class railroad bonds and preferred stock
of certain railroads and the bonds and
preferred stock of selected list of
! American industrals Should these Sc
curites be Sold at the present exchange
rates in foreign markets, they would
fetch far more than the purchasers paid
for them. due entirely to the depression
! Of exchange.
Thus $1,000 American bond sold In
Paris par would on account of the pre-
vailing exchange rate, bring approximate
~ 5000 francs. When purchased at a par
a year ago. II cost the purchaser approxi-
mate!Y 1850 francs. The net profit would
be about $50 francs, or about 10 per cent
the percentage of depression in francs in
American exchange markets. In London
the proht would he approximately 81
per cent and in Rome the profit would
approximate % per cent
The establishment here Of a big foreign
credit estimated conservatvely at 500
Oo,o0 was thought to be absolutely nee
essary IF exchange rates were 20 he re-
stored to anything like normal figures
/ Leading bankers. however. were al
most unanimous in the belief that Eng
land had failed to awaken to the fact
that she had lost control of the world q
finances, temporarily at least and that by
failing to establish speedily an adequate
credit here still chung to the deluslon that
the pound sterling was the standard Of in
ternational finance to-day as It had been
for generations past. AS soon as London
bankers realize fully that New York Is In
control and establish the credit needed to
protect their money, II was thought, ex-
change rates would return to figures more
nearly approaching normal