The Caldwell tribune., 1915-08-27
business and Finance
BY W. S. Cousins, Editor The American B.DL.,

New York, Aug 2l, 1915.
The most serious cloud on the hor-
izon to day is the international mon
etary, more Familiarity known as the
foreign exchange market. In normal
times the British pound sterling is
equivalent in value to $4.S6H of
American money. On Monday of
this week sterling exchange" was
drug on the market at $4.65, and only
the special efforts of skilled interna-
tional bankers prevented a still fur
ther decline. This represents a dis
count of % points from normal value,
or about AZ per cent decrease Nor
mally the French franc is equivalent
to 20 cents in American money; in
other words, one dollar will buy 5
francs. With the present depression
in French exchange, it is possible at
times to purchase e francs for one
dollar, representing a 10 per cent de-
crease. Italian lire and German
marks have shared a similar fate;
though with the almost complete para
lysis of trading with these countries,
there is no special necessity for the
maintenance of the exchange parity.
One practical effect of these CON
ditions in the foreign exchange mar
kets is the obvious advantage it gives
to the seller of American securities in
the foreign money centers. With the
British pound sterling at a AZ per
cent discount and American bonds
payable in dollars, the investor who
sold his securities in London at the
same nominal price at which he pur-
chased them one year ago, would in
reality receive AZ per cent more than
he paid for them. An American bond
for ST 900 sold in Paris at prevailing
exchange rates would net the seller
5000 francs, while normally rated at
the same price at which it cost 5000
francs one year ago. This represents
a profit of 20 per cent, and it stated
that the same process in Rome would
net the investor Is per cent. This is
of course, only incidental to the real
problem, and it may be assumed as
most unlikely that sufficient of such
transactions will be recorded to show
any appreciative effect upon the ex-
exchange markets.
Cable reports from London this
week tell of the very urgent desire of
the financial leaders in Great Britain
to effect satisfactory adjustment of
this exchange problem. The latest
suggestion is that of a government
issue of short-term high-rate bonds
to be placed on the American market.
The amount involved would be any
where from $2000,0 100000 to $5OO0,OO0,
900 in the form of two-year 5 per
cent bills, free from the income tax
and all special incumberances. If
subscriptions could be secured in this
country sufficient to cover such an
issue, the foreign exchange problem
would be quickly solved; but the
question is, could and should such a
loan be acceptable to American in
vestors. Backed by a syndicate Of
Americas leading international bank
ers, which would be strong enough to
undcrwrite whatev r of the issue
could not be absorbed in the regular
investment markets, there would be
no doubt as to the ability of our finan-
cial mechanism to bridge the chasm
that now threatens disaster to our
foreign trade. New York bankers
have been in conference on the subject
this week, and important develop
ments maybe expected in the near
future.
1t is now recognized that any pro-
longed decline in foreign exchange
rates must adversely affect American
trade; and that whatever remedy is to
be applied must be the result of Joint
action between this and the British
market Neither nation can say that
the problem is none of its concern,
for neither nation can solve the diff
hculty acting alone. The unsettle
ment of the exchange market has
hardly been factor in the stock
market, but a settlement of the mat
ter would nonethcless be a very help
full development from business point
of view, for it would give greater as
surance of the continuance of condi-
tions favoring record volums OF ex-
ports.
Railroad Earnings Decrease.
Gross earnings of the leading rail
roads in the United States for the
six months ended June &c. 1915
amounted to 81, 88,472003, decrease
of SAL ,423O35, or 90 per cent, from
the corresponding period in 1914, ac-
cording to reliable tabulation. A
remarkable circumstance in connec-