The sun. [volume] (New York [N.Y.]) 1833-1916, 1915-06-21
FINANCIAL REVIEW
OF The PAST WEEK
British Obstinacy Cause Of De-
lay in Correcting For
eign Exchanges.
MUST MEET OUR TERMS

NiiiiiS hVW III tnt lhVl ICY" lays u WCTTy
about when sterling exchange fell to
the lowest price on record. demand be-
ing quoted at 4.76k. This was a de-
cline OF 2 cents in a week. and while
II measured a discount OF only a little
more than 2 per cent. which Is slight
in comparison with the depreciation OF
other important ~currencics. such as
francs and rcichsmarks. the fact that
the pound sterling. hitherto the internal
tional standard OF value. was quoted at
a growing discount. with every sign of
undergoing further depreciation. was An
extraordinary event. 1t testified to the
terrific economic d~lslocation which the
war has already effected. and while II
OF the American dollar and a token OF
the powerful reasons which argue for
confidence In our own financial and
business prospect. IL stimulated uneasy
conjecture respecting Its bearing on the
course of our foreign trade, the posi-.
ton OF our securities market and the
state OF the European world when the
war ends.
SNOIN W. tTdut liflIltuldlcly r
gan to ~conjure up distressing spectres
OF approaching paralysis in the inter-
national money market. with attendant
congestion OF commerce and a dismal
curtailment of our xport trade for
lack OF q abroad to pay us for var
supplies and ordinary commodities.
Naturally. too. Wall Street professed
TO see a dlsmaying prospect OF heavy
foreign sales Of our securities because
the fan IN the price OF sterling works
out In financial calculation to . pre-
MUM over the actual market price for
securities sold on foreign order.
There was professional pressure on
the stocks last week. explained by the
trading deductions from the foreign ex-
change market. Some miscellaneous
outside selling was also induced and the
share list was characterized by more
or less ~irregularltv of the price move
ment. with some heavlness after the
middle OF the week. Yet the stock mar
ket on the whole gave Its own per-
suasive answer TO the foreign exchange
riddles which spectators in stocks pro-
pounded. Dealings on the Stock Ex-
change tended to decrease on price re-
cesslons. Pressure was not In volume.
Satisfactory ahsorptive capacity was
displayed and the market had a good
undertone.
Irrespective OF surface changes IN
quoted values II was manifest that
underlying conditions continued TO work
for eventual betterment and, what Il
Of more interest. there was no foreign
selling OF securities In any noticeable
increase OF quantity. and there was less
OF II in stocks than in bonds. For
months foreign liquidation has been car
ried on In n persistent but trickling
stream. which shows that the sales have
been most grudgingly made. So Crudg-
ing. indeed. has been European ~realiza-
'ior here since the cessation OF the panic
outpour last autumn as to suggest that
correctives for the foreign exchange sit
uation will not he supplied through re-
course to European investments In the
United States.
Selling of our securities from abroad
has only pieccd out the help which gold
exports to New York rave afforded ir
providing the means OF settling inter.
national balances at New York. and both
have fallen far short of requirements
Furthermore. British holdings OF our
securities. wen before the war. have
probably been hugely exaggerated. and
in any case foreign holdings of our
stock have been largely sold out except
such stocks as are tightly held for
investment. Bonds are firmly lodged
and are %liquidated only out 81 NECESSITY
by the actual owners, who can hardly
be brought TO exchange them In any
substantial amount for British or other
Government securities subject to thu
risks OF war and the eXorhItant exac.
tons of taxes levied to carry on the
war.
Some little piecemeal tinkerins with
the foreign exchange market 10 support
II may be done in the way OF placing
American securities nj the disposal OF
British or French finance TO furnish
collateral for loans by our bankers. hut
the amount of practical relief available
In that fashion Is not at present re-
garded az deserving serious consider
alton. Also the proposed line OF RENE
dial action for adjusting the foreign ex-
changes through loans on American Sc
curities as collateral Is affected by the
nature OF much British Investment In
the United States, which consists OF
equities in ranches, timber lands and
other forms OF real estate. non-l!quid
Investment in short, and therefore un-
acceptable by bankers for the grant
OF accommodation.
As for the possibility OF heavy sewing
of such OF our securities as are still
lodged abroad on account Of the pre-
MUM which the decline in foreign ex-
change places on them. Il suffices to
say that selling has for many weeks
been almost negligible. The only pre-
MUM likely to attract liquidation is
that which will he furnished by ad-
vancing prices for securities through
the development Of n stronger and
higher market for them. Liquidation
IL more apt 10 grow on a rising market
as absorptive capacity expands on the
rise. Anyway the hogy Of foreign liqui-
dalton of stocks and bonds may be dis
missed as immaterial.
An illustration has been given IN the
last few months Of what air the foreign
selling in the securities market comes
to We were called on last autumn to
AXE over stocks and bonds in volume
from European holders and we had TO
export a great deal Of gold, Now the
gold which went out in the last half
Of 1914 has ALL come back In other
words, we have both the gold and the
securities and have IN effect repurchased
the securities with Europc's own money.
Any more profitable business NJ that
kind which we can do will be welcomed.
British Seek Market Here.
Apart from tho foregoing cons,dera-
tons worry over me slump in sterling
exchange and the general demoral'za-
ton OF the foreign exchanges was CON
fined almost wholly TO speculative Wall
Street, Nowhere In the banking com
munity was any real concern felt. The
bankers knew that the situation In the
international money market could be
changed suddenly for the better by very
simple processes. They knew that nego-
tiations were going on to bring n change
about through tho establishment OF
credits In New York, especially for
British finance, which is bearing SO
much OF the monetary burden OF the