New-York tribune. [volume] (New York [N.Y.]) 1866-1924, 1915-09-06
Securities Unsettled by
Sterling's Great Fall to
$50 in Pound.
DROP ENCOURAGES
FOREIGN SELLING
Expectation of an International
Agreement Brings Back Ex-
change Market.

exchange rather than in changes OF
security prices. Pressure OF our great
trade balance broke through levels at
which sterling rates had been main
tanned and produced low records for
exchange on London in times OF normal
money markets here For while IT
seemed as II the decline WAS without
limit Purchasers withdrew from the
market, seeing no reason TO accumulate
bills with no reasonable assurance as
70 what the future price would be.
In the extreme decline there were
some transactions Wednesday in sight
drafts on London at 450 in the pound,
1914 cents under the final figures OF
the Saturday before. Assurances from
international bankers that the coming
conference with representatives Of the
Allies would result in some adequate
credit arrangement brought excited re-
covery. The week ended with demand
sterling At 4.66 after spectators in
covering FIbAb NNhiHiANi''N''
the price up 10 4.7O.
Direct shipment through Canada Of
another S19.5OO,OO0 of gold and some
S35. 100000 of securities was OF no
benefit 10 commercial dealings IN eX-
change, as this was obviously TO settle
for national debts already due. Mon
day saw a two-cent decline in the price
Of London checks. Thereafter almost
as much disorder followed in the for
eien exchange market as we saw IN the
early DAYS Of August a year ago, when
England was calling back her balances.
A drop Of cents on Tuesday was fol
lowed by the further extreme fall OF
5la on the next day, which brought the
rate 70 80 in the pound, ~ per cent
below metallic parity.
Recovery Rapid as Decline.
So light were requirements Of re-
mittance 70 London as compared with
our right to draw on that city that
paper calling for a sovereign there sold
at its lowest at $685. cents less than a
gold sovereign would bring here. AT
this low point expectation OF some IN
ternational arrangement TO regulate
the market brought recovery. Specu-
lative sales were covered and the rate
rose as sensationally as it had de-
clined.
In ordinary times, long before trade
between this country and Great
Britain and her Allies had reached a
state measured by such abnormal eX-
change rates, corrective influences
would automatically have been at work
Gold would have been shipped to N
more readily at the start, buying here
would have been lessened and our pur'
chases abroad would have been en-
larged as lower exchange rates made
il cheaper TO buy on the other side and
dearer to buy here.
Now the excursions Of our citizens
abroad that each summer required
such large remittances to Europe have
been largely postponed. Other offsets
10 the movement of goods have beer
cut down. Higher interest rates II
London no longer attract money from
this side when there is doubt as TO the
! future value of funds In London. The
messing need of warning Europe fol-
supplies that mean victory overrides
ordinary trade adjustments.
War Needs Pre-emnent.
At present it appears that Great
/ Britain and her Allies intend TO con
/ abroad. no matter what may be The
cost in money and prestige. A pei
| cent premium in London on dollars II
| New York, such as the low price o.
sterling signifed last week. runs into
| large figures VIII an current estimates
/ of the amount of the Allies war or
| ders, principally payable through Lon
! don. are considered. Yet we must re
] hnrC~hf a
rose from ~ 10 20 cents a pound anC
wheat from 80 cents TO over Sl.5C
a bushel. Men and means must be
! lavighlv used in war. Even gold, thu
basis Of currency and credit, will b'
sacrificed if required.
This is true Of the national wa
needs. Much that Great Britain ha'
10 nav for has no connection with war
and. If London has to give an abnor
/ mally high price for dollars here, oul
exports of this kind may be greatly
| reduced. English authorities are urG
inr her people TO refrain from all un
necessary buying of Injuries. and lux
uries NAV come to mean on the otheI
side anything for those that stay a
home not absolutely needed for food
clothes and shelter. SO II is 20 GU
/
preserve our trade.
Gold already has come until GU
bankers are troubled lest II lead us 7,
undue expansion and bring a crasi
when il has TO be given up later an'
| credits based on IL are withdrawn
| Government figures show we lost OF
balance nearly SIP. 100000 in gold dur
ing the last half of 1914. From tn
/ first Of January to the twentieth o
! August this year official record show
| some S1S8 100000 more received thai
we sent abroad Since then $4,000,
600 has come 70 this city, end more !
on the way. In addition we mine mucl
Of the precious metal in our own terri
tories. part OF which normally Is ex
pected 10 be distributed TO other ma
tons.
Allies Still Hold Much Gold.
In their great central banks the Al
lies held at last accounts around 81,
600 COO 900 in gold. Their cash re
sources need not be questioned. Thi
gold, however. is required as reserv
against their ever expanding circula
ton Of paper currency, and we shoul,
wish TO keep these countries sound
so that we can continue TO trade will
them for years TO come to their prom
and 20 our own.
We must grant some kind of credi
20 our customers II would be sim
pier II London. year ago. had beer
wise enough not 10 demand an immedi
ate cash settlement when war brok'
out. Had not the British capitali
pride in her long-held position as th'
world financial centre caused delay
/ after delay, the accommodation coulC
! have been arranged before confidence
in the bill on London had been Sc
badly shaken. As it is. we await pro
posals Of the Allies as TO means OF