The sun. [volume] (New York [N.Y.]) 1833-1916, 1915-05-01

and Government deposits.
The above figures are from the Lon
don Economist OF April 10, 1915.
Foreign exchange rates only TO a de-
gree reflect the countries strong or weak
financial conditions, hut. like harome-
ters indicate the position of their ever
fuctuating trade balances. created
through the exchange OF commodities
with each other. Rates OF exchange
move M or down on the same prinCi
pie as do the prices Of commodities. reg
ulated BY tho demand and supply OF bills
OF exchange or other forms OF obligation
10 pay for debts OF one nation TO the
other.
In New York the pound sterling dur
ing the first few weeks of last August
and September sold at from J to 50 per
cent. premium above the gold export
parity OF 4Ssai in normal times. We
owed England, var.ously estimated. at
from $500 0OO, 900 10 $500. 000. 900: our
cash balances I'm London were rather
low. and the unexpected tremendous de-
mand for cable transfers and bills OF
exchange on London and other English
cities had forced up tho price of pounds
sterling TO az high as 81. AS soon as
our balances began 10 increase in Lon
don through the large EXPORT OF our
crops. metals. manufactures, &c. the
valve of the pound sterling began to
decline, until Il had reached the low
figurr OF Si.1s.
THIS is a fair illustration Of what an
erratic and Wild illCtudtion the foreign
trade can create Ia the value Of cur
rcnCi.s under abnormal conditions,
The commercial ana industrial eXpau-
son OF Germany during the last quarter
OF "a century. her large foreign COM
Mrrcc. which OF recent wears has
reached dimensions IN excessive proror-
ton 20 her national wealth, were only
made possible with the aid of for,ien
capital. Germany for many years has
been periodical borrower in all the
principal money markets Of Europe and
N this country. and at the outbreak ot
tho war WAS indebted to US Tor q con-
siderable amount.
We have drawn away large per-
cen;nge OF our balances as they became
/ available. and continue 20 do 80, but as
/ import OF merchandise from Germany j.
now practically impossible. and since
/ balances there cannot be utilized until
the country can resume her export
/ trade. II is very difficult TO sell relchs-
mark exchange in our market.
Germany contemplated making large
purchases here before the Development
Of the practically complete blockade by
England. and for that purpose created
! balances here. German banks sold
! large amounts OF reiChsmark exchange
/ through New York International hank
Ing houses and through banks doing a
foreign business This fact should also
he mentioned as one OF the primo pal
/ causes OF ;he rciChsmark's present low
position.
Prom all OF the fore going 1t would he
fair 10 assume that the true foreign
value Of the currency Of n country can.
not hc ascertoucd IL she is rot in the
position To carry on a foreign commerce
that IL 20 say. unless she is free TO I'M
port and export commodities.
\ RESUMPTION Of Germans oversee
trade IS moro essential for tho rcstora
ton OF the reichsmlrk to its previous
high position among tho CuTencios o.
the world than any favorable change /,
hCr financial condition.
E3wAED r. SPir7Rn
NEw York. April 90