New-York tribune., 1918-08-18
The Dollar in Foreign Exchange

III q tIldIhCt tuaC WAS OtuGTWlSc ICld-
lively stable francs continued their
steady upward movement during the
last week. AS result of the efforts
Of the Allied Financial Committee to
bring rates on Paris closer to par;
which foreign exchange men say are
being made, francs rose in the seven
day period from 5.671s to 5.641s for
cables and from 5.68A to 5.651z for
checks.
Sterling exchange, which showed
much strength week ago, was easier
all of last week and rates on neutral
exchanges were consistently weaker.
Bankers said that the great Allied
successes on the Western battlefront
were a factor in the movement of
neutral rates. Pesetas moved down
ward again, in expectation of an off,
cial announcement of the progress Of
the negotiations that are being carried
en- to secure loan for the United
States in Spain to reduce the discount
on the dollar there.
1t was ascertained last week that an
agreement had been reached between
the United States and Bolivia to stabil-
ize exchange. A $4,000, 900 fund, which
can be raised to $20,o00.oO0, has been
deposited in the name of the Bolivian
Minister at Washington at the Federal
Reserve Bank, and moneys due Bolivia
ir this country are to be paid at the
Reserve Bank.
Canadian exchange remained steady
at discount Of 1892 last week and
the prospects of narrowing the dis
count have lessened with the depreci-
alton Of the present wheat crop in the
Dominion. In diagnosing the reason
for the present exchange situation.
Thomas White, Canadian Finance Min
lister, has recently made the following
statements:
lowing to many complex causes aris-
irs out of the war. and due partly to
worldwide conditions, Canada's ex-
change with New York. which is the
great exchange centre Of America. has
has been for some time past unfavor-
able. The late against US has at times
exceeded 2 per cent. It is to be pointed
out that in this, with war conditions,
there IS nothing exceptional. Great
brltaln's exchange with the United
States has Tor two or moro years been
at as high a discount, and exchange
rates with neutral countries have. in
the case both Of Great Britain and the
United States, been at times unfavor-
able to the rate Of even 30 per cent.
and this upon an immense volume of
purchases. Adverse exchange Is not an
unmlxed evil to country at war. Eco
nomically speaking, 1t is the natural
corrective OF national extravaganza and
OF unduly large outside investment Of
funds needed for war issues at home.
III 1T costs per cent to obtain New
York funds there will be less impor-
tation of luxuries and other commodi-
ties we do not need and less buying by
our people Of outside securities Offering
high interest yields as against the rate
OF our war issues. An unduly high rate
Of exchange, however, penalties the
importer of necessary raw material
and commodities actually needed by
the public and. consequently. enhances
the general high cost Of living.
"Judicous interference is therefore
justifiable to palliate or obviate its
worse effects. To assist in adjusting
the balance of our international ac-
counts arrangements have been made
which will. l think. be materially help
full and at least hold exchange within
reasonable bounds. Orders placed in
Canada for American war require
ments, such Canadian issues as may
be permitted in New York. prohibitions
upon non-csscntial imports by order
in council, together with special stabil-
izirg financial expcdicnts. will ell CON
tribute to this result"
If you calculate the cost Of the dol
lar in terms Of foreign money ut par
valne--that is, il you were buying dol
lars with pounds, marks or francs--ita
value at the close Of last week. n