New-York tribune., 1919-07-04
Sterling Exchange
Slumps Heavily in
A Panicky Market
Lack of Demand for Eng
lish Pounds Causes Swift
Drop in Rate; Decline
Is Expected to Continue

Sterling exchange, which was un-
pegged in March, fell to the lowest
level since 1915 yesterday in mark ct
which bankers called panicky. The
pound on the average was quoted at
94.519s. The break of substantially
8 cents IN one day IN New York fol-
lowed q similar movement in London.
Because Of the great demand for dol
lars abroad and the Indisposition of
local institutions to purchase offerings
OF London bills, bankers expressed
their belief that the decline of the
worth of sterling would continue. The
movement was described as an express
sion of the general international situa-
tion in which the United States is the
creditor of Europe.
American bank balances in London.
1t was estimated, now reach between
$50, 100000 and $4,000, 900, and the dis
parity IN money rates in New York
ana London has discouraged the buy
ing OF pounds offered here. The ruling
rate IN London has been per cent.
whereas in New York carly this week
it had been lent at about g per cent.
1t was reported that several of the
London banks were lending money here
to take advantage of the higher rate.
and this condition helped to dcpress
sterling exchange.
Paying for England
It was also said in banking circles
that some Of the gold which has recent
ly been shipped to South America from
this country was for British account,
adding more to British Indebtedness to
this country. AS proof Of this sug-
gestlon, it was asserted that New York
agencies of London banks have been
heavy sellers of sterling in this mar
ket and have been using the proceeds
to take pay for the engagement of
gold
Moreover, some exchange experts
contended that the lifting of the en-
barge on the export of gold, which re-
suited in the shipment of the metal
to the Orient, to Spain and to parts Of
verse to the United States, placed the
dollar in its true position of supremacy
and indirectly depressed the pound by
emphasizing the fact that London was
not settling its international balances
in gold. One banker, in discussing this
phase of the subject, said that Ameri-
cas- shipping gold to its creditors
showed the comparative worth of the
pound, and that the market was ad-
justing itself to the new situation.
Because of the uncertainty of the
many of the large exchange
operators have been hedging by buying
spots against future Acute observers
OF the market anticipated this decline
rs long as three weeks ago and fortified
themselves against the move. Many of
the local banks are making heavy offer
ings OF spot, and there seems to be no
demand tor offerings from abroad.
Expect Indebtedness to Grow
Bankers looking into the future de-
clare that large purchases by Great
Britain and the Continental nations,
particularly of cotton and grain, will
add to their indebtedness in this coun-
try and further depreciate the value Of
the pound and other European money.
Some tinancers regard this condition
as a reason why delay in extending
large credits to Europe would be dis
astrous.
Francs followed the pound in the ex-
charge market, but the lire was strong
Bankers prophesied that the lire would
follow the other two currencics and
drop shortly.
At the present rate the pound is 20
cents under the normal parity, 20
points below the quotation at which it
was pegged, and nearly 0 cents below
what it was a month ago. The lowest
point reached by sterling exchange was
in September, 1915. when it
went to $3.50. This was shortly before
the hotaton Of the Anglo-French loan
of $500 100000 in this country.