Perth Amboy evening news., 1919-12-23
REASONS FOR UNCERTAINTY
IN FINANCIAL SITUATION
Rn The AaSocinted Press.

BIZ The Associated Press.
NEW YORK, Dec. 23:-Three fac
tors in the generalization of foreign
exchange, ineligible to the average
man, rise above the complexities OF
the present situation, according to
old-timers in Wall street.
These are: Allied and other
nations of the world owc the
United States approximately
SIS, 900, 900 900;
American manufacturers hcsi-
tate, owing to peace treaty I'M
certainty, to accept big advance
foreign orders;
England'S virtual suspension of
gold exports outside the British
colonies Is repulsing American
trade.
Just why the British pound sterl-
ing, normally worth $4.S665 in AM
much since the war ended, and what
it all means is an obscure question:"
said a New York financial expert.
The present situation, Sir George
Paish'S apprehenSions notwithStand-
ing, Is by no means hopeless. Proph-
ecies of a breakdown of credit are
not well founded.
America, the storehouse of the
world and now the worlds banker, is
80 tiN poAAS postum LAi464olA was III
after the Napoleonic and American
Civil vars. She bought the cheap
securities of impoverished nations in
a most prodigious and there
by laid the foundation for her future
wealth. We must do likewise and
do it within the next two or three
years by which time these abnormal
conditions will have passed.
With pound sterling rs per cent
OR mora below mar EDplapd oop coll
to the United States at a great advan-
tage We can sell American goods
abroad only at a great disadvantage
ecaus we must add the abnormal
rate of exchange to the goods to get
into foreign markets. Premier Lloyd
George recently declared, when ster-
ling was selling at a discount of 10
per cent, hat the discount really
represented a protective tariff of Is
per vent on goods manufactured in
per cent on goods manufactured in
keep American goods out of that
ountry
THE only remedy for this condition
is for the United States TO buy foreign
securities and extend long time credit
for merchandise. We are in a strong
economic position. The nations of
Europe must have our cotton and
wheat and, since they are so heavily
indebted to us we must extend them
many more millions to put them on
their feet what is the difference
whether we buy their bonds or SEND
them Il merchandise?
Everyone in Wall street knows
hat If the Peace Treaty had been
signed in Washington an Interna-
t.onal Exchange Committee would
have been organized long before now
to stabilize exchange and bring about
other necessary establishments. Never
during the ndvlpCf 1aNG nf tho wa
when the Germans were almost at
Paris, did British and French ex-
change go to where it is now. The
British. during the war. by a system
of credits with the United States.
had sterling 'pegged' to $4.52.
THE tension over and gold expOrIs
curta led there was nothing to keep
it that close to parity Indeed. I'M
less the United Statec Ioosens it's
purse strings there are London finan-
cial experts who say the pound ster-
ling will drop as low as $3.50. That
would be a calamity. 1t would be a
two-edged sword iniuring both Eng
land an the United States.
Europe is like a man on the
verge or death due to starvation.
When you find such an unfortunate
you feed him gradually until the
stomach becomes accustomed to di-
gesting food. Now our aim has been
81 a.OnS 10 Stu1 Europe with all
kinds of American products. We
have piled up a trade balance, ac-
cording to former Secretary of Com
merce Redfeld, a~ggregating $4,000
900 a year Europe's financial sys-
tenn, like the starved human stomach,
has been unable to assimilate it.
Consequently, we thus contribute to
the Generalization of foreign ex-
change and, incidentally. by imitation
ha1n tO lOUap tho n1IrCha sing nnyVar
of our own dollar.
when you consider. as Mr.. Red
field points out that 81, 600, 000, 900 rep
resents American dollars at par and
must be paid by those who owe it in
deprecated currencies. making it the
equivalent of $4,000, 600, 900, the re-
suit cannot be healthful to future
American trade and commerce For
eign buyers are going into more ia
Vorable markets"