Omaha daily bee., 1919-09-30
Falling Foreign Er-
changes and Upsets IN
American Markets


UnSteddlneSS ana dldEIH III Jul
own markets followed the recent
fall of foreign exchange rates to
record low levels. How long can
the outside world continue to buy
the goods Of the United States at
the prevailing rates of exchange,
and how long can the outside world
continue to buy our goods SO enor-
mously in excess of the value Of the
goods we buy from the outside
world?" asks Richard Hoadley
Tingley, succinctly stating the prob
lem in The Financial World. The
outside world cannot settle in gold,
and 1t cannot settle in goods Bor-
rowing seems to be the only re-
course, but England, one OF our
greatest debtors, refuses to borrow.
According to The Wall Street Jour
nal:
Rather than add to her indebt-
edness to this country, she prefers
the lesser evil, as she regards 1t,
Of sterling dropping to lower levels,
particularly as the decline will tend
VITO restrict British imports and force
her people into ways OF greater
economizing With the pivotal ex-
change of the world thus left to its
own devices, the work of stabiliZ-
ing the other exchanges is rendered
more arduous
England is much more favorably
situated in the matter of her ex-
changes than some of the other
countries, notably France and Italy.
She has only single problem on
her hands, exchange with this
country. AS matter Of fact, ster-
ling even in some of the neutral
centers, notably the Scandinavian, is
quoted at a premium, while in others
the discount on it is little more than
nominal. Furthermore, were she
able to realize the credits she has
advanced to other nations, she would
have little difficulty in liquidating
her obligations in the United States
and restoring sterling to normal.
The amounts owed her by the other
allied nations, including Russia, ag
gregate in the neighborhood of
$500, 100000, while her indebted
ness to this country totals approx
imately $4,000, 900, including
the $4316, 100000 she has borrowed
from the United States treasury.
British authorities have looked
with considerable favor upon the re-
CCIiI ny hullIl, ILO6D q
company Of 100000 shares of the
Shell Transport & Trading company
from British interests, and they hope
that other similar transactions will
be consummated. For, while the
purchase tended to steady sterling,
it did not signify the contraction of
any debt in this country on the part
of any British subjects, but merely
the entrance of Americans into
partnership with Englishmen in a
huge business enterprise"
On September 6, when rates on
Paris, Rome, Berlin and Vienna
went to the most unfavorable figures
ever recorded at that time, and ex-
change on London went within 2
cents of the lowest rate, the New
York Evening Post commented:
F "Just how great this depreciation
of exchange on belligerent Europe
has been, both during the war and
since the armistice, will be seen from
the following comparison of the low
rates of the foreign currencies in
American money this week, the low
rates of wartime, and their normal
parity:
English rD. si Tffsssa s sans s4 ta5
French franc. 1.sc 1e.4c 10. &c
Italian Italian Ira Ira. 19Se lesc 1s &c &c
Austrian crown disco &C 20 &c
"All Of this weeks low rates are
the lowest ever reached, except that
exchange on London touched $4.12A
on the goth of last month. Compare
son of the separate columns makes
the rather remarkable showing that
AL of these rates have fallen nearly
or quite as heavily since the war as
they fell during the war itself.
This is not at all what was ex-
pected during the war. Most people
looked for a decided movement OF
exchange in favor Of these European
markets as soon as peace was ar
ranged. But then it is perfectly safe
to say that nobody imagined at that
time that the balance of actual
merchandise trade in our favor and
against belligerent Europe would be
actually larger after suspension OF
hostilities than it was when war was
going on. Yet here is the record OF
our exports in the first seven months
of 1919, compared with the same
seven months in 1918, at the climax
of the war, and in 1914, just before
the war began. The figures are in
thousands of dollars:
England .'s1,sis,!722s s,2id.es4 s2s s.5
italy 1y'' :::: sSssis s si,5s ss,is
Total ...s2,1ss,so5 s2,oss,s4s s4o4,so
All Europe 3,O7s,745 2,20s,4 3s 7S5,04t
This unexpected increase in ex.
ports to such countries since the
war has not been offset by any
great increase in imports, which fol-
the same seven months compare az
follows, also in thousands of dol.
lars:
England ~ .s1is'o75 5 ss,ss2 s17 sis
France ..... 1851 37,945 70, 40,
Italy ........ 1898 1865 1884
Total s1so,o7s sl5s4ss ssso,7s.
Cancellation of export orders az
consequence Of the exchange sit.
uation are noted by the New York
Journal of Commerce. THE result
tant situation is admittedly serious
and is regarded as one of the dis.
turbing elements in the current do.
mestic position" this authority re.
marks, and quotes "a leading inter
national banker" to this effect:
but while we are waiting fol-
the exchange market to right itself
it is conceivable that on this side
American plants would have to close
down for lack of business while Eu
ropes progress in the direction O.