Evening star., 1919-12-27
LAWMAKERSSEEK
TO REMEDY ILLS IN
FOREIGN EXCHANGE
See Serious Danger Threat
, ening Export and Import
Business.


Business.
With foreign exchange rates in a
chaotic condition, threatening export
and import business Of the country.
members of Congress are planning to
give the matter their immediate con-
sideration when the Christmas recess
is over. They desire, if possible, to
take steps to remedy the situation.
which. If allowed to run along, may
bring ruin to many, cause thousands
to lose their jobs and work n hardship
upon the European nations as we'll as
the United States.
The Edge law, which was signed
this week by the President, known as
the export finance law, is expected to
aid. i'll relieving the situation. But
that it can entirely remedy the diff
cultics now confronting this and for
eigil nations in the matter of cx-
changes is doubted. The break in the
foreign change is due to the war stricken
condition. Of Europe, which have left
England. France, Belgium and other
nations i'll . serious financial condi-
tion.
Much Gold Held Here.
This country holds a tremendous
amount of the gold supply Of the
world and has extended billions of
dollars of credits to the nations
abroad. The result has been that the
value of the pound sterling, the franc,
the Ira, the German mark, etc, in
it's purchasing value when it comes
to exchange with the United States
dollar has suffered enormously.
The problem is how to stabilize the
foreign exchange SO that longtime
credits may yet be extended, enabling
the foreign nations to purchase Amer
lean goods without the great losses
they would otherwise suffer in such
transactions.
Wants Commission Appointed.
Senator Thomas of Colorado, who
said that he was much exercised over
the situation, is the author of q joint
resolution, now before the Senate for
eign relations committee, for. the ap-
pointment of an international none
tary exchange commission. He plans
to address the Senate on the subject
and to seek favorable action on his
resolution.
The comm ission which the resolu-
tion proposes is to consist of seven
m efnberS, not less than two OF whom
shall be members of the Senate and
two of the House. the entire commits
sion to be appointed by the President.
This commission is authorized under
the resolution to inquire into and as
certain what methods and legislation
are essential to the establishment and
continuance of fixed ratio of ex-
change between the nations: to con-
fer and cooperate with commission
which may be created by Great Brit
ain. France, Italy. Japan and other
nations charged with similar duties.
1t is Senator Thomas idea that
through the work of such an interna-
tional commission it may be possible
to establish permanent internation-
al commission to fix rates of foreign
exchange as far as possible and to
stabilize such exchange.
Contracts Reported Cancelled.
Already, it is reported. many con-
tracts for goods in the United States
are being Cancelled by foreign buyers
because Of the rates of exchange. It
is easy to see that if a buyer in
France makes inquiries and finds that
due to the foreign exchange rates
franc will purchase in this country
only one-half Of what it purchases in
England. to put it broadly, or one
third as much as it will purchase in
Spain, he will make his purchases
where he can get the goods cheapest
to him.
A contract by a Belgian firm for
steel drums with an American con-
Germ was recently Cancelled. it is re-
ported. and the contract given to a
German manufacturer notwithStand-
ing the terrible treatment accorded
the Belgians by Germany, because of
the great difference of the rate Of
foreign exchange. The Belgian found
that by dealing with Germany le
could get more nearly the value of
his money in the exchange than in
dealing with the United States.
; This is not an isolated case. but
many other foreign buyers are said
TO be canceling contracts here because
of the rate of exchange.
At present the exports of the United
States are very large, because the
countries Of Europe have hardly
started producing again. They need
American goods and American food
to continue to purchase these goods,
but there must be a limit to credits.
The one thing that will aid more than
anything else in correcting the exist
ing condition is for the European ma
tions to get settled down to produc-
in quantities as large or larger than
they import.
How Edge Law Works.
The Edge law. in brief, provides
that five' or more Americans may or
ganize under the federal charter cor
porationS with a minimum capital of
S.. 600, 900 each for export finance oper-
ationS. These corporations are to be
under direct supervision of the United
States government. These corpora
tions will be able to arrange foreign
credits on securities approved by the
federal reserve board, and against
this collateral will be issued deben-
lures for sale to American investors,
and the money SO raised is paid to
the producer or exporter here in
America. In this way the foreign
buyer is able to make his purchases
and the money remains in America.
Senator Owen of Oklahoma. rank
ing democratic member of the bank
ing and currency committee, is the
father Of a bill to amend the federal
reserve act SO as to establish a for
eign exchange bank. He proposes
that the government shall undertake
what is left to private enterprise un-
der the Edge law. The bank is to. be
called the Federal Reserve Foreign
Bank, and will act for all the United
States federal reserve banks in the
matter of foreign exchange. He pro-
poses that this bank shall have a cap
ital stock OF $100.0oO.OO0. 1t is au-
thorfzed to discount notes, drafts. bills
OF exchange; to receive deposits
! from American and foreign banks and
Nbankers, from the United States or
Soreign governments, in current funds
~ lawful money, national bank notes,
ia 1eral reserve notes or checks and
drA its, payable upon preservation, and
also. for the collection of maturing
roteE and bills.