The sun. [volume] (New York [N.Y.]) 1916-1920, 1919-07-14
WORLD DEMANDS
AMERICAN CREDIT
Raising Blockade Quickens
Foreign Inquiry for New
York Loans.
STERLING HAS BIG DROP
Urgent Need Of Stabilizing
New York and London Ex-
change Is Shown.
HAS BIG DROP
ny WILLIAM JUsTus BoIEs.


With the return to tho United States
Of the financial experts who visited Paris
as advisors of the American delegates
to the Peace Conference the problem OF
financing the needs Of Europe assumed
new importance. The tentative estimate
OF at least $4,000. 900. 900. Of which
$500. 0oo. 900 would have to be used to
put Germany upon It's feet, to be re-
Quired within the next twelve months.
was made. Those disclosures were
made more interesting by the sensa-
tional decline in the London exchange
price, sharp rise in call loan rates here
and frank announcement by the Federal
Reserve Board that "it is not the func-
ton of the Treasury. the Federal re-
serve banks or the banking institutions
OF the country to provide cheap money
for stock speculation"
Financing Foreign Trade.
Those developments emphasized what
was said in this column several weeks
ago concerning the overshadowing i'm
portance in stock market affairs OF
money market influences during the
latter half OF 1919. The serious de-
cline in London exchange has made
extensive purchases In this country by
foreign buyers almost impossible, be-
cause to the decreased purchasing power
of tho American dollar must be added
the high premium paid for dollar credits
f1xrN hA t1a
burden probably was never greater than
II is to-day, and thus the problem OF
promoting the foreign trade expansion
OF this country resolves itself largely
into a question of stabiliSing exchange
rates between the United States and
Great Britain.
II that should be done. all other for
eign exchange rates would be benefited,
as London is still the worlds greatest
exchange market and Great Britain ie
chief intermediary between producers OF
America and consumers Of Europe In
asmuch as Great Britain on balance
owes to the United States for war ad-
vances and on other accounts $4,000.
00o, 900. the first thing to do Is to fund
the Indebtedness that 1t may be repre-
scented by long term bonds instead Of by
what are virtually demand loans. Sc
! long as that indebtedness is in suspense
it will be impossible to stabilize ex.
4 change rates between the two countries
An adjustment OF that Indebtedness
would leave England free to make ad
vances TO other governments and indus
trially. at least, relieve the strains or
credits here Great Britain financed
the war largely through the use OF short
| term loans and has a floating indebted
ness OF about $4,000, oo0,ooo
4 1t would take England more thai
twelve years to nquidate Its indebted
ness to the United States II II used fol
that purpose the gold production OF tn
British Empire. But the situation
could be met through negotiations be
tween the two Governments in a wa,
which would fortify foreign exchang
rates and restore order out OF chaos
which prevails in the internationa
markets The most pressing problem
has to do with stabilization OF New
York and London exchange rates as tn,
first step In any we'll directed move I,
finance restoration OF Europe's crippled
industry. Until that Is done. II will b,
impossible to handle the situation sat
isfactorily. for this market will be al
ways at a disadvantage when dealing
situation Is really working to the bene
1T of Great Britain in curtailng i'm
ports and increasing homo production
there.
But the foreign nations need America,
foodstuffs. raw material and merchan
disc and will make immense purchase
in this country as soon as they &c
the opportunity to do so. The urgenc
OF the demand will force some buyers I
deal with the American market even a
| very high costs.