The sun., 1919-08-25
FINANCIAL NEWS
ANDTHE SITUATION
Sensational Break in Foreign
Exchange the Governing
FactoE
GOOD RALLIES IN STOCKS
Dominating Influences In the
Markets for Money and
Investments.
GOOD RALLIES IN STOCKS
BY WILLIAM JUsTUs BoIns.

during the last fortnight securities have
passed into strong hands and the situa-
ton has been relieved by the elimina-
ton of thousands OF top heavy specula-
tive accounts In this way the technical
position of the stock market has been
strengthened and the loan account has
been purified in a manner TO bring Joy
to the hearts OF the six members of the
Federal Reserve Board.
1t has been an interesting process,
typically American, and suggestive of
the willingness of the trading public to
accept conditions as they are and not
to force the rising price movement
against the odds of an overweight
against profiteerlng the serious COM
pllcations OF an upset foreign exchange
market and the curious tangle over the
League of Nations and the peace COM
pact
Fall I'm Exchange.
Wall Street has given . good account
of itself In the midst of this confusion,
which is largely in the nature Of q
traordinary complications that the war
has brought about. The situation has
been made worse by the heavy losses
resulting from the fall in European ex-
change, which has made II almost i'm
possible for that portion OF the world
that is eager to send us lucrative bust
ness to maintain trade relations with
the United States.
This movement has a new meaning to
us to-day because of the 100000 los,
taken by Chicago banks from las
Wednesdays sudden drop in London ex
change and the numerous instance,
where Kansas City foodstuff exporters
| and shippers In this and other cities
have had to pay dearly for their failur,
to insist that foreign buyers should
| furnish dollar credits in settlement Of
| their indebtedness instead OF sterling
bills.
The Generalization in the foreign ex
| change market has reached a stage
| where Sir George Paish's prediction o,
| an ultimate 81 level for the pound ster,
ling has almost been fulfilled. for tn,
4.12h level touched last Wednesday
| was the lowest quotation ever known
| This situation has caused British holder,
of American securities to ship them tc
this market. for the high premium Of
| dollar credits probably has much NOR,
than Offset whatever depreciation ha!
| taken place as compared with the pre-
war price level.
Some Of these offerings have resulted
| in large sales to bond houses at consid
| cradle recessions from market quota
| tons. Inasmuch as the foreign holding,
! of our securities have been material:
reduced as a consequence OF the enor
nous liquidation that has taken plac
during the war period. the chances ar
that the foreign selling movement canno
be greatly extended.
The situation would be relieved II
reverse movement should set In with TIL
development of a broad demand on Thu
| side fer British and French securities
But the total of such transactions 8,
far has been insignificant compared will
! the volume of sales which would be re
! quired to create London exchange Il
sufficient quantity to stay the declining
| tendency of the market for London bills
Mr.. Asquith's Remedy.
British sentiment has been much de
pressed by this further break in Londo,
| exchange, for the depreciation of the poun,
sterling increases Great BritaIn'e indebt
edness to the United States. The move
ment has caused much discussion abroa,
as to the chief causes back of the declin
and the feeling Of English hnanciers 4
that the remedies lie in increasing pro
! duction. lettering shipping facilities an,
demobilizing industry as quickly as pos
sible so that normal conditions may OBJ
tain. Mr.. Asquith. the former Premie
of Great Britain. sized up the situation
the other day in these words:
The prime economic need at this mo
ment OF mankind Is that production
should be increased until the maximum
output is obtained. What Is true a
home in a drmestic sphere Is not onl
equally true but more significantly tru
In the International sphere"
1t has been pointed out In London
however. that It will be difficult to reduc
public expenditures so long as hostili
ties between the smaller nations call 70
large military reserves with immens
naval OUTLAWS. The situation hurts tn
pride OF the average Englishman, how
ever, for the pound sterling for centurie
past has been the most highly prize
form OF International remittance, with
broader market than any other bill en-
Joyed.
To see 1t quoted at the lowest leve
| on record has caused London to feel tha
the restoration Of the exchange rat
must become the chief aim of Britis
bankers from now on. The British Gov
eminent has not acted to stay the de
cline, and unless the situation shout
change radically 1t is not expected tina
the old ''pegging process" will be &c
sumed.
OF More Importance to U. 3.
But the need OF stabilizlnR the Eng