New-York tribune., 1919-04-06
lhe Dollar in Foreign Exchange

NterlIng exchange underwent pro
nounced Improvement in last week 3
market. The English pound rose from
ground S1.60 to close proximity of
was S46S
Although the financial district heard
reports that the British Treasury
Planned to restore the peg" in sterling,
oankers IN Il position to know the in
Slde OF the sterling market said there
had been no change in the situation.
What actually has happened in the
sterling market has been this: Brok-
erS, on the announcement a fortnipht
ago OF the Withdrawal of the support
OF lne brltlSh government, Immediately
oec5uep mat sterling rates were sched-
uled Tor big Decline Accordingly
they sold sterling short in heavy vol
umc- ne rate went to S4.57 but when
the market failed to 20 lower the shortq
began to cover, and their purchnses Of
sterling since then have served TO nush
the rate upward sharply. Exchange
bankers do not bclivc that it will be
possible to hold sterling around the
current level without artificial support
ana as II Is apparently the policy Of the
British Treasury to let the cxchanpns
take caro- Of themselves lower rafcS
are looked for in sterling.
French and Italian EXCHANGES. aftcr
dlspiay'ng further weakness, developed
a better tone and closed fairly stoadv
although way below ihc recent peg
prices.
ID: H. G. Penny, ce-president Of the
Natlona Bank Of Commerce, and for
merly identified with the foreign cx-
change division Of inc Federal Reserve
board; SAID much of interest regard
'nE "dollar exchange" at A convention
Reserve nj
leans last week
he lnted States has dispIaced
England and all other prc-war creditor
countries, he said, "in supplying long
time money for financing industry and
transportatio Dollar exchange is a
war time development. international
exchange is concerned with making
payments between different countries,
each having different currency. Be
fore the war if Brazilian merchant
SOLD TO an American importer, the set
Jlement was made neither in Brazilian
currency nor in American dollars, but
IN pounds sterling bills or drafts drawn
on London. Tho great instrumentality of
lnNernatlonal payments was bills of ex-
changc or acceptarces drawn on Lon
don banks or acceptances houses. Dol
'af eXchange was not quoted officially
III buenos Ayres or in the other prin-
N'i'"i "i"i htiS III ,>Ouln America.
During the war dollar exchange
mas made remarkable progress in deal
ilngs IN South America and the Far
East 1t IS moro readily negotiated in
Japan and China than any other OK
change. Closely allied TO dollar cx
change and leading directly to an cx-
tension OF dollar exchange is what is
Known as direct exchange For cx-
ample, we are doing business with
Argentina, Greece. Japan and other
foreign countries in their own moneys
now Reversely they quote dollars in
Their marAets and make payments to us
IN dollars. This makes it easier for
them, moreover, to make payments to
some third country in dollar exchange
and so furthcrs the use Of dollar ex-
change"
If you calculate the cost Of the dol
lar IN terms of foreign money at cur
rent exchange valuc-that is, f you
were buying dollars with pounds
marks or francs its value at the close
Of last week. as compared with a year
ago would be about as follows: