The sun. [volume] (New York [N.Y.]) 1916-1920, 1919-08-28
BRITISH DIFFER ON
FALL IN EXCHANGE
Decline of Sterling in United
states Splits Financiers Into
Two Equal Groups.
ONE SIDE NOT ALARMED
Other Glass Regards Drop as
Serious Calamity and
a Fears Future.
spsrid cable Despatch 10 THB suS.

grgrhH Cdbie DcSpdtcH 70 IHb DUN.
ropvrioht. 1912. all rights reserred.
1oSpoS. Aus. 27.-The depreciation OF
che British pound sterling In the Ameri-
can financial exchanges has produced an
amazing division of opinion in London.
prltish flnancie~s apparently being
ec,,ally divided. one group assuming that
,ha rapid decline in the value OF the
nound will have little effect on Great
prtain's after war commerce and eco
rnmics while the other class regards the
drop in exchange as an utter calamity.
Among those who are hopeful Mackay
Edgar head of large trading firm,
voices the optimistic opinion. He says
1--WE in Great Britain can more than
hold our own. 1t is simply playing the
winning cards, which we hold In our
hand The depreciation OF the pound
sterling Is much worse for the Ameri-
cans than for u.s. We cannot afford to
purchase goods In the United States and
will buy anywhere except there. We
will take American goods and products
ONLY when we are physically unable to
get them in some other country where
exchange is less adverse.
'sThe fall in the value of the pound as
MEASURED in dollars is the biggest cb-
stacle to American exports that any one
could desire. America is loaded up with
goods and products which she has paid
extravagant and uneconomic wages to
produce and she has done so in the ex-
peetation that Europe would be forced to
purchase them at any figure. but the
European demand is falling off, largely
because of the chaotic condition OF ex-
change. America must either sell at a
loss or cut down production. She has
money but little else. London to-day is
as predomlnantly the clearing house of
International trade as she ever was"
Predict Suffering I'm Britain.
On the other hand. those who look
upon the darker side OF the problem have
graSe fears for the future. They see on
every hand evidence of wild extrava-
gance. not only on the part Of the peo-
pie, but In every Government depart
meut. They find little consolation in
the fact that America faces a possible
loss in exports, but they declare that
long Sefore any serious effect be felt in
the United States Great Britain will
suffer physically and financially and will
continue to suffer far greater discomfort
In handling her export and import trade
until adequate measures be taken to re-
store the value of the pound.
All over England there Is evidence that
among those who have accumulated for
article does not count, and 1t is open to
question whether the adverse American
exchange will have any serious effect on
such reckless buying. but It cannot be
doubted that the adverse American ex-
change will have very serious enect
on the country In raising the price OF
food and raw material.
London bankers debate almost fever
ishly various schemes for stabilizing the
exchange rate. A. Palachi, the European
representative Of Hallgarten, & Co.. New
York bankers, declares against the use
Of artificial methods such as have beer
applied in the past to bolster exchange
He SAYS: THE suggestion recently put
forward that the opening of London's Sc
curIty market as an international centre
might result in foreign purchases OF oul
securities by those countries quotint
the pound sterling at heavy discount
meets with some favor. Such purchases
would Offset to some extent the adverse
trade balance which handicaps the re
yival of our activities.
Americans Are Apathetic.
II have had an opportunity of in
vestigating the possibilities OF placin'
British and other securities on the New
York market, and I find that one or tn
chief difficulties is the fact that invest
ors do not want to be involved in tn
risk of exchange The American publi
is not acquainted with foreign invest
ments, and does not understand ex
change problems. This explains Target!
It's apathy in buying securities abroa'
which carry exchange risks.
"In view Of this difficulty the British
treasury mighty guarantee to foreigi
buyers the rate OF exchange existing OIL
the day Of purchase. III this guarante
were made 1t would mean that no los
could be sustained IN exchange D.
American investors. even II sterlinI
went TO a heavier discount This Nigh
stimulate substantial foreign purchases
at would be necessary only for thos
who buy foreign securities to submit
such purchases before shipment to tn
Treasury Department with the con
tract Of purchase and have them stampe
with the date and the rate OF exchang
on that date. In case the rate of ex
change became more favorable tina
that guaranteed by the Government. tn
foreign buyer, when realizing In tn
London market. would get the benefit.
Experiments could be made by offer
ing such privileges to buyers of British
Government, municipal or colonial Sc
curities. II these are successful, Their
IS no reason why other classes OF securi
ties could not be included IN the scheme
There is no doubt that such procedur
would create greater confidence abroa
and It might lead to considerable expor
Of securities, which would relieve tn
trade situation. Even II a risk were In
Cured by the Treasury, the probabl
outlay would surely be counterbalance
by advantages OF the improved exchang
position"
Practically all representatives G
American firms in England look on IN
decline o fthe pound without favor. Al
though II Is certain TO add materially Z
che profit on current business, II entail
heavy mixing Of accounts and necessAr
" RAPIDLY diminishing business In In
portation.