The sun., 1919-03-18
FRENCH EXCHANGE
HAS SLUMP TO 6.76
Drop Practically Demoralizes
Market, Which Went to
SAT Last Friday.
MANY ARE CAUGHT LONG
British Attitude Said to Be for
- Lesson to Advocates of =,
-
d. Freer Rates.

French exchange slumped In this mar
ket yesterday. the quoted rate going as
low as SIC francs to the dollar for
checks the opening. although the ae-
tual but mess was transacted between
Eli and 5.721s francs to the dollar De-
clses or advances in the market for
franc exchange are usually measured by
eighths. sixteenths or even smaller frac-
tons. The slump yesterday amounted
TO Generalization. as the rate last Fri
day was about SAT francs to the dol
lar. The best rate since the signing of
the armistlco was 5.3s francs to the dol
lar.
The break came as a great surprise
TO more than 80 per cent. OF the specula-
tors In French exchange. They had reaped
large profits on the sdvance 10 53s, bur
the decline caught them long OF French
exchange for delivery on or about April
!. As to whether the SPECTATORS will
lose much by the present slump opinions
were divided! the unknown quantity
being the possibility OF an early remedy.
Foreign exchange experts have as
serted frequently that the approach of
peace would bring about convulsive and
unexpected movements In foreign ex-
change. but this is the first sensational
movement to bear out their prediction.
1t was said that the break was really
caused by the financial relations be-
tween Paris and London. where the
credit extended by British bankers to
the French was found to be suddenly
exhausted. Immediately sterling ex-
change In Paris went to n premium, af-
fecting the rate in Paris on New York
owing to the sterilization of the sterling
ratio between London and New York.
The spectators here, who were long
OF French futures, had been counting on
the fact that about a month ago British
bankers purchased French rentes OF
three months maturity at 5.45.. and sold
exchange against It at 5.46, The now
position taken by the British is the re-
verse OF that adopted about month
ago.. and It Is said TO have been adopted
by order. of the British Government to
afford an. object lesson to those who
have been advocating the removal OF all
Governmental restrictions on rates II
was said also. that pressure Is being
exerted regarding fire adoption OF the
Peace Conference Of international finan-
ciai arrangements favored by the Brit
ish and opposed by the French.
The break in French exchange. con-
ing to do with the maturity Of 500. o00.-
600 French Government 514s. payable in
Paris on April 1 at 5.75 francs TO the
dollar. When these bonds were selling
at q low level In fine New York market
a number of banks bought them and
prepared to ship them to Paris. selling
French future exchange deliverable on
April 1 against the purchase. The spec
ulators, who are long OF such French
futures. bought them from the banks.
The bonds, however, as a result OF those
purchases rose TO n level az which the
exchange operation was no longer profit
able. About that time j. p. Morgan &
Co. announced that they had received
funds 90 pay the bonds on April at a
fixed rate. which worked out an ex-
change rate OF 5.45 francs to the dollar.
The drop in French exchange Is unfavor-
able to the French Government in that
operation, but the reports that J. p.
Morgan & CO. would lose money by the
break owing 70 their obligations to meet
tho French bonds on April are said TO
l., o.