Daily capital journal. (Salem, Oregon) 1903-1919, 1919-04-03
Restrictions Upon Exchange
With Foreign Countries Are
Modified.
New York, March 90, 1919.

| Conditions growing out Of the British
government S announcement, referred
to in cur last issue, that artificial con
troll of sterling viii be discontinued il
this market, have been the dominating
factor on the exchanges for the past
week. This Fundamental announcement
was promptly followed by a statement
/ from the federal reserve board that the
ecEtrol Of ira exchange, when had
been eXerted by the board, acting joint
| ly with the Italian Institute of Foreign
Exchange, had been relaxed. There has
been a notable slaekening in the sever
Iity Of our embargo ON gold and silver
for some time past, while a strong ten
dcney toward the slaekening Of fiaan
eial censorship both here and abroad
has been observed-aided as it has been
by the pressure Of financiers and mer.
chants who desire to see . lvtuln 10
normal conditions.
This change Of policy represents, as
was indicated in the announcement con-
eernng sterling, a definite step toward
the restoration of peace time iaethods
of trading, Taken in conjunction with
the necessary consequences and implica
tiOns of the STEP it is perhaps the most
important measure looking to interna'
tional freedom of dealing in securities
that has yet been ordered since the
opening Of the war. Preceded as ii
was by the cessation of control of the
issue of securities by the so-called capt
tai issues committees Of the United
States and Great Britain, it goes far to-
ward putting the world back upon a
basis of free international competition
for capital It is already seen that
there must be immediate ana c--sctivo
action looking to local financing
through private channels of our great
export balance. This balance still con-
tinues heavily in favor of the United
States and must in some way be settled.
Foreign countries cannot afford to al
low their exchanges to 90 to Gn unduly
low quotation, and sterling has already
been quoted for checks as low as $4.5S,
while franc have declined to 600 francs
to the dollar, and lire, according 20
some quotations, to 500 lire to the dol
lar. This inevitably means the opening
Of large foreign credits in the United
States, and the offering of securities in
this country. II foreshadows very
strong demand for Americas capital,
and points in all probability TO strength
and activity in the stock market. That
the New York market must, for a time
at least, occupy the position Of world fl
uancier and world creditor is still the
opinion of some Of the ablest financial
minds. Temporary disturbances Of Sc
eurity values, the Quotations in the
value Of foreign issued bonds and stock s
where no provision is made for the pay.
ment Of a stable interest return in dol
lars and other shifts and cnGnges in
the local selling prices of such foreign
securities may be expected, and will
continue until some stable and semi
permanent basis Of exchange is arrived
at through arrangements for regular
and adequate financing such as has al
ready been described. The War FL
nance Corporation has already made
preliminary arrangements for the appli-
cation Of the billion dollar credit allot-
ted to it by congress for the support
Of our export trade and may prove to be
powerful factor in bringing about \
more stable situation.
Domestically the most promising fl
naacipl event Of the week has beeu
the definite establishment Of arrange.
meuJ5 with the Finance Corporation,
and incidentgIy with the banks, for
the financing of the needs Of the rail
roads. Congress may be expected to
meet early In May, and this leaves prob
ably hot more tnan SIX weeks to be
bridgcd over by the temporary plans
now projected This should not be diff.
ficult, and success signifies that there
will be no serious interruption to pur-
chases Of supplies and equipment. The
outlook has had its due effect upon the
quoted prices Of railroad shares and of
equipment stocks as well. In reaching
a basis of agreement fol temporarily
stable ariccs on the chief steel products
the steel manufacturers have taken at
least & tentative step toward faeilitat-
ing the resumption Of business on a nor.
NAL basis. There are predictions that
these prices may not prove to be great
stimulators Of trade, owing to the fact
that large portions of the community
believe further reductions must be had
before a profitable footing for opero.
tions can be arrived at.
Politically the outlook for the next
lew wecAs is decidedly uncertain Uono
ful factors are found in the strong ipti.
nations from Paris that a treatv nil
be concluded and brought back 10 ,ba
United States early in April. There
need be no positive expectations ON tbis
score, however, since diplomatic proee3.
ure is notoriusly slow. Events in sont5
ern Europe are such as to neeessitsta
prompt action, and while they arc II
themselves diseouraging, indicatinc as
they do a continuous prospect Of dis.
turbanee. vigorous measures ,,,., -,
uentiy being concerted for dealtp, v,;,b
them. The stock market has fsi, ~
diseouragement growing ont of ,bo
spread Of radical control in the south.
en European countries. and investo,s
nave shown their concern by exhibiting
iess active interest in the market dur,
ing the latter part Of the week. They
must remember, however. thar II invest.
ments in The United States are not safe.
there is no safety in the world. Cor.