Evening star. [volume] (Washington, D.C.) 1854-1972, 1919-12-25
GIVE THREE CAUSES
FOR DEPRESSION IN
Foreign EXCHANGE
Old Timers in Wall Street
Cite Factors as Sequences
of the War.

NEW YORK. December 25.-Three
actors IN the GENERALIZATION OF for
ctsn exchange, Ineligible to the
average man. rise above the complex
tiles of the present situation, accord
ing to old-timors in Wall street
These are:
1. Allied and other nations of the
world owe the United States approx
mately $l5.G00, 100000;
= American manufacturers hesitate,
owing I" peace treaty uncertainty, 20
accept big advance foreign orders;
3. England's virtual suspension of
gold exports outside the British colo
MES Is repuls;nG American trade.
Just why the British pound ster-
ling. normally worth s4.S6s5 in Amer
lean gold. should have declined So
much since the war ended and what
it all means is an obscure question"
said Il New York financial expert.
The present situation. Sir George
Paish's apprehensions notwithstand-
ing. is by no means hopeless Propne-
cieS of a breakdown of credit are not
we'll founded
Americas Opportunity.
America. the storehouse of the world
and now the worlds banker, is in the
50 me position England was in after the
Napoleonic and American civil wars.
She bought the cheap securities OF i'm
poVerlShed nations in a most prodi-
g1ous manner and thereby laid the
foundation Tor her future wealth. We
must do likewise, and do it within
the next two or three years. by which
inc these abnormal conditions will
have passed.
With pound sterling IS per cent or
more below par. England can sell to
the L nlted states at 4 great adVan-
tage We can sell American goods
abroad only at a great disadvantage
because we must add the abnormal
rate OF exchange to the goods to get
INTO foreign markets. Premier Lloyd
George recently declared, when ster-
ling vas selling at q discount of Is
per cent, that the discount really rep
resented 4 protective tariff of Is per
cent on goods manufactured in Eng
land. Certainly it is helping to keep
American goods out of that country
Only Remedy Up to United states.
90 The only remedy for this condition
is for the United States to buy for
eiSn securities and extend longtime
credit for merchandise. We are in a
strong economic position. The ma
tons of Europe must have our cot
| ton and wheat and, since they are so
heavily indebted to us and we must
extend them many more millions to
nut them on their feet, what is the
difference whether we buy their bonds
or send them our merchandise?
Every one in Wall street knows
that if the peace treaty had been
signed in Washington an interna-
tional exchange committee would
have been organized long before now
to stabilize excheEge and bring about
other necessary establishments. Never
during the darkest days of the war,
when the Germans were almost at
Paris did British and French ex-
change go to where it is now. The
British, during the war, by n system
of credits with the United States, had
! sterling 'pegged' to S4.52.
United States Must Loosen In.
The tension over and gold exports
curtailed, there was nothing to keep
1t that close to parity. Indeed, unless
the United States loosens it's purse
strings there are London financial ex-
perts who say the pound sterling will
drop as low as $3.50. That would be
calamity 1t would be two-edsed
sword. injuring both England and the
United States.
Europe is like a man on the verge
find such an unfortunate you feed him
gradually until the stomach become s
accustomed to digestins food. Now
our aim has been all along to stuff
Europe with all kinds of American
products.
I'VE have piled up a trade balance.
according to former Secretary OF Com :
merce Redfeld, aggregating $4,000
000,0 a year. EUrope's financial sys-
tenn, like the starved human stomach,
mas oeen uhaole TO asslmiiate IL Con-
sequently, we thus contribute to the
GENERALIZATION of foreign exchange
and, incidentally. by imitation, help to
lower the purchasing power Of our
own dollar.
when you consider. as Mr.. RedfieId
points out. that $4,000. 100000 repre-
Sents American dollars at par and
must be paid by those who owe it in
deprecated currencies. making it the
equivalent of $4,000. 900. 900, the result
cannot be healthful to future Ameri-
can trade and commerce. Foreign
buyers are going into more favorable
markets"