The sun., 1919-07-17
STERLING DROPS TO
LOWEST RATE HERE.
Falls to 4.31 and Francs, Lira
and Neutral Exchanges e..
So. Are Weak. - .,.-

With sterling exchange down to 431
and francs. Ira and neutral exchanges
weak in sympathy. the foreign exchange
market yesterday was in the most de-
moralized state In its history. The new
low rate established for sterling ex-
change was the lowest on record and
represented a discount on London ex-
change OF moro than IL per cent ana
more than 10 cents below the closing
price OF the preceding day. At 2 o'clock
In the afternoon conditions had reached
such a point that no bids for sterling
were In the market while offerings
ranged from 4.3lls to 4S2h. One
banker refused to make a bid, declaring
that every minute he held out he was
getting better deal.
Several reasons for tho condition of
the foreign exchange market were ad-
vanced by various dealers and bank
ers. One was the failure Of Americans
to purchase British securities for the
establishment Of credits here. He de-
clared that back of this hesitancy lay
the high rate for call money and the
much higher yield obtainable on Amer
lean securities compared with British
paper. He painted q very dark picture
or the future of American export bust
allowed to continue and declared that 1t
was up to America to adopt corrective
measures II she planned to advance in
foreign trade. So far as he knew, he
declared, no shipment OF gold from Eng
land to the United States was contem-
plated. He pointed out that about the
only way In which quick corrective
action could be obtained was by author
ration OF Congress for further govern
mental advances to the United King
dom. He said that the plan OF bankers
ton Tor the extension OF foreign credits
was good one, but would take too long
10 put into effective operation.
Another dealer in foreign exchange
took very blue attitude toward the i'm
mediate future for sterling zone of the
immediate causes for the break in star-
ling" he said, lis the absence OF any
short account When sterling was
begged at the rate OF 4.76 1915 many
had sold the market with the result that
the short interest grew TO tremendous
proportions A few weeks after the Brit
Ism Government abolished the regulation
Of the market there was a decline IN the
cable rate to 4.5Sh and a subseouent
recovery to 4.6o. On those movements
most or the shorts had covered their
commitments and there was little 10 sun
port the market when commercial BILLS
Of varieties and descriptions, but chte fiy
cotton and grain bills, began to pour
into the market in the last few weeks.
on the demand side. In view of the
light imports from Great Britain TO this
country, the inquiry for remittance IA
extremely light Until a few DAYS ago
there was an unusually heavy demand
Tor futures by importers who were TAX
ing advantage Of the low rates to anticl-
pate their requirements, in some cases
as far ahead AS nine months. But that
demand has been satisfied and offerings
OF commercial Keep pouring In In vol
ume' We shall have no doubt rallies.
but we shall have probably much lower
rates II the British Government takes
no drastic action To curtail imports from
the United States nor obtain huge credJt
IN this country nor forward gold here on
scale comparable with that which we
saw in 1916"