The sun., 1919-07-21
FINANCIAL NEWS
AND THE SITUATION
How the Sensational Break in
Sterling Menaces Our
Foreign Trade.
WHAT FRANCE HAS TO DO
Significance Of the Worldwide
Advance in American
Dollar Credits.
WHAT FRANCE HAS TO DO
ny WILLIAM JUsTUs BoIEs.


The American dollar has come to be
the only currency Of undisputed interna-
tional value. The dollar credit is the
scarcest commodity in all EyTope to-day,
and unless the downward movement in
the European exchanges be checked
forthwith the foreign trade of this coun-
try will be seriously threatened. That
situation has arisen from tho striking
decline in sterling exchange last week.
when the foreign exchange markets
reached a point of utter Generalization
so that there appeared to be at times
almost no demand for the London bill
Such a development was highly sensa-
tional, byt was effective in opening tho
eyes of exporters to the need for intelli-
gent cooperation between the banking
and commercial interests OF the nation
that drastic measures might be taken to
provide the New York credits necessary
to enable foreign buyers to continue
their purchases of American merchan-
disc.
Crisis in Exchange.
This is the most alarming situation
that has developed since the war started
and emphasizes what has been said by
Paul NJ. Warburg Henry P. Dawson and
Frank A Vanderlip concerning the
necessity Of providing adequately Tor the
expansion of American trade abroad.
Nearly all foreign exchanges are moving
SO heavily in favor of the United States
as to force the foreign buyers Of Ameri-
can products to pay an almost prohibit
tive premium for dollar credits with
which to adjust their Indebtedness to
this market. We are not in a position to
demand gold settlements for the reason
that any addition to our already album
datt gold reserves would cause more in
f1ation here and add to the difficulties
resulting from high commodity prices,
high labor and social unrest. II the for
eign nations were willing TO send the
gold It would be a shortsighted policy
for our financiers to force such ship
ments at a time when every ounce of the
metal is needed as cover for the An
fated currencies of Europe. 1t Is OBJ
yious that the situation cannot be
righted in the ordinary way through re-
sort to gold remittances or increased
merchandise shipments at time when
Europe's productive machinery Is seri-
ously crippled.
1t is of the utmost Importance that re-
lief measures be adopted quickly by our
bankers and business men that adequate
credit facilities should be provided lot
many thousand foreign buyers who de-
sire to do business with us. There have
been a dozen proposals as to how this
assistance should be provided. and some
thing has been achieved through the
sale to this market of bond Issues or
acceptances put out by Switzerland.
Denmark, Sweden, Argentina. Brazil.
Canada, Belgium, Czecho -Slovakia and
other foreign governments and munich
-,lities. The credits resulting from
Iese operations, although aggregating
100000, 900 or more, will not be avail
able Immediately in all cases, and l. Is
clear that a much more formidable re-
lief programme must be determined on
to meet needs of an altogether exraor-
binary foreign exchange situation. Lon
don bankers in considering the solution
of such problems have been accustomed
Ia reckon on Government support, and
n NAV be necessary for bankers here
to provide for Treasury cooperation In
some form.
Unless the situation be quickly cor
rected and effective measures taken
| to Increase the supply OF New York ex-
change available at reasonable prices
abroad the outflow OF American raw
material and merchandise will be seri'
ously hampered. This is because 1t VIII
cost the British buyers OF American
supplies too many pounds sterling to
purchase every 100000 OF New York
exchange required to make 1t worth
while to execute large merchandise
orders here In this way an exception
ally high rate for New York exchange
| quickly reacts on the trade of this coun
try and places our manufacturers. pro
| ducers and exporters at serious dis
Advantage compared with their rivals
In countries where the London bill Il
quoted higher than 1t is here.
| Approaching the importance OF TIL
problem some Wall Street bankers favo
the enactment of the Edge bill. provid
! ing for the formation OF a heavily cap
italized corporation. privately financed
but operated under Government control
Tho Dawson committee has undertaken
to interest bankers throughout the coun
try in the formation of a syndicate es
tablishing the required credits for GU
foreign customers. but negotiations ar
necessarily slow as they take in larG
number of individual underwriters.
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