Evening star., 1919-12-21
STERLING DECLINE
LIKE GOLD FURRY
Surrounding Conditions Are
Found to Have Some His
t0ric Parallels.

tFrom Financial Dept. of n. Y. Evening Post,
NEW YORK, December 20.-The
student of finance or the reader OF
history must turn back a good many
pages before he will find another such
episode as that which has just oc-
CURED in sterling exchange. The de-
cline from s4.76 at the beginning OF
August. 1915. to s4.4S at the begin
ming of September was nearly as eX-
tensive as the fall from SS.99h. on the
first of this present month to so6i "A
on the 18th. but it was much more
deliberate movement, and it began at
a much more normal rate. The ac-
tion of the market of 1913 resem pie $
that of the present month only as the
first violent break of prices IN STOCK
exchange decline resembles the
panicky collapse in panic week
from values already abnormally de-
pressed.
Even the virtual loss of all its
value in the exchange market by the
German mark is not parallel case
That represented n gradual and all
but uninterrupted crumbling away OF
bids. in response to visible conditions
growing continually worse Tor the
value of German currency in other
countries. which. in fact. had at least
raised the question whether II had
any value there
Gold Fluctuations.
The recent episode in sterling can
perhaps be paralleled only by the
wild fluctuations OF the premium on
gold in other days. That premium
has been suppressed during the war
and its aftermath by law or by agree
ment of the markets. The influences
reflected in earlier days tncluding
the influence of daring speculation
or financial panic) have at this time
been able to find expression only in
TAs frr .terv, boz L. ntS
Our own gold market" of the six
ties provided some such precedent.
When gold, as quoted in American pa
per currency, on the New York Gold
Exchange of those days rose from 222
on July /, 1864, to 2S5 on July II. the
markets witnessed something not al
together unlike what has lately hap
pened on the sterling market. 1t
meant that the value of the paper dol
lar, as measured in gold or in other
gold standard currencieS. had fallen
in ten days from As cents to fraction
over 35. In that case there was a spe-
cial reason: for Congress had sud
denly passed foolish law prohibiting
contracts for future delivery of gold,
and merchants who had to provide for
their own forward requirements (cus-
toms duties being then exacted in
gold) were thrown into instantaneous
panic.
FafaiIeI IN NapOIeOn1c DayS.
Going still further back. the gold
sold in London during April. 1915.
eleven months after the abdication of
Napoleon and the end of the continent
tai war, was at pounds 9 shillings
per ounce, which. since the normal
price in standard British currency was
pounds II shillings, represented a
premium of 25 per cent. In one week
after April 10, the price of gold rose
to pounds shillings, a premium of
4S per cent But in that week Ma
poleon had escaped from Elba. landed
in France and begun the war again.
Both of those historic precedents
were result of sudden and important
news. The American gold premium
cf July, 1854. declined as far as it had
risen. when Congress repealed the
"anti-future" law, and the British
gold premium of 1915 almost disap-
peared after the hundred days and
the battle of Waterloo. This gives at
least some ground for conjecture as to
what might happen to the present
sterling market, in which is embodied
the discount on British currency in
exchange, if the treaty were adopted,
the interest on our governments loans
to the allies temporarily funded, and
the machinery of the Edge bill applied
with comprehensive purpose.