The Caldwell tribune. [volume] (Caldwell, Idaho Territory [Idaho]) 1883-1928, 1919-04-04
Business and Finances
Nv w. S. Cousins, Editor American Benker

authorities have differed entirely
from that of the English in stabilizine
exchange. England has sought to
keep the sterling rate pegged at a
very slight discount, while prohibiting
many OF the importation transactions
involving direct payment through the
exchange market. The French gov
eminent, on the other hand. has per-
mitted heavy discount on franc ex-
change abroad; and, while this has
mad a corrective effect upon the inn
portatIon OF unnecessary article into
that country, it has been attended
with considerable embarrassment.
The announcement that the French
government would be unable longer
to continue to supply Frech import
ers with sterling at the previous fixed
rate OF twentysix francs to the
pound sterling; that ]. p Morgan &
Co., had been authorized to discon-
tlnue the purchase of sterling for the
British government and that the Ital-
ian government had come to the same
conclusion with regard to the pur-
chase of Ira in this market, were in
effect the termination of the "peg-
ging" system in the United States.
Although there had not been much
expectation of the taking of such an
important step until the actual sign
ing of the formal peace treaty, the
fact that it was certain had been
| clearly perceived for few weeks. and
business was at least partly ready for
1t. This was more nearly true of the
banks than in the case of mercantile
| houses, but it is fact that the bust
ness world in general had understood
that the old system could not con
tinute indefinitely, and had, therefore
so far as practicable accommodated
itself to the new condition.
Exchange and Foreign Trade.
1t is in the field of foreign trade
of course, that the chief difficulties
in the adjustment of exchange rates
will be found, and it is here and now
that American financiers and invest
ors should follow the oft-repeated in.
Junction to stand ready to loan freel,
of their surplus to foreign bushes:
enterprises as an aid to readjustment
By whatever amounts are Loaned
abroad will the necessity for ex
change facilities be decreased. Evel
since the system of government sup
port of the exchange market has beer
in effect there has been in operation
the means by which shippers of mer
chandise and importers of the sam,
have been provided with a given mum
Der of pound sterling for a given mum
Der Of dollars and cents and vic
versa. In ordinary times an exporte
who is expecting to be paid in TIL
currency of foreign country has t.
take the regular risks incident to tn
fluctuations of exchange rates. 1t
the risk of loss incident to these fluc
tuations which tends to limit the flo,
of commodities between differen
countries and thus prevents ther
from overbuying in any case. TIL
balance. of trade is thus stabilized an
prevented from becoming too one
sided. If there is good reason fo
Its being one-sided the unfavorable, @
adverse surplus must be carried b
the banks of the creditor country
eventually, perhaps. by their investor
, in the form of advances to mel
chants, banks or others in the debto
country.
| Before our entry into the war pr
vate concerns in this country shippe
large quantities of goods to foreig
: understanding the belligerer
, governments, creating heavy trad
!. balance in our favor These good
r were paid for in gold as long as tn
? form of payment was feasible, an
then private loans were arrange