The sun. [volume] (New York [N.Y.]) 1916-1920, 1919-04-01
new HIGH MARX
IN PREMIUM RATE
Rise on New York Exchange a
Feature in Canadian Finan-
cial Markets.
BIG BREAK IN STERLING
Opening Of st. Lawrence Nav.
igation Expected to Re-
lieve the Situation.
Special Desposch 10 Tus Sun.

| MONTREAL, March S1.-A rise In the
premium on New York exchange to the
, new high record quotation Of AZ per
cent. has been an outstanding feature
OF the financial markets in Canada last
! week. The rate had touched small frac-
lions over the per cent level a number
! of times previously. but this was the
first occasion on which the az per cent
level had been crossed.
According to good banking authors
ties the influences contributing to the
further advance are complex, but laSge
Importance Is attached TO the sensational
| break in sterling exchange at New York
when the British Treasury authorities
! decided to withdraw the artificial sup
port that had been establishing the sterl-
Ing rate for the greater part Of the war
period.
1t was pointed out that, with sterl-
Ing selling down to $50 at New York,
Canadians with obligations to meet In
me London money market would nat
urally wish to avail themselves of the
exceptional opportunity Of purchasing
sterling bills at a discount of more than
per cent. from par. Those with New
York balances would be In an especially
favored position, but even when Mont
real funds would have to be employed
for the purchase Of sterling the ad-
vantage would be considerable.
Against the cost Of about 2 per cent.
which remittanoes from Montreal to
New York were costing when sterling.
broke In the latter market sterling
could be bought In New York at a dis
count Of more than 5 per cent 1t Is
believed. therefore. that there was a
concerted movement on the part Of
Canadian corporations and individuafs
with obligations maturing In London, to
buy New York funds and with the pro-
ceeds to purchase sterling at New York
This operation repeated in a number OF
ways placed further strain on the ex-
changes between here and New York,
already feeling the effect OF the heavy
balance Of trade in favor Of the United
States. with the offset in Canada's IA
vorable balance with Great britain neu-
tralized by the credits for goods pur-
chased here.
The situation which has many burden
some features Is not likely to be relieved
to any considerable extent until credits
In favor OF Canada are arranged at New
York on fairly generous scale.
Whether this will be done until your
Victory Loan financing is out Of the way
| Is considered very much open TO doubt
Compensation for Canada.
In the meantime there Is a compen-
sating side from the purely Canadian
standpoint. Our exporters to your side
OF the border line benefit to the extent
Of a premium OF about pa per cent. on
their sales when paid for in American
funds Conversely. where the prices that
your exporters can quote to Canadian
importers are fairly close TO the Cana
dian manufacturers prices the "a
per cent premium on New York ex-
change becomes factor OF Importance
IN swinging orders to the Canadian man.
ufacturer. It has the further important
effect, too. OF stimulating purchases of
Canadian securities by American In
vestors. bringing new capital into the
country. and OF recalling Canadian cap
ital abroad through salee Of American
securities owned In Canada For in
stance, a Canadian investor owning a
short term Anglo French per cent.
bond selling around STH in New York
could exchange his investment for a
per cent. Dominion OF Canada tax free
1887 war bond selling at about ee&.
virtually at parity. And conversely the
difference of about ~ points in every
100 in favor OF the American buyer OF
Canadian securities gave added attrac-
tons to some of our Government and
municipal bonds. many of which are
payable both as TO interest and princi-
pal in New York.
The opening Of st. Lawrence naviga-
ton, which promises to be exceptionally
early this year, will tend to ease the
situation by placing Canadian exporters
who have been holding back shipments
p.lN L. l..
sterling bills in New York. The main
dependence for a more stable exchange
situation, however, so long as Canada
continues to give credits to Britain, must
rest on the prospects Of credit advances
to Canada by your bankers. The fact
that the high rate discourages buying
abroad by Canadians has advantages
from the Canadian economic standpoint,
but 1t has serious disadvantages from
the standpoint OF your exporters The
latter. In seeking TO develop new bust
ness to make up for the loss Of war or
ders, are confronted on the one side by
the discount OF about per cent on
sterling and on the other side by dis
count Of about u per cent. on Montreal
funds. Necessarily this heavy lmpos,
on both British and Canadian buying Of
your goods tends to restrict the ability
Of your exporters to expand their mar
ket.
Increase in Saving Deposits.
The Canadian bank statement for
February Is notable chiefly for further
Increase in savings deposits, the total
rising from 1890, ooo, 900 in January to
s1,0lS.ls5.0o0. Since the slump that fol-
lowed the Victory loan OF last autumn
| there has been n recovery of SIS, 900, 900,
or considerably more than half the drop
| Of S137,000,000 from the high record
| figures reached in October. 1918. De-
mand deposits, however contracted
showing a decrease of about s57, o0O, 900
In the month. This item OF the state
ment, representing TO a considerable
| part the current balances OF business
institutions, Is subject to erratic fiuctua-
lions. Withdrawals may have been bal
anced Off TO considerable extent by re-
! payment OF hank advances and also in
part no doubt, some of this money
found Its way into security Investments.
| The savings deposit item continues the
real barometer OF the banking position.
and II points favorably.
Current loans to business in Canada
| touched a new high level at S1.095,3O2,-
600. a gain of about $4,000, 900 in the