Evening star., 1920-02-07
GIVES REASON FOR
RISE IN DOLLAR
AND IN STERLING
Cashier La Ferrier of Bank Of
France Says It Dates Back
to March IS, 1919.

PARIS. February 6.-The Paris mar
! ket has little or nothing to do with the
| fluctuations of exchange quotations and
| the upward trend of the dollar and ster-
| ling. according to Julien La Ferrier.
| cashier OF the Bank of France, whose
| name appears on every Bank of France
| note that goes to make up its circula-
tion of $4,000. .00O. 900 francs.
THE initiative always comes from
New York or London" he said today.
THE cause for the rise in the dollar
and in sterling is simple and dates back
! to March 10. 1919. in the non-renewal Of
credits advanced by the American and
, English treasures to the French gov
eminent during the war. the latter in
turn handing the credits to the Bank Of
Fra nee. which managed to obtain dol
lars at a rate a little over 5 francs.
stabilizing at SIS. The withdrawal
j market and the trade balance run
ming against France caused the grad
ual rise which was inevitable and to
be foreseen when the credits were
not renewed.
Law of supply and Demand.
Speculation. although it may be in
strumental to certain extent in the
rise. has comparatively little to do
with it. 1t is merely the old law Of
supply and demand. The exchange
market is very sensitive. There is
!: no doubt that persons owning dollars
Will hold them until favorable mar
ket can be obtained and then load
them upon change. which sometimes
is responsible for spasmodic rises.
Perhaps YOU have noticed that after
a big rise the market is generally
stable. Sometimes it recedes during
three or four days. This may be ex-
planned by the same spectators re-
buying the dollars with view to
future advance in prices.
For instance. yesterday the dollar
closed at Is francs. a rise of nearly
1 franc so centimes in two days. To-
day the dollar is quoted at II francs
so centimes. This may have been
above, or perhaps by an optimistic
article appearing in the French press
this morning concerning the probable
meeting of an international bankers
conference in London and the partici-
patton in it of American bankers, even
conditional on the acceptance by Eu-
ropean bankers of the point of view
expressed in the recent letter of Mr..
Glass. the former Secretary Of the
Treasury.
But this was merely a secondary
cause The main reason for the sud
den Jump in the price of the dollar
can be laid to the fact that on GER
tain days American banks have large
bills upon France which call for pay
ments of large sums which must be
realized at once This creates
stampede for dollars in French cir
cles in order that the bills may be
paid. Paris merely follows the New
York market. instead of leading. as
it should do. inasmuch as the Parls
exchange is closed before the one at
change used and published Paris quo
tations in the past. but l understand
that this has been abandoned. perhaps
for the reason that cablegrams did
not reach New York in time or for
some other reason which is unknown
to me.
1.-The Bank of France is helpless to
assist in the betterment of the sit
uation in France unless credits SINH
lar to those granted during the war
are again allowed. Such credits. how
ever. afford merely temporary relief.
the intensification of production and
exports and the ruthless restriction
Of imports.
Eixht-Hour Law q Handicap.
I'm this connection the eight-hour
law is a serious handicap to France.
coming at this time. after complete
stagnation of production for FIVE
years. 1t might have been better II
its adoption had been delayed few
years"
NJ. Sautereau. chief of the exchange
department of the Bank of France.
| says there is remaining in that insti-
tuition part of the last credit Of
100000, 900 granted by the United
States treasury to the French gov
ernment. These dollars, however. are
being distributed among French i'm
porters under the specific conditions
laid down by the American treasury
They are given only to French i'm
porters Of American raw material
and necessities of life produced in
the United States.
Another cause of the rise in the
exchange quotations. NJ. Sautereau
added. was the fact that France set
tied with America for all temporary
loans made during the war for the
purpose of buying dollars. payment
being made in foreign securities val
ued a several billions. II the securi-
| ties had been retained by France
there might be some hope Of easing
| up for French exchange, he said.