The Bridgeport times and evening farmer., 1920-02-10
to the dollar and lire have gone

 nearly to 20 to the dollar. Other exchanges have been generally demor- a1ized, and even with Canada, drafts on New York have occasionally been at 8 premium of nearly 15 per cent. This is an unprecedented situation and it is not strange that partly out of sympathy with 1t, there has been a severe decline in stocks. We cannot have prosperity and good business at home if it does not exist, in some measure at least, abroad, whiIe a sudden suspension of some important portions of our export trade such as is now threatened could have none but 8 most seriously disturbing in- duence upon foreign business. There is no immediate or direct cause to be assigned for the decline in ster- ling and other currencies but the final fIlip was undoubtedly given by the strong and positive statement is- sued by Secretary Glass to the effect that no further relief (except in a purely humanitarian way) was con templated in the case of the foreign countries by the Treasury Depart ment9 This statement, strengthened as it was by the announcement on the part of British authorities that they had no plans for the placing of new
  cia1 community to the belief that ex- change must take care of itself.
 At the same time the publication of trade figures that showed an even greater balance of merchandise in favor of the United States than had been expected emphasized the situ- at1on even more strongly than before.
 There has been a good deal of eff fort on the part of exporters to if nance their foreign customers on their own resources through allowing them to retain due balances either with or without interest, but this kind of private financing has about reach ed the limit of it's capacity That there will be a further fall in ex- change, either, immediate or at a little later date, is now expected by many in view of the final withdrawal of public support and would seem to be entirely probable. The situation has been forecast in this circular for some time past
 Era of ssIight" Money.
 It is unfortunate that, contempor- aneously with the forces tending to depress foreign exchange there has coincided a. situation in which the ap- plication of the credit contraction policy has been made a chief factor of banking policy. The general dis position of banking and financial au- thorities has been to approve the policies of the Federal Reserve Board with respect to the raising of interest rates because of the con- | stantly falling reserve position It had not appreciated, however, certainly not | until the past few days, that these influences, coming together with the | bad conditions in foreign exchange, must necessarily serve to intensity conditions which were bad enough in | themselves It is not merely the ad- vance of rates of discount, but sim | ultaneously herewith the application Of g. general plan of limiting and re- strfcting bank loans that has during | the past week led to a call money l rate as high as 25 per cent while l the renewal rate has varied around i 14 per cent up to IS per cent.
 | With such rates for accommoda- l ton as these it would be too much i to expect from investors who are obliged to depend to any extent upon loan funds the making of commit ments that might involve extravagant l carrying charges with no sign of re- 1 duction as yet perceptible. We say l "as yet percephb1e,'' since there has 1 been thus far no indication of success TOT the COnlIaCIlOu pOIICy Ol tic F GU 1 eral Reserve Board
 Last weeks reserve precentage was, if anything, a little less favor. | able than that for the week preced
 ing the application of the presen high rates, and wherever there haI been a reduction of loans collateral
 led by Government obligations, tn
 saving has promptly been taken III
 by new borrowing based on com
 mercia1 paper. If the so-called Gin f1ation" is thus continuing, it is to b.
 expected that further applications 0
 the remedy of high rates for none will be forthcoming- Indeed, this i
 what has already been unofficial
 promised or forecast. There is, there
 r~-e nothing in the present situatio " ich holds out any hope of i'm II ediate relief unless there should b an immediate and decisive change i
 the policy of the Federal Reserv Board. Of the latter there woul seem to be no suggestion at pres ent.
 Plans, therefore. should for tn