Evening star., 1920-02-07
PREDICTS EXPORTS
WILL NOT DROP TO
PRE-WAR LEVELS
Representative PIatt 0pti-
mistic Over Foreign Ex-
change Situation.

Optimism regarding the condition oi
foreign exchange is expressed by Rep
resentative Edmund riatt of New
York, chairman OF the House commit
tee on banking and currency. He
takes a very hopeful view Of the sit
uation and says that in his opinion
exports will not slump to pre-war
levels.
II do not share the expressed be-
lief Of many people" he says, "ths I
stop export trade. Sterling exchange
has simply been adjusting itself TO
the depreciation of the paper currency
now circulating in England. and the
same is true of French and Italian ex
change"
He points out that "the price of tho
american dollar in paper currency ha 8
risen. but SO has the price Of every
thlng sold in England and in Europe.
Doubtless the rise of prices has been
irregular. some commodities have
risen much more than others. but on
range Of prices is or soon will be
enough higher in those countries to
enable trade to go on.
English importers nc explains.
do not pay any more actual value
for our cotton or other ommcdit ties
when their local currency Gepreciat es
in purchasing power another ten or
more points. and that is all that. the
decrease in the rate Of exchange
means.
Gold IL at Premium.
SO called sterling exchange" Mr.
Platt continues. lis down nearly So
per cent, but gold is at premium in
London Of more than SIS per cent. II
the premium on gold measures the
then exchange must go as low, when
purchased in that paper currency, as
the gold premium indicates, regard
less of the balance Of trade.
TIE depreciation of the currency
establishes a new par Representa-
new pars Of exchange, and compari-
son ought no longer to be made with
the old par of S4.S66 to the pound
sterling. because the present pound
in circulation isn't sterling
THE effect of a spectacular drop in
more psychological than anything else.
1t naturally does check purchases OF
our commodities abroad because the
instability Of their own currency dis
courages the importers. who have to
take chances that they can make it
it will not actually stop them from
purchasing if they want the goods.
Measure of Depreciation.
ne VI thCiI Sul SHSs
will be measured. in the long run. by
what they sell-by increased prices
as well as by what they buy. That
prices of some things in English
paper pounds are much higher in
England as the rate of exchange is
down can be easily shown. For in.
stance, silver-the London price OF
silver is the New York price trans
lated through the rate of exchange,
with due allowance for the hneness.
On Wednesday silver went up in Lon
don and down in New York. the diff
ference being accounted for by the
drop in exchange-that is. by the fact
that British currency had lost in pur-
chasing power relative to our Amerl-
can money.
The thing to bear in mind is that
the balance Of trade in a time like
this, when the world is full Of infia-
ton, has relatively little to do with
rates OF exchange. Out Of the sS per
cent decline in pounds sterling 1t may
account for per cent, but that is
probably high estimate. Current
exports are being sold abroad at
profit, ard are being paid for in some
way-partly by imports, partly by Sc
curities. and partly by further exten-
sion of individual credit. Doubtless,
exports will fall of. and perhaps con-
siderably, unless our own prices de.
cline enough to help. but they will
not stop or even slump 10 pre-"a-
figures, in my opinion