The Little River news., 1920-02-11
REIMBURSEMENT or TRADE
 IS BEGUN; PRICES DROP
Europe Reduces Imports and Seeks to Increase Production of
 Various Goods.


 nance is gathering headway rapidly Last weeks slump of foreign ex- changes told it's own story of enforc- ed curtailment of European purchases in the United States, and forecast in- creased endeavor of European manu- lecturers to produce more goods for domestic needs and for shipment abroad
 It was significant that conferences of financial leaders over there have brought up new suggestions for cor recting exchange rates. The result of deliberations was advice to the people to consume less and produce which had been presented on numer- our occasions in the past year, al though not under auspicies that prom l ised so wide hearing as at pres ent.
 The salient-features of the situa- tion may be outlined briefly; Europe cannot spare gold from her reserves to ship to America in settlement Of old or debts; other European na- tions cannot borrow further from the United States government, and our credit position is such that substan- tial credits for financing eXport5 pri- vately cannot be negotiated for the time being. It comes down, then, to l the necessity of Europes reducing | imports from the United States, or offsetting imports by an equivalent value of exports or paying eXtraord- ] inarily high prices for goods here, counting in the great depreciation Of sterling, francs, lire and other cur rencies in terms of dollars,
 Cotton Hit First.
 When sc acute situation as that produced by @ 30 per cent deprecia- ton of sterling arises, something has to give way, The first pronounced effect came in what was reported by cable to be a practical agreement of Lancashire cotton spinners to stop purchase of American cotton. That news resulted in a convulsion of cotton prices in the American exchanges, and reaching further in sentimental effect, acted to produce sharp reactions of corn, pork, lard and other commodi- ties prices on the Chicago Board of Trade. Doubtless future events will | show that the British spinners actual ly did not put a ban upon cotton im- ports, but were merely moved to post pone purchases until sterling rates im- proved
 With England trade largely de- pendent upon the manufacture and sale abroad of cotton goods, it is not l conceivable that scep would be talk ] en to cut off the flow of raw mate | rials. As stocks of the staple in England are reported in excess of l. ooo,oo0 bales, more than double the quantity of year ago, the British buv- CT might be able to safely hold back ms forward contracts for while The cotton episode, however. was only one of developments showing that foreign purchasers were being impelled away rom the American market by adverse eXchange rates. Cabled discussion of criticism in England, France and Italy or American reluctance to support the exchange by advancing liberal credits indicated that the problem was stim- ulating widespread interest abroad. Uncle Sam and his business men are unpopular in Europe, in quarters where underlying causes and effects are considered casually, Money Hard to Get.
 The stock market last week stood on starvation basis in respect to bank credit. Gall money fiuctuated between 10 and 20 per cent with a greater emphasis upon the higher than the lower rate, and time money was | hard to get at 8, 9 and even 10 per cent for certain maturities. The treas ury drew down it's balances with de- pository banks throughout the coun- try, which evidently restricted loan offerings by interior banks on the New York market. The raising of dis count rates to common level at all the reserve banks tended to discour- age the use of credit in speculation, and that was what the Reserve Board wanted to see,
 Higher discounts may have played a greater part than was discernible at the time in the drop of cotton and commidities, bringing out offerings of speculative holdings. At any rate the comment of brokerage circles cen tered upon the tendency of lenders to keep their purse strings tight, and 1t was not surprising that conjecture