New-York tribune., 1920-02-05
Dollar at Record
Premium as Slump
In Exchange Grows
Sterling Fluctuates Wildly
in a Panicky Market;
Banker Says End of the
Decline Is in Sight


yesterday over sterling, franc, llra and
mark exchange was the highest on rec
ord Tho tumbling Of the European
exchanges to unprecedented depths con-
tInued without respite
Exchange bankers, looking overseas
TOR some action to help save the situa-
tion from further decentralization.
feared that the time was near whom
tho international exchange market
would cease to function entirely. One
OF the largest traders in exchange in
the United States said it was likely
that in certain European countries II
would soon be impossible to buy dol
lars IN the open market, and that con-
tracts would have to be settled through
negotiation across the seas The ex-
haustion OF government credits to Eu-
rope and the unwillingncss of banks to
extend large credits have been throw
ing the burden of financing what trad,
ket
Thin Market
The thinness of the market in ster-
ling, indicating a slump in exports, was
Illustrated shortly alter noon, when
relatively small buving orders for stcr-
ling reached the market MANY of the
exchange bankers were out to lunch.
ard there was difficulty, it was said. IN
getting bills at the moment Rates on
sterling, therefore. leaped from S3.19
to $500, but after the midday recess
rates dropped promptly TO S324 and
closed at $3.22lo. compared with S33325
yesterday, S3.5l5o week ago and
$as66 at par.
AS q reflex of tine break in sterling,
She dollar was at a premium of IT per
cent in Montreal, the highest in his
tory, and Canadian bankers in New
York were Of the opinion that no more
gold was likely to be shipped in the
near future, because it was thought
that would not correct the disparity
of $20,000,00O in gold from Montreal to
New York had failed significantly to
change the situation. The weakness of
the Canadian dollar is attributed to
the fact that it buys in this country
Tor cash and sells abroad for credit
In normal times Canada settles her
debit here with sterling credits OBJ
tanned by trade balance in Canada's
favor in England.
At the ciose of trading yesterday
the dollar, which at par will buy 5.1s
French francs, or 14.77 Belgian francs,
or 1882 lire. German marks, normally
worth 23.9 cents, was quoted at l.O4
cents All of these quotations are for
checks.
Sees End of Slump
After the drastic decline yesterday,
which followed fortnight of precipi-
tate drops, an officer of one Of the
leading banks who has been Of the
opinion for three years that European
exchanges We're cue Tor q sharp slump.
yesterday expressed the opinion that
the bottom was now in sight.
ne EXCHANGES WI rO lOWpr in NV
opinion,' he said, but we shall soon
turn the corner. Europeans are now
srasplng the fact that it is up to them
to help the situation. They are now
dlScusslng, particularly in England
and France, the placing of severe re-
time must be near when the Europeans
VIII seriously attempt to balance
their accounts. Before this is done
there viii be further declines. The
proposed import restrictions are ex-
tremely drastic, and III France, be-
lIeve, they include reduction even OF
wheat purch ses'
Other leading fnanciers were Of the
opinion that the situation would auto
matically tend 70 correct itself through
the cqrtailment Of imports into Eu-
rope, but they thought this could be
done through the barrier erected by
declining exchanges. without govern
mental decree. Bankers said that
Europe needs must conine its pur-
chases to bare essentials, and thought
they would find means of financing
these.
Those who contend the bottom in the
exchanges will not be reached for some
months argue that Europe can do little
until the winter is over In the spring
England, for example. is expected to be
ready to export quantities of cotton
goods anufactured out of raw ma
terial purchases in The United States,
and, if So it is believed exchange will
be helped BY exporting to countries
like the United States, whose exchange
IS at premium, Engla viii make q
profit out of exchange, whereas now
the disparity is costly to her. It was
reported yesterday that some English
manufacturers were shipping small
quantities of raw cotton back TO the
United States which had been pur-
chased when sterling exchange was
higher, and thus making profit
A survey of the opinion of bankers
regarding the international exchange
outlook revealed great uncertainty and
also brought out the fact that in
certain extremely influential quarters
the view is still held that the real solu-
tion lies in the extension of huge
credits to Europe by Americans to aid
the Old World TO get the processes OF
economic life functioning again.