The Washington times., 1920-02-04
Present Hysteria IN Foreign
Exchange Market Basic
ally Unwarranted
NJ soERsIANER.

~ hhe on TUESDAY
the Government withdrew aIprosi-
mAtely fl2o000.0 from the public
banks In New York. Nine ner cent
was bid for sixty and ninety oay
loans Sterling fell TO 3-33h In the
final trading.
Ordinarily and normally IN.
masses at large pay little heed 10 for.
eiEn exchange and to the money
market. These are supposed 10 be
highly technical specialties whose
anxleties devolve on trained special
,sts. But when the particulars at
length snect securities as they did
today-and in coxent manner
some attention 10 paid to the eausss
Then IL Is seen that stock exchange
habitues do not wait for the every
day man to discover the eventual
menaces OF money contraction At
home and the shocking depreciatIons
on the foreign money: they proceed
to capitalize their earlier perceptions
In the stock market
The hscal fatalities OF today, fur
thermore, may soon bring an impor-
tant question to a decision. Can re-
!entless contraction OF monetary ia
cilities be continued indefinitely with
out imperiling a country's CONNER
eial structure?
Market Is Nerve Ceater.
Can the securities market be abzn.
donedZleft without moral or material
support--without endangering nnan-
cial fundaments? IL 10 Que thing To
hrottle boom on the Bourse II
Is quite another thing to extend the
strangulstion to a degree where pa
| tient holders become either fright
med or disgusted. II the nerve CEN
sr OF business. the Stock Exchange.
can be demoralized without sooner
han later affecting general business,
- will be a new postulate In political
economy. Hitherto II has been a
long tried tradition that a normal
stock Exchange position, at least,
prerequisites . nourishing trade
status.
The nrst fright of the day was
rith the American holders of foreign
bills. His liquidation was heavy and
hurried at the outset. Sterling,
francs, and lire were heavily sold.
with the American holder of foreign
lebts In hand was an extensive cur
tailment OF plenned commercial cred
Is. The Government Withdrawals,
the rigid attitude OF the Federal Re-
erve Board. and the fall in foreign
moneys impelled exporters to protect
themselves.
Abroad the pressure was also pro
nounced. Continental countries made
of London a receptacle for their
sterling, which they exchanged for
American dollars. AS a set-ofr Lon
Ion sold sterling here, thereby in
creasing the supply. There were
rumors that the British government
would offer no relief to foreign ex-
change. that conditions on the Conti-
lent were ominous. But these may
be regarded as the negligible super.
ficies' of q nervously apprehensive
lay.
BasieaIly UnwarrsnteA.
Surveyed calmly and broadly the
hysteria in foreign exchange, while
understandable and perhaps unavaid-
able, is bssically unwarranted. Let
it be remembered that of the
81 ,0O0, ,00O. 900 trade balance in favor
OF the United States in 1919, fully
one-half was against England. The
wonder Is that sterling held above
$50 up to January 1. Since then,
however, there has been a marked
decrease in exports and an increase
in imports from England and else
where. Even Germany's imports into
the United tSates has risen from a
nominal sum In July to over - 600, 900
in December. Besides, cancellations
of exports from here-have aug
mented week by week until last week
they reduced by go per cent the con-
templated shipments. A few more
days like that OF today, sales to for
eign countries will be confined strict
ly to the bare necessaries and at the
same time the movement from the
other side will rapidly expand,
Just now II is a state of nerves.
American merchants and manufaa
turers are losing their nerve in face
OF money conditions here and the
price OF foreign moneys. They are
throwing bills on the market, taking
whatever these will bring. Europe,
feeling the repercussion of scrambles g
for American dollars, paying what
ever must be paid. The effect on the
stock market, though belated, was in
evitable. 1t now remains to be seen
II the money powers here will see tho
light in time to forefend an easily
forefendable disturbances: for railway
stocks are a bargain, especially safe
as reasonably fair and safe railway
bill Is an early certainty.
IA hQQECTEN Nv ADMV