The Washington herald., 1920-02-06
MONEY CRISIS
LOOMING UP AS
DAWSON SAILS
Morgan Banker, Of for
England. Says History
Will Be Made. q
SUGGESTS NO REMEDY
Canadian Discount Rates
Doubled as Restriction
OF Imports Begins.

fNcW iorh' reD- D. Inere Will DC
history made In Wall Street before
my return" was the cryptic, remark
made today by Henry p. Dawson. the
banker. just before he sailed on the
Cunard Liner. Mauretania, for Eng
land.
Accompanying Mr.. Dawson. who is
chairman of the League Of Red Cross
organizations, was Eliot wadsworth,
vice chairman of the American Red
Cross Central Committee.
Mr.. Davison's prediction, while u
was elucidated no explanation by him
and comment upon it was refused at
the banking Offices of J. p. Morgan
and Company, was regarded as refer
ring to the curtailment of foreign
markets for American goods through
the tremendous drop in foreign ex-
change and the expected drop in
the cost OF living as a direct and
almost immediate consequence.
III I should tell you what l think
of the situation it would not be fit
TO print" said Mr.. Dawson. II
i-beIicve history will be made in my
absence"
Asked il he had any remedy for
lthe situation TO suggest. Mr.. David
son said:
I'm afraid not
Europe TO Limit Imports.
/ Financial mcn. exporters and manu-
! facturers discussed with very lively
interest today the changing cohdi-
! tions growing out of the new sItua-
ton, the consensus apparently being
that. with foreign exchange at low
-ebb. Europe perforce will limit I'M
ports to the barest necessities. Re-
striction on a broad scale of the pur-
chase OF American goods wouIu re-
lease in the American market for con-
sumption here large quantity of
America made goods and prlees
would accordingly, It is held.
| Cotton, food and other necessities
imperatively needed in Europe Will
soon constitute the chief exports from
America until Europe's financial
equilibrium is restored. according to
a prediction in the British Manches-
ter Guardian. cabIed here today. This
will follow az a result of the cur
,taiincnt of imports by Europe in 4
general exchange rate adjustment, the
Guardian asserted.
| Dawson declined to discuss the
mission upon which he was sailing
to Europe. or to state whether IL
related to public or privatJ affairs,
but his remark that there will be
history made in Wall Street before
my return gave rise to belief that
LIS journey. which win take him to
London and Paris. is intimately re-
lated to the foreign exchange situ-
alton.
Advance Canadian Discount.
"rom various points on the United
States side of the Canadian, border
came reports today that the dis
count rate on Canadian silver and
currency will have sharp advance
.
banks demanding 20 per cent in
- ad OF the prevailing 10 per cent
discount.
The long Ssuffering consumer Is at
last to get relief through the inevi-
table consequences of the foreign
exchange collapse. according to
4 statements received here from Chi
caEo bankers, who declared that all
the legislation, Federal price COM
missions and housewife campaigns
combined had been unable to effect
what the Generalization of foreign
currency is doing and will do to
smash high prices in America.
Ameican exports must practically
cease with the low rate of foreign
Exchange. and the immutable law of
supply and demand mus toperate to
bring prices down when the Ameri-
can made goods, barred from ex-
port. have piled up a huge surplus
in this country.
Reduction 10 Continue.
The reduction in prices will con-
tinue until the United States begins
buying heavily abroad" declared
| President NJ. a. Taylor. of the First
Trust and Savings Bank of Chi
lcago. This would send the rate of
exchange up again. In the mean
time an enormous surplus will ac-
cumulate in this country. due to the
curtailing of exports. While this
may mean unemployment for many
persons II will mean a sharp reduc-
tion in the cost of living. Wages,
of course will come down with the
prices, but tho salaried person who
has 'had slight raise In pay will
benefit thereby. The question of
how soon the consumer will feel
THE reduction in price will depend
largely upon, how soon we cease
exporting goods. Indications are
that the householder will notice a
change in prices very soon"
The slump In the prices of cold
garded today as a harbinger of a
general reduction in the cost to the
consumer of life's necessities.
May Syndicate French Loan,
Coincidcnt with the confirmation
today by American bankers of the
Paris report that part of the pro-
posed French loan viii be offered to
the American people through a syn
dicate to be formed here, came dis
cussion as to whether the recent
frank declaration by Secretary of
the Treasury Glass that further gov,
ernment loans to Europe could not
be considered by the United States
was a rominant factor m causing
the latest foreign exchange drop.
Bankers, here. while regarding with
lfriendliness private participation by
Americans 10 the French loan. de-
CARED the placing, OF $2.0o00o0.ooo with
American investors is not to ne con-