The Washington herald., 1921-09-26
BRITISH FINANCIAL
EXPERTS F0RESEE
EASIERCoNDITIONS
Last Few Months Have
Brought Gradual I'm
provement.
STERLING IS STEADY
Steps Being Taken to Prevent
Misrepresentation in
Stocks.
STERLING IS STEADY
ny ARTHUR w. KIDDY.

months ago most of the experts.
and practical. were in
clined to anticipate a fairly strin-
gent autumn with considerable
weakness in sterling as expressed
in American currency. Today, at
the close Of the summer, the same
people are talking about the posi-
bIlity of an easy autumn with
In sterling. 1t may be
interesting. therefore. to inquire
what has happened to occasion the
change in these views.
While many eide issues may have
operated there are undoubtedly two
main causes responsible for the
financial Developments Of the past
few months. and for the altered
views with regard TO autumn
monetary prospects. The hrst caus.
is the continued trade depression,
which has been more severe and
has LASTED longer than some had ex-
pected. with the result that none
tary conditions have become easier
and indeed would have become
even easier than they are but for
the very large frozen credit posi-
tiCns which are still carried. This
same trade depression has also af-
fected sterling in the sense that Il
has greatly checked exports from
your country.
Eject Of Reparations-
On. top of these conditions has
come the second great influence,
nlmely. the extent to which the
situation has been affected by Ger
man reparation payments. The fact
that these at the earlier stages
were so strongly demanded In
dollars was. OF course. responsible
for a time for the great weakness
in sterling, but it seems also TO
have prompted great deal Of
hear" selling Of exchange. added
to which. genuine traders afraid
OF still worse conditions in the
autumn made purchases OF dollars
well ahead OF time. Therefore.
when the special demands in con-
nection with German reparation
payments ceased il was also rea-
liSed how very much genuine
autumn requirements had also been
anticipated. and having regard to
the continued trade depression and
tro fall in wholesale prices OF many
Of the commodities exported from
you. IL Is maintained in many
quarters that we may have seen
the worst of sterling for the cur
rent year. AS to whether it will
maintain it's present level Ut is
s2.75 at the time of writing)
throughout the year is another
matter. because after all it said
and done the fact remains that the
economic position as regards the
trade balance and so on Is still
enormously in your favor. and
moreover. should trade revise, It is
felt that that very circumstances.
would tend in the first instance to
depress rather than raise sterling,
because our purchases of raw ma
terials from you would be very
large.
On the other hand. the feeling
grows that the enormous gold imports
into your country must in time have
an effect not only upon your money
rates, but ultimately upon the ex-
change position itself As against
this argument. however. IL has to be
remembered that the position is still
wholly abnormal in the sense that the
dependence of Europe upon you for
foodstufs 10 enormously increased by
reason Of the conditions IN Russia.
In that respect you benefit not only
by increased quantities in your ex-
ports, but by higher prices than would
be the case II Russia were competing.
A further point. Of course. to be
borne in mind Is the possibility OF
the next instalment OF German repa-
ration payments tending to occasion
an additional demand for the dollar,
DNN sOlhc -ls u
position to set against that possibility
the large extent OF the assets pre-
sumed to belong to German nationals
in the United States.
Nor Is another factor TO be entirely
left out of consideration. namely. the
growing perception on your side OF
the disadvantages Ito your country
arising from too favorable ex.
change. This consideration 10 one
which It Is felt has to be borne in
mind when considering the question
of the liabilities OF European govern
ments to your government / am
only speaking now. Of course. in the
very broadest sense OF the word, but
the thought is this: Granted for q
moment that you are going to stand
by your rightful claim to the full re.
payment Of such indebtedness anc
that the debtors also readily accept
that view. The idea is that when II
comes to arranging the method and
period for the payments you VIII bt
fully as anxious as the debtors thai
the minimum disturbance Of exchange
conditions should. II possible. be Sc
cured. On the whole. therefore. and
while some temporary dips in sterling
are looked for between now and th'
end Of your active export season. thu
| feSlinR as have said preyails that