The New York herald., 1922-12-11
FINANCIAL NEWS
AND COMMENT
Rise of Sterling Exchange to
Highest Point Since 1919
Features Markets.
---------------------
FORCES BEHIND ADVANCE
Britain Makes Good Progress
Toward Regaining Position
in Trade and Finance.
FORCES BEHIND ADVANCE

Although there have been many i'm
portant developments OF national signi-
ficance during the last week. none has
had more than passing reflection In the
financial markets. The message OF
President Harding was regarded with
high favor. yet it failed to create any
sensational activities marketwise; Sec
retary Melons announcement Of the
new Government financing was like
wise construed as constructive, but
nothing occurred on the surface which
would indicate that Wall Street even
had received the news. So 1t went
throughout the week. Stock market
fluctuations continued to be controlled
almost exclusively by professional oper-
ators and what public interest did ap-
pear was mostly OF a passive nature.
Probably the outstanding feature of
the week from financial standpoint
was the remarkable action OF sterling
exchange. Rates on London advanced
daily. with new high records being es-
tablished In rapid succession. At one
time the British rate was less than
thirty cents below its parity and is
now at the highest point since early
in 1919 soon after the British Govern
ment abandoned its pegging operations
and allowed once more the full sway
~F svF 4,, he
market for its currency. @
Reasons for Movement.
OF course there are many reasons why
sterling exchange should have had a
sustained advance. First and foremost
which Great Britain has reestablished
herself in the worlds trade. The
United Kingdom is once more on fair
way to occupying a dominant position
in International trade and finance; in
fact, there are many who declare that
she already has assumed the place
which she always held until the great
war In Europe threw the world out of
balance. Britain's trade returns are
truly remarkable demonstrations Of the
efficiency with which her affairs are
being handled,
Another point which cannot be over-
looked In searching for basic reasons
for the strength of the pound sterling
Is. the determination of the British Gov
ernmeft to pay as 1t goes. No more
contracting OF debts and no more ex-
tensions Of loans as they mature. is the
avowed policy Of England. and it is a
policy which commands respect and
creates confidence.
other nations would be very glad to
do the same thing. but none Of the
other parties to the terrible conflict of
l914-19ls OF course Is able to, do So.
What the immediate future may bring
forth In relation to the disparity be-
tween American and British ycurrencies
Of course none can say at this time.
but there certainly is no cloud on the
horizon which would give reason to ex-
pect anything except continued I'M
provement
other European Exchanges.
That other European exchange rates
should not have advanced In the sannc
manner as the pound sterling is not
at all strange. In the Sirst place no
other country has accomplished what
England has in the way OF readjust-
ment and rehabilitation. OF her affairs.
France for instance Is struggling
nobly to put herself back on a solid
and SUBSTANTIAL footing but faced with
a tremendous deficit in her budget Z
does not seem likely at this time that
she will meet with moro than average
success in her efforts to reduce her
and otherwise getting back to nov-
nnalcy OF course the talk 81 the franc
following the mark is ridiculous
drool. France will recover but II will
take a long time.
The keenest and most far-seeing per-
sons are doing their utmost to work
out Frances problem and they are ccr-
tain to succeed IL given time and the
proper cooperation. But there is one
thing which must be recognized II the
statements OF scores OF big financiers
and economists are to be taken at their
face value and that Is the necessity os
revision OF the reparations terms on
basis more favorable 20 Germany.
That is the one big rock against which
the French Ship OF State IS now strik-
ing and which constitutes the only real
danger in her path toward the port os
normally.
Situation ne Home.
So much for Europe. At home the
danger lies IN another direction. It
must be admitted that the United States
has passed through part of period of
secondary initiation. There Is nothing
10 indicate that tho end OF that period
Is at hand. In fact. many tigns OF its
existence. among them high commodity
prices. higher wages IN the steel indus
try and new tendency toward re-
vision upward OF railway pay schedule.
are just making their appearance.
Initiation OF a sort is a good thing.