The New York herald., 1922-02-10

Sir Robert Horne's announcement con-
cerning the British intention to estab-
lish free gold market in London was
regarded in New York as the most i'm
portant financial event of the postwar
reconstruction period. 1t was taken as
an indication that the relief from the
enormous war strain on British finances
had reached a definite point where all
restriction on international commerce
and finance could be lifted. The an
nouncement was also held responsible
for the advance of the exchange rate on
the pound sterling from the recent
figure of $420.
Decline In Pound Felt Here.
The decline of foreign exchange rates
which carried the British pound sterling
as low as SAILS two years ago was much
more keenly felt in the international
and domestic transactions of England
and the European continent, 1t was ex-
planned. than in America. But it never
theless had it's Oppressive effect on cur
trade by increasing the cest of our goods
in European markets, and to great
extent has been responsible for the
stagnant business condition In America.
The suspension of specie payments,
which means the abrogation of the free
experienced in this country for many
years. 1t went into effect in England
after the commencement of the war and
spread to all the nations of Europe sub
sequently. It meant that a bank note
was not cashable at its face value in
gold. The Scandinavian countries even
went so far as not only to prohibit ex-
ports of gold, but also to forbid inward
shipments.
The declaration of a free gold market
in England, which seems from Sir Rob-
erts announcement to be imminent, fore
shadows the restoration of the gold
standard throughout Europe, 1t was ex-
planned last night, because England, as
the clearing house for continental ma
tions. will be obligated by the technical
tiles of the international money market
to accept all foreign bills of exchange on
European and all other nations and reg
ulate the exchanges by shipments OF
gold, so that these bills will be paid, as
before the war. at a specified rate of
exchange. This reestablishment of the
gold standard throughout Europe will be
considered at the Genoa international
financial conference.
The chief interest this country has had
in the exchange rate of foreign cur
rencies and the restricted gold market
has been in the effect on our exports. As
European currencies declined in terms OF
dollars the price of American goods went
correspondingly higher. Thus American
wheat, at 81 bushel in the New Yor;
market, when sold in England or other
European countries. cost not only the
dollar represented by the selling price.
but also the amount of foreign exchange
premium in addition. An automatic ad-
vance in the price of American goods re-
suited from each drop In the rate OF ex-
change on European nations. This drop
was due solely to the fact that gold
could not be shipped from Europe ss pay
ments for American goods. which had
then to be made in paper money, or for
whatever the paper money would bring
when sold in the international money
market
VIII Restore Price Level.
A free gold market in England, 1t was
explained by banking authorities, will
mean stabilization of European ex-
change rates and consequent reliable
price level for American goods Since
the war private interests in England
could not ship gold TO New York to pay
debt. But with the establishment of
free gold market any Englishman pos
sessing bank notes can convert these
into gold and ship the metal to New
York. The British pound would thus be
kept at par, which is s4.S665.
il was taken for granted that Sir
Robert Hornes statement put definite
quietus on rumors current from time TO
time that due to the low exchange rates
Europe might at some future time aban-
don the gold standard and leave the
United States with more than $4,000
000, 900 of the metal. the largest concen-