Evening star., 1923-07-07
BY STUART p. WE3T.
Special Dispatch to The Star.

Special Dispatch to The Star.
NEW YORK, July 1.-THE one de-
velopment of consequence bearing
upon the financial situation this past
week has been the continued fall in
the foreign exchanges. The declines
in sterling, it is well understood. has
not been due to political causes. 1t
has been the result Of the transfer of
funds from London to other markets
more especially to New York
where more remunerative terms have
been offered. To stop this exodus the
Bank Of England has raised it's dis
count. forcing up rates in the open
market, and thus making it no longer
attractive for Americans to borrow.
The expectation is that offerings of
sterling drafts to cover remittances
OF borrowed money will now cease,
and that sterling rates will recover.
New low records, in some cases for
the year. in others for all time. have
been made in continental currencieS,
however. Here the explanation is
mainly political. 1t is further ad-
mission of what has been felt in in
ternational banking circles all along,
that the French experiment in the
Ruhr was a mistake. 1t is also an ex-
preston of uneasineSs as to what will
happen if the allies part company
and proceed to their own separate
solutions of German reparations and
the interviewer problems of the war
debts.
French-English Situation Precarious.
If Great Britain were to withdraw
her offer to France of partial remis-
sion of the war obligations in return
for reduction of French claims upon
Germany. and were to insist upon the
whole debt being refunded and in
terest payments begun. it would bring
French financial affairs to crisis
Already the situation is sufficiently
precarious.
French collections of German coal
amount to little beside what the
French budget pretends to count
upon. The deficit in consequence is
much larger than the actual figures
make 1t out to be.
France is doing all it can to avoid
the disastrous expedient of initiating
the paper money to meet this de-
hciency. 1t is attempting to bridge
the gap by constant additions to the
huge volume of internal loans. What
would happen in such a state of
things If Great Britain started to
enforce its war claims. is not hard to
imagine. 1t would mean a further
violent fall in the value of the franc
and quite likely would lead up to "a
confession on Frances part of In
ability to meet it's foreign debts.
Wall Street Unduly Alarmed.
At a time of unsettlement such as
the New York stock market has been
passing through every possibility of
trouple is canvassed, as being a fac
tor In the downward movement In
creasing attention has accordingly
q
abroad The disagreement between
Great Britain and France is admit
teoly serious from the point of view
or the French financial position and
ropes economic rehabilitation
But 1t is difficult to see the ground
Tor the apprehension, which some
people in Wall street profess, of Eng
Iano and France carrying their dis
pute to the breaking stage. If there
Wa. Was any great amount of alarm on
this score. 1t would have shown in
one quarter more than anywhere
else-the quarter most sensitive to
war scares--that Is. the wheat mar
ket and here during the past week
there has not been the slightest rip
pie of excitement.
No Trade Boom In Sight.
The perplexities Of the European
situation have no doubt been an s,..
a
comparatively minor one. The ex
planation for the prolonged and severe
decline on the stock exchange, which
was at length checked toward the
close of the last week. must be look
ed for In conditions at home. IN
doubtedly Wall street and also the
business community outside were too
optimistic in their calculations four
months ago. There Is not going TO
be the trade boom and the price in
nation that We're so freely talked of
at that time.
To the extent that the downwa rd
movement in the stock market rep
resented a revision of these ideas. it
was altogether logical. But, of
course. the decline went far beyond
the limits of a reaction after an
over-enthusiastic speculative cam
paign.
Observers whose experience covers