Evening star., 1932-11-21
FATE Of STERLING
LINKED TO DEBTS
Discussion Here Tomorrow
Likely to Affect Pound
Strongly.
BY CHARLES E. SPEARE.

Special to The Star.
NEW YORK, November 21.-Closely
linked with the war debt discussion
which will be opened in Washington to-
morrow is the immediate effect of this
meetings decision on the market for
sterling exchange. This has been eX-
tremely sensitive to the rumors that
have passed back and forth between
New York, Washington and London, and
is once more approXimating the low
point reached after Great Britain went
off the gold basis, on September 26, 1881.
1t has been semi-ofticially stated that
Great Britain has sufficient funds on
deposit in New York to make full pay
ment of the sos, $3.50 900 due this coun-
try on December Is. Her ability to
pay now, therefore. is not in question
The debatable point is whether, after
drawing on rather meager reserve,
she will be able to protect the pound
and prevent another dislocation Of ex-
changes in other countries
One of the arguments for a postpone
ment of the current payment is the
rather direct effect that a fulhllment
of the debt obligation at this time may
have not only on American trade, but
on that of other nations with which
this country does business. Involved
in the general situation also is the
latest change in the political set-up in
Germany, which will for some time be
a disturbing factor in all international
financial relationships.
Sterilization First Expected.
Until late in the Summer it had
been felt that Great Britain might
stabilize the pound at $3.50. After sew
prol r1onY1fhc nf EY1c clfnl1flry
this level, sterling in October dropped
abruptly below $780, 1t has not re-
covered much since. The idea that the
stabiliZation point would be at $3.50
has been abandoned Now there is be-
ginning to be sentiment that the
pound cannot even be held at 1925.
The next step downward, and what
many consider the ultimate resistance
point. is to So a pound, which would
represent depreciation of nearly 40
per cent from the old parity prevailing
prior to September, 1881.
One of the consequences of reaction
in sterling of this extent is a probable
decline in wholesale prices, following
the moderate recovery that has oc-
CURED in the last few months. This
would mean greater difficulty in restor-
ing the purchasing power of the
growers of American wheat, cotton and
tobacco. Those who take an extreme
view OF the effect Of a disorganization
OF the exchange market by reasCn of
forced war debt payments are of the
opinion that all of the benefits arising
ouc OF the Lausanne conference will be
lost both here and abroad If these pay
ments are insisted upon now and in
the future.
U. S. Trade Recovering.
Included in this improvement has
been substantial recovery in American
foreign trade. The figures of both ex-
ports and imports of merchandise for
October, just released by the Depart
ment OF Commerce. are larger than
since last Spring. Exports in October
were S2l 100000 greater than in Sep
tember, while imports exceeded by So
100000 those of the previous month.
The gains have been slow but persistent,
renectlng not only a willingness on the
part OF foreign consumers to buy Amer
lean manufactured goods and raw ma
terials, but the restocking of the shelves
OF merchants in this country with i'm
ported articles. This suggests a gain
in confidence both here and abroad,
which began directly after the sue
cessful conclusion of the Lausanne par
ley
While October exports were the larg-
est since May, they were 26 per cent
less than year ago. Even this de-
crease compares with one of IS per
cent for the 10 months of the calendar
year. showing that some of the losses
in the earlier part of 1882 are being
cut down by the improvement in the
last quarter. Imports in October were
off 40 per cent from the same month
III 1881 and made higher loss than
for the 10 months. Between January
and the end of october shipments of
gold. which went mainly to France, one
o. the most reluctant of the foreign
debtors, amounted to over $500 900 900,
with the export balance of gold over
imports for the year $685.. 900. A
year ago the two items of gold exports |
and imports exactly balanced.