Evening star., 1932-10-20
BRITISH POUND H|TS'
NEW Low IN SLUMP
Drop Is Attributed to Attempt
to Find f27,OO0,00O for
U. S. Debt Payment.

By Gable to The star.
LONDON, October 20.-Great Brit
aims war debt payment to the United
States, due December Is. has again been
placed in the spotlight by the sensa-
tional slump of the British pound.
BY reaching the ratio of $685. against
the dollar yesterday. the pound estab-
lished a new low record for the year,
but steadied today around SO 49, This
drop was attributed In some continental
sources to Great Britains effort to find
f27,ooo000 to meet its December debt
tnstallment.
British circles discount such bslief,
however They admit that there have
been heavy continental sales of sterling
during the last three days, due to for
eign realization that the British have
been attempting to peg the pound too
high-at s345. When this peg is re-
moved. the pound must drop. Experts
are aware that the peg must be re-
moved, as the exchange equalization
fund is fast being used up, with less
than f300O0000 left to pig the daily
fluctuations of sterling. The British
assert that the foreign selling is genu-
inc, and they expect the pound to drop
to lower levels, reaching the bottom
about December /. possibly even at
$500.
Other Depressing Factors.
Other factors contributing to de-
press the pound are:
Heavy food and raw material pur-
chases, which are periodic at this time
of the year.
Exchange restrictions in various
countries, serving to withhold British
exporters money. This money ordi-
narily would lower the adverse trade
balance, for whose adjustment more
foreign currency must be bought by the
British
A steady, grave fall in Great Britains
invisible exports, such as returns from
customary dividends and interest pay
ments from abroad. as we'll as a seri-
GUS fall in banking and shipping re-
ceipts All these last are still showing
an alarming downward tendency.
In addition there is the f168, ,000,0 600
which the treasury will have to find to
pay dissented war oan holders around
December l under the conversion
scheme. When the war loans were
converted bond holders desiring cash
payment were permitted to apply for
such within a certain period and a
small portion of the investors took ad-
vantage of the privilege.
IL ID VII CGl lt1lll IIidG llllS VIII
be the last payment the British will
make under the present war debt agree
ments. There are two schools of Brit
ish thought here. The British treas
ury is pressing for re-ision or can
collation. almost to the point of re-
pudiation, while London City, jealous
of England's financial honor. believes
Britain should pay on the rail.
Nav Promise Lumu Sum.
Both schools, however. conTerge in
be done after December Is. It IS quite
likely Britain will come forward and
propose to pay the United States a
lump sum of 81 sl,ooo,ooo,ooO spread over
10 years, or lump sum payment
spread over an issue of bonds.
The British will inform the United
States that it is impossible to continue
the transfer of var debt payments IN
less the United States is willing to take
enough imports to give Britain favor
able trads balance to achieve such
money transfer 1t is even said that
Britain might pay the United States in
December in geld. saying it is unable to
transfer currency. 1t would. therefore
pay out of the bank of England's gold
reserve, driving Great Britain further
than ever from the gold standard. to
which the United States wants it to re-
turn.
France, it is understood, is also pre-
pared to make its December payment
to the United States If both France
and Britain pay, then the reparations
question temporarily reverts to the po-
sition prior to the Lausanne. conference,
or, anyway, it is reopened in connection
with a final European and American
debt settlement. "
Copyright, 1922