Evening star., 1933-11-16
NATIONS TIED Up
BY MONEY CRISIS
Risk Due to Fluctuations
Stunned by international
Commerce.
NEW YORK, November 1s CN.ANA).

NEW YORK, November 16 (NANA).
Before England went of the gold
standard the currencieS of the three
most powerful commercial countries,
the United States, England and France,
were fairly stable and business men
conducted international trading know
ing precisely what their profits would
be in their own money.
NOW, with England and the United
States of gold. and with the pound
sterling soaring at S5.3l, foreign ex-
change fluctuations are so rapid 1t Is
difficult for exporters and importers
to agree on prices.
At par of exchange and before the
fall Of the gold standard in England
and America, $4.86Ss would buy one
pound sterling. In the last three
months, with these countries off gold,
the pound sterling has ranged from
$3.50 to as high as $5.3l. with daily
changes amounting to as much as Is
cents a pound.
International Trade Effect.
Under these uncertain conditions 1t
Is not hard TO understand why exports
and imports of the leading nations do
not increase more rapidly. Today, an
American exporter who sells an Eng
lishman 100000 sterling order
may receive S515000 If the pound is
is S5.15, or $505,000 If the pound is
S505 when settlement is made, a differ
ence of about 2 per cent.
The English importer knows he will
have to pay 100000 for his pur-
chase. but the American exporter may
have quoted the 100000 price
when sterling was selling for $5.15,
whereas the sale might bring him only
S5.C5 pound when he exchanges ster-
ling for dollars. Thereby he would lose
approximately $4,000.
On the other hand, the American ex-
porter might quote his English customer
q dollar price. Assume the seller quoted
S515, 900 for his merchandise. The Eng
1ish buyer counts on paying $515, 900,
or 100000 at $5.15 pound, but mean
time the dollar becomes stronger and
the pound Is quoted at $5.05. The
Englishman must. pay approximately
f102, 900 at $5.e5 for the American to
realize the $515,000 price agreed upon.
The American realizes the profit he eX-
pected, but the English importer has
to pay $4,000, or approximately $4,000
more than he had figured on.
Normal Times Different.
In normal times, with Great Britain
and America on the gold standard, 1t
did not make much difference to ex-
porters or importers whether prices
quoted were in pounds or dollars. The
exporter knew he could get approx
mately $486, ,625 If he quoted the English
customer 100000, and the Englishman
knew it would not cost him more than
$1,000 They were dealing with def
mite, stationary figures, and each knew
In advance what his costs would be.
The American included what he con-
sidered a fair profit in his quotation
of 100000, fixing price low
enough to give him the business and
his profit. The Englishman, knowing
his cost would not exceed 100000, pur-
chased the material because he knew
his market for it would pay enough over
100000 to give them fair profit ON
resale.
With the uncertainty today due to
fluctuations in the daily values of paper
currencies, business men cannot be
blamed for failure of international
trade revival, because the risks of los
ing large sums through violent changes
in exchange are so great.
Copyright, 1888. by North American News
paper Alliance, Inc)