The Washington times., 1935-03-05

N# lndeX, ana Cney
showed litt lie
~ change last
S week (allowing
Lewis haney for seas o nal
conditions). Commodity prices
averaged a trifle higher.
It seems not unlikely that
brief period of irregularity may
now develop, with a little final
squirt before the delayed Easter
season. Most observers expect
some recession thereafter, and
the confusion in Washington
politics is certainly not conducive
to sustained recovery.
Last week brought a re-
newed threat of international
currency warfare, which is prob
ably among the outstanding
developments.
The immediate occasion for
this development appears to be
found in EngIand's financial
difficulties. The pound has
fallen to a new low value in
terms of gold, and English
authorities have done little to
prevent the decline.
AS usual under existing condi-
tionS, the decline in the pound
tends to cause lower prices for
commodities sold in world mar
kets. Ones first thought would
be that as the pound falls in
purchasing power, prices would
rise-and in the case of gold
and silver this is the case.
But the immediate effect upon
ordinary nonmonetary commodi'
ties is to increase pressure on
export markets. In the first
place, the decline in the exchange
rate of the pound amounts to
cutting prices on England'S eX.
port business. The foreign buyer
makes his payments in pounds,
and as he can get more pounds
for his own currency, he is en-
abled to pay in England more
cheaply.
On the other hand, a French
exporter, for example, is hurt, be-
cause in order to get the francs
with which to pay him, a buyer
in a sterling" country has to
give more pounds.
OF course, too, these wild
fluctuations in exchange rates
hamper all foreign trade, be-
cause of uncertainty as to what
the actual payment for goods
will be.
A part of the game has been for
the country whose currency is
depreciating in foreign exchange
to keep it's currency stabilized"
at home, thus keeping its domes-
tic prices from rising. This
further tends to discourage other
countries from selling to it, and
holds its manufacturers costs
down so that they can export.
England has played this game
more shreWdly than we have. She
does not offset the export stlmu-
lus by boosting the price OF her
exportable products, as we have
done for cotton, etc. Nor has she
"revalued" the pound, as we have
pretended to do with the dollar.
The pound is a free lance, without
any nominally fixed "par OF ex-
change" 1t remains frankly and
honestly off the gold standard.
The big question now is, can
this foreign price-cutting game be
resumed again without breaking
down all pretense to maintaining
monetary standards, and finally
causing a worldwide monetary in
flation which would put domestic
prices up sharply in England and
in this country?
1 can see no good result. If
England proceeds and gains some
initial success, the U. S. is likely to
buy lot of overvalued silver and
eventually to "devalue" the dollar
again. Pounds, dollars, and yen
would be more and more depreci-
ated. Maybe sufficient political
pressure would arise within even
the gold countries to cause them
to embargo gold. Then there
would be no standard anywhere,
and the last phase of the World
War would be fought out!
One sure thing is that this
whole game has been based
upon a double standard (paper
and gold, and a two-price sys-
tenn domestic and foreign). I'm
til we all return to a definite
standard Of value, and quit liv-
ing a double life by trying to
sell things abroad without buy
ing, plenty of trouble remains.
COTTON GOODS
NEW YORK, March 5 ON.SD.-The
coarse yarn cloths market continued in
active TODAY. with OnlV scattered i'm