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Show THE POUND S DECLINE A subscriber to The Tribune has asked why it is that the pound sterling has suffered such a marked reduction in value measured by the American dol lar He is carious to know whether this lessened value is indicative of shat tered British credit or if it is merely an incident of the convulsion of trade conditions The decline of the pound sterling of course is merely temporary and is due not to any lost faith in the stability of British credit or the capacity of the British nation to pay in gold the face value of its obligations The matter is almost wholly one of exchange To illustrate A Salt Lake merchant will buy a bill of goods in New York Tor these goods he can make payment eith er by sending money to the New York house from which the purchase was made or he can buy what is known as New York exchange This he will obtain from some bank that carries a balance in New York There is never any difficulty in Salt Lake in obtain ing New York exchange for the reason that we have many products such as wool sugar and metals which are shipped cast and paid for there International finance is much the same as interstate finance except that it is on a greater scale and with a foreign country When oondltions are normal we sell products of various kinds to European countries and estab llsh a credit at the various financ al capitals Similarly these countr es sol to us and establ s ere Jit w th o American c t es 8 h as Boston Ne York Philadelph a an 1 af,o If wc owe Europe more than Europe owes us we ordinarily ship gold to make up the difference From tha duloa&Uoa fii European la dust v due to the war and the tre mendous increase of our manufactures and exports of war mater al to Europe we ha e bu It up a balance of trade n our favor amount ng if memory serves r ght to cons derably more than a bil lion dollars du mg the last year Much the greater part of this is with the al lied countr es and the usual pract ce would be for these countries to ship us gold in payment of the balance due us This of course they are loath to do as it would much dimmish the r gold supply and to that extent weaken the r own financial systems Also we do not need the gold. In lieu of gold it would be necessary for them to provide a credit large enough to absorb this ad verse balance of trade This can be done by sending American securities here or it can be accompl shed by an American 16ah In either event there would immed ately be a sufficient cred it in the United States so that Lon don exchange -would be worth par once more But until some Buch device is put into effect Amer can manufacturers and business men will either have to wait for their money or accept a d scount in New York in order to be paid in cash The greater the amount due and the longer the poss ble wa t for a readjustment re-adjustment the lower London exchange will fall |