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Show FOREIGN EXCHANGE I PROBLEM SERIOUS English Pound Is Now Selling Sell-ing in New York City at $4,551-4. IS NEW LOW RECORD Situation May Soon Seriously Seri-ously Affect American Exports to Europe. NEW YORK, Aug. 31. The tremendous tremen-dous export trade of the United States, In which the- country lads the world for the first time, was Imperilled today by an alarming drop in foreign exchange rates, notably sterling. At the close of business tonight the English pound brought only $4.55 in American money. This is a drop, from its normal value, of 313 cents', from its value August 1 of 203 cents, and from its quotation last night of 53 cents, a twenty-four-hour break In values without precedent. prece-dent. It marked the lowest value yet recorded re-corded in an excited market, where every day recently has set a new record of depreciation, de-preciation, and It indicated that sterling was headed downward with a momentum and velocity that: promised to take It to levels urithought of ten days ago. Effect on Trade. In the face of this iapiti depreciation tankers here were wordering tonight how much longer Great Britain would pay the premium and buy oods in this market which she can get elsewhere where the value of her money is greater. They were of the opinion That American factories fac-tories and producers would feel the pinch if rates went much lower; that cancellation cancella-tion of war orders for everything except what Great Britain cannot afford to do without powder and shot, rifles and shrapnel, aeroplanes and automobiles would follow; and that there would be few new orders placed by London in America except for positive necessities. The reason and the remedy seemed clear in the minds of international bankers bank-ers here. The English pound has become depreciated, they said, because London has failed to provide a method here of paying the big bills now coming due to 'American shippers; the remedy would be, they thought, to establish quickly very quickly, unless sterling should become still further debased a mammoth credit loan in this market. America does hoi want English gold to pay for supplies; on this point opinion was unanimous. The vaults of Wall street and the banks in the Interior are already choking with gold. More gold would tend to create a period of enormous inflation. Bankers Favor Loan. What New York bankers want to do Is to lend Great Britain an enormous sum of money, to be spent in paying bills here, on approved collateral of high-class American railway and industrial stocks and bonds. This, it Is believed, will restore re-store conditions to nearly normal. Apparently Ap-parently Great Britain intends to adopt this course. Officially, neither Great Britain nor her financiers have given an Inkling to bankers here of what they intend in-tend to do to remedy the situation. When the deputation of British bankers reaches New York on its mission to straighten the market, they will come with a plan, it was authoritatively said tonight, of which their associates In New York are wholly in Ignorance. Depreciation Forecast. In this connection, it was learned tonight to-night that some of the biggest international interna-tional banking houses in New York had pointed out In their cable conferences to Loudon financiers three weeks ago the danger that lurked ahead and had suggested sug-gested a course which, if pursued, would have steadied the markets for a month, or until permanent methods of correction could be applied. That cable message, it was said, had been entirely Ignored. To this day there has been no reply to it. London has not awakened to the full measure of the situation. In the opinion of International bankers here. The tardiness tar-diness of Engllsh'bankers. It was said, is being paid for In British gold at rates extremely ex-tremely dear- The depreciation of the pound sterling, it was emphatically asserted. as-serted. Is not costing American manufacturers manufac-turers one cent, for all bills payable by Great Britain here are payable In dollars. London bankers and buyers are paying the tolla premium of more than 6 per cent. Bright Spot in Outlook. The only bright spot In the outlook was the probability that the prevailing rates would persuade British holders of American Ameri-can securities to part with them now and reap the 6 per cent profit which thus would accrue. These securities are needed need-ed as collateral for the contemplated British credit to be established here. It Is estimated that there are American securities se-curities now In Great Britain to the value of $2, 000. 000, 000. A sizable fraction of these securities, If available, would restore re-store rates to nearly normal, It is believed. be-lieved. Where foreign money values were headed, head-ed, to what new low levels they would plunge If allowed to follow their present tendency, no man in Wall street was prepared pre-pared to say tonight. The high tide of foreign bUU 1 on its way to New York now. By the end of next month a flood of bills for cotton and wheat will deluge the market. This movement Is hardly yet on its way. Its sweep will be tremendous far greater. It was thought, than the great current of war munition bills that Ihas undermined tho markets and bankers. (Continued on Page Three.) FOREIGN EXCHANGE PROBLEM SERIOUS (Continued from Page One.) here conjured up a mental picture of English pounds selling at or around ?4 unless the rate were bulwarked soon by a mammoth credit loan. Decline in Rates. Never within the memory of man have the foreign exchange markets been so thoroughly demoralized before as today. Rates tumbled, not by the usual eighths, but a cent or more at a time. Widely divergent di-vergent quotations came out simultaneously simultane-ously from different bankers, to be succeeded suc-ceeded quickly by other quotations at invariably in-variably lower figures. One big banking house quoted a rate on sterling to o bank a.t Havana, shortly before the market opened. By the time Havana could accept ac-cept the rate was o cents lower. The tendency of the market was so evident evi-dent that speculators caught the spirit of excitement and participated, adding to the demoralization. In some instances even messengers, attendants and clerks pooled their interests and sold sterling, figuring that they could not lose. And they did not. Scores of transactions of this sort, it was conservatively estimated, estimat-ed, occurred during the day. |