FINANCIAL PRESSURE

Dominion, Volume 9, Issue 2634, 3 December 1915, Page 4

FINANCIAL PRESSURE

The foreign exchange between New York and the European capitals is wholly in favour of New York, because the balance of trade favours the United States, owing to the enormous purcha-ses of munitions by the Allies. This can be easily shown by taking British trade as a guide. The figures for the, nine months to September 30 for-this year, and last year sliow the position to be as undpr:— 1915. 1911 •2 £ Imports 644,029,043 522,505,152 Exports 283,091,254 350,748,303 Excess 'of imports 300,937,780 171,810,78b Of course these figures do not apply to the trade with the United States only, but with the entire world. The interchange with the United States, however, bulks largely, and is chiefly in connection with the imports. Britain's excess of imports for the nine months of this year has increased by £189,121,000, as compared with 1914, and that means that this additional amount has to be paid to foreign creditors, the United States being the chief of these. A good deal of gold has been sent.to Ameiica to meet these payments, and American, railroad securities held in Britain have also been used. Moreover, the Allies found it .convenient, iu order

to preserve a reasonable rate of exchange, to borrow in New York at a very stiff rate of interest £100,000,000. The leading British banks have since arranged to borrow from American banks about £10.000,000 more, all for the purpose of steadying the foreign exchange, which has been very much against Britain and the Continental nations affected by the war. In spite of all this, the ex-change-rate is -Idol. 70 cents to tho £, instead of the normal rate of about 4dol. 84 cents to 4 dol. 85| cents, which means that buying in America is a more costly business than usual. Bad as it is for Britain, however, it is very much worse for Germany. A cable message published this morning indicates that the rate of German exchange has dropped within the past two days from 84„cents to 79 3-8 cents for the 4 Reichma-rks. Germany is not doing very much direct trade with the overseas countries, except perhaps with Norway and Sweden, the British blockade making the business far too hazardous, but it is very probable that she is doing a certain amount of business through the aid of neutrals. Germany, too, has encouraged her people to sell foreign securities, especially American securities, for the double reason of facilitating payments for purchases in America, and also for securing the proceeds of tho sales of these securities for investment, in German _ loans. German exchange even with Holland, Switzerland, Denmark, Norway, and Sweden has fallen, and it is not surprising that it should be at a low point with the United States. Berlin merchants who owe money to American manufacturers must pay the latter in dollars and cents, and must arrange through bankers for this. The cable message means that while before the Serbian campaign was undertaken the 4 marks in Beilin could purchase 84 cents in New York, the Berlin merchant now can enly get 79 3-8 cents for that sura, and therefore must give more marks to pay a given amount of debt. ( The dron in the two days is equal to nearly 6 per cent.; that is to say, if at the earlier period 100 marks were sufficient to discharge a German debt in New York, it now requires about 106 -marks to pay the same debt. The significance lies in tho fact that there should bo this movement in ■the exchange oh the ground stated, that is because of the German adventure in Serbia; for it clearly proves that the bankers in New York, many 'of whom are Germans with strong German sentiments, are apprehensive of Germany's future.