THE STERLING EXCHANGE.

Hokitika Guardian, 19 December 1919, Page 4

THE STERLING EXCHANGE.

IMPORTANT REPORT. LONDON, Dec. 14. The Committee on Currency and Foreign Exchange, in its final report, states that the depreciation of the sterling exchange in New York is largely due to the expanded state of credit ip. Britain. The report says ;—‘ ‘The large payments we have to make in America for necessary imports make it essential that we should secure payment in cash for as largo a proportion of our exports as possible. We therefore recommend that we should give preference to exports to countries able to pay in the ordinary course of trade. The first essentials to the recovery of the sterling exchange are increased production, the cessation of Government borrowings, and decreased expenditure by the Government and individuals.”

Sterling exchange in New York, states the Melbourne “Argus” of December sth, has smartly declined in the last day or so, the rate now being quoted at 3.88 per £l. This makes the total depreciation 20 per cent since the downward movement began in earnest, wheh the British authorities decided to allow the trade balance to regulate the exchange without any artificial control. While the increase in the cost of American goods, due to the depreciation of the buying power of the sovereign in ,Nw York, undoubtedly serves as a protection to her producers, it niay be so complete as to close very important markets to her goods. Tins opens the .question as to how American traders are to dispose of their surplus commodities, apd, in that case, how are prices to bo maintained and workers to he kept employed. It may be assumed that the long period of great prosperity which has been experienced in America has not fitted workers in the United States to accept poorer conditions. A continuance of the existing financial strain is impracticable, and the onus of meeting the position, sooner or later, will be forced on the United "States. " '•" ’. -f -. __ . _ J