DOLLAR AND POUND.

Manawatu Herald, Volume XLI, Issue 2068, 16 December 1919, Page 4

DOLLAR AND POUND.

AN ECONOMIC PROBLEM. People begin to understand what economic forces mean when the current prices for American goods are brought home,to them, when it requires 5s Id to buy what used to cost them 4s 2d in America. The value of the pound sterling has dropped since Ist March from £1 to 16s. For American goods once worth £l, 4s more must now be paid. This is passed on to the price of all goods, from axe-handles to motor-cars. Naturally, it must restrict the demand for goods of American manufacture, and it is alreay having that effect. The cablegrams recently show a slight recovery of the value of the £l, as compared with the dollar, but it is still about 3s 4d lower than it was early in the year. «

Endeavours have been made by both British and American bankers to adjust this important matter, but, up to the present, with but little result. The dollar is still in the ascendant, the £1 sterling well down in value, in its relation to the American exchange.

It is quite true that the American manufacturer selling goods in countries where the £1 sterling is in vogue is receiving more money for furnishing fewer goods, but that cannot go on for ever. The goods may become too dear, beyond the purchasing power of the people who use the £l. They will have to pay American prices or go without. There is another way: It is to go into other and cheaper markets. This is where Germany may be afforded an opportunity to trade with countries which fought against it twelve months ago. There is yet another way: It is for America to make advances to European countries of the great surplus of money knoAvn to be in the United States. This, it is believed by some authorities, would restore the dollar and £1 sterling to something approaching their prewar relationship. But the best way is for the great indebtedness to America to be discharged by the European countries, including, of course, Great Britain, in goods. This necessitates increased production, not only of goods for (he domestic markets, but for the American markets —and a substantial reduction of imports from America of goods that can well be provided in Great Britain, and other countries debtors to the States,