POUND AND DOLLAR

Otago Daily Times, Issue 17690, 30 July 1919, Page 8

POUND AND DOLLAR

SfilllOUS EXCHANGE POSITION. 'I'ho vuluc of the sovereign in dollars was usually taken by bankers to bo somewhere midway between 4.81 dollars and 4.88 dol- ; lars. The war lias had the effect of making the dollar dear and the pound sterling correspondingly cheap. But among the blessings of peace" has com© a very decided , depreciation of the value of the £1 and the consequential rise of tile dollar to a point leading to a very serious financial position. This day the dollar is worth 4s 6£d. In the i opinion of a New Zealand banker (says the i Wellington Post) it may go to ss. The old ; idea of considering the United Stales dollar as representing 4s 2d in English money must, it is to bo feared, 'bo shelved for the I time being. A cablegram, dated New York, | July 19, showed the £1 sterling to be worth . 4 dollars 43 cents; but a cablegram, dated [ London, July 17, and received here after > that from Now York, put the position as: £1 sterling equals 4 dollars 31J> cents, j In thinking that, the dollar will reach ss, ; the banker above referred to was of the i same view as Mr G. H._ Roberts, British j Minister for Food, who insisted that the . only remedy for this great disparity was a 3 reduction in prices and an increase in home

production. t During -the war the dollar was, more or less, stabilised at 4 dollars 76 cents to 4 dollars 761 cents, as the equivalent to £1. This was effected in large part by the compulsory sale to the English Treasury of American securities, hold in England by companies. corporations, private persons, and other holders. Other methods were also resorted to of keeping the dollar stable. But no sooner was restraint removed than down went the value of the £1. and up went the price of the dollar. In fact, it ro6« almost immediately to 4 dollars j57 cents. In brief, at the 4s 6d rate it now takes of English money £1 '2s 6d to buy what could bo bought for lOd less when the dollar was normal. In transactions running into thousands of pounds the rise of the dollar a very largo sum indeed, when all the business done from day to day and week to week by New Zealand is considered as a lump stim. The only way to restore the dollar to something liko its former relation to the £1 is the very way that is not being pursued. To buy lees from America would help; to ship over to America in golden sovereigns and bars all the gold held by British banks in discharge of British monetary obligations to that country would also help, but it would not be sufficient to discharge all the monetary obligations of Britain to America. Britain is living on credit,_ just as a farmer or a manufacturer may li.vo on credit, but both in the expectation of being able by production to discharge that credit and have a little bit over in the end. The only real way to bring down the dollar into a reasonable relationship with the £1 sterling is to produce; to pay in goods to America what is owing to America. The banker referred to saw no j other way. It rests with Labour to do I this," he added, " and Labour at present does not inspire confidence in the breasts of the manufacturers of Britain. If through the miners' action manufacturing is seriously interfered with —as seems inevitable—thsn the exports which are used in the discharge of onr obligations will not be available, but the obligations will remain. The difficulty might bo temporarily overcome by the of a loan in America. But evsn so, the only real way ! to meet the difficulty,. which is far-reaching j and involving everyone in British countries, is by increased production, more goods furnished to pay for what is owing."